Republic Act No.

9994

AN ACT GRANTING ADDITIONAL BENEFITS AND PRIVILEGES TO SENIOR CITIZENS, FURTHER

AMENDING REPUBLIC ACT NO. 7432, AS AMENDED, OTHERWISE KNOWN AS "AN ACT TO MAXIMIZE
THE CONTRIBUTION OF SENIOR CITIZENS TO NATION BUILDING, GRANT BENEFITS AND SPECIAL
PRIVILEGES AND FOR OTHER PURPOSES"

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Title. - This Act Shall be known as the "Expanded Senior Citizens Act of 2010."

Section 2. Section 1 of Republic Act No. 7432, as amended by Republic Act No. 9257, otherwise known
as the "Expanded Senior Citizens Act of 2003", is hereby further amended to read as follows:

"SECTION 1. Declaration of Policies and Objectives. - As provided in the Constitution of the Republic of
the Philippines, it is the declared policy of the State to promote a just and dynamic social order that will
ensure the prosperity and independence of the nation and free the people from poverty through
policies that provide adequate social services, promote full employment, a rising standard of living and
an improved quality of life. In the Declaration of Principles and State Policies in Article II, Sections 10 and
11, it is further declared that the State shall provide social justice in all phases of national development
and that the State values the dignity of every human person and guarantees full respect for human
rights.

"Article XIII, Section 11 of the Constitution provides that the Sate shall adopt an integrated and
comprehensive approach to health development which shall endeavor to make essential goods, health
and other social services available to all the people at affordable cost. There shall be priority for the
needs of the underprivileged, sick, elderly, disabled, women and children. Article XV, Section 4 of the
Constitution Further declares that it is the duty of the family to take care of its elderly members while
the State may design programs of social security for them.

"Consistent with these constitutional principles, this Act shall serve the following objectives:

"(a) To recognize the rights of senior citizens to take their proper place in society and make it a
concern of the family, community, and government;

"(b) To give full support to the improvement of the total well-being of the elderly and their full
participation in society, considering that senior citizens are integral part of Philippine society;

"(c) To motivate and encourage the senior citizens to contribute to nation building;

"(d) To encourage their families and the communities they live with to reaffirm the valued
Filipino tradition of caring for the senior citizens;
 "(e) To provide a comprehensive health care and rehabilitation system for disabled senior
citizens to foster their capacity to attain a more meaningful and productive ageing; and

"(f) To recognize the important role of the private sector in the improvement of the welfare of
senior citizens and to actively seek their partnership.

"In accordance with these objectives, this Act shall:

"(1) establish mechanisms whereby the contributions of the senior citizens are maximized;

"(2) adopt measures whereby our senior citizens are assisted and appreciated by the community
as a whole;

"(3) establish a program beneficial to the senior citizens, their families and the rest of the
community they serve: and

"(4) establish community-based health and rehabilitation programs for senior citizens in every
political unit of society."

Section 3. Section 2 of Republic Act No. 7432, as amended by Republic Act No. 9257, otherwise known
as the Expanded Senior Citizens Act of 2003", is hereby further amended to read as follows:

SEC. 2. Definition of terms. - For purposes of this Act, these terms are defined as follows:

"(a) Senior citizen or elderly refers to any resident citizen of the Philippines at least sixty (60)
years old;

"(b) Geriatrics refer to the branch of medical science devoted to the study of the biological and
physical changes and the diseases of old age;

"(c) Lodging establishment refers to a building, edifice, structure, apartment or house including
tourist inn, apartelle, motorist hotel, and pension house engaged in catering, leasing or
providing facilities to transients, tourists or travelers;

"(d) Medical Services refer to hospital services, professional services of physicians and other
health care professionals and diagnostics and laboratory tests that the necessary for the
diagnosis or treatment of an illness or injury;

"(e) Dental services to oral examination, cleaning, permanent and temporary filling, extractions
and gum treatments, restoration, replacement or repositioning of teeth, or alteration of the
alveolar or periodontium process of the maxilla and the mandible that are necessary for the
diagnosis or treatment of an illness or injury;
 "(f) Nearest surviving relative refers to the legal spouse who survives the decease

The Bureau of Internal Revenue recently issued Revenue Regulations No. 07-10 (the “Regulations”),
which implement Republic Act No. 9994, otherwise known as the Expanded Senior Citizens Act of 2010.

The major provisions of the Regulations include the following:

A. Income tax and other taxes

In general, Senior Citizens must file income tax returns and pay income tax. However, the Senior Citizen
is exempt from paying income tax if his returnable income is in the nature of compensation income and
he qualifies as a minimum wage earner under RA No. 9504. The Senior Citizen is also exempt from
income tax if the aggregate amount of gross income earned by the Senior Citizen during the taxable year
does not exceed the amount of his personal exemptions (basic and additional).

Under the Regulations, the Senior Citizen can avail of income tax exemption only upon compliance with
certain requirements. These are:

1. the Senior Citizen must first be qualified as such by the Commissioner of Internal Revenue or his
duly authorized representative (i.e., the Revenue District Officer (RDO)) having jurisdiction over the
place where the Senior Citizen resides), by submitting a certified true copy of his Senior Citizen
Identification Card (OSCA ID) issued by the OSCA of the city or municipality where he resides;

2. the Senior Citizen must file a Sworn Statement on or before January 31 of every year that his annual
taxable income for the previous year does not exceed the poverty level as determined by the NEDA thru
the NSCB; and

3. if qualified, his name shall be recorded by the RDO in the Master List of Tax-Exempt Senior Citizens
for that particular year, which the RDO is mandatorily required to keep.

A Senior Citizen who is a compensation income earner deriving from only one employer an annual
taxable income exceeding the poverty level or the amount determined by the NEDA thru the NSCB on a
particular year, but whose income had been subjected to the withholding tax on compensation, shall,
although not exempt from income tax, be entitled to the substituted filing of income tax return under
Revenue Regulations No. 2-98, as amended.
Note that the income tax exemption does not extend to all types of income. Under section 8 of the
Regulations, the Senior Citizen can still be held liable for the following taxes on income:

1. The 20% final withholding tax on interest income from any currency bank deposit, yield and other
monetary benefit from deposit substitutes, trust fund and similar arrangements; royalties (except on
books, as well as other literary works and musical compositions, which shall be imposed a final
withholding tax of 10%); prizes (except prizes amounting to P10,000 or less which shall be subject to
income tax at the rates prescribed under Sec. 24(A) of the Tax Code, and other winnings (except
Philippine Charity Sweepstakes and Lotto winnings) (Sec. 24(B)(1), Tax Code);

2. The 7.5% final withholding tax on interest income from a depository bank under the expanded
foreign currency deposit system (Sec. 24(B)(1), Tax Code);

3. If the Senior Citizen will pre-terminate his 5-year long-term deposit or investment in the form of
savings, common or individual trust funds, deposit substitutes, investment management accounts and
other investments evidenced by certificates in such form prescribed by the Bangko Sentral ng Pilipinas
before the fifth year, he shall be subject to the final withholding tax imposed on the entire income
depending on the holding period of the deposit or investment. If held for a period of:

• Four years to less than five years — 5%

• Three years to less than four years — 12%; and

• Less than three years — 20%

4. The 10% final withholding tax –

a. On cash and/or property dividends actually or constructively received from a domestic corporation
or from a joint stock company, insurance or mutual fund company and a regional operating
headquarters of a multinational company; or

b. On the share of an individual in the distributable net income after tax of a partnership (except a
general professional partnership) of which he is a partner; or

c. On the share of an individual in the net income after tax of an association, a joint account, or a joint
venture or consortium taxable as a corporation of which he is a member or a co-venturer (Sec. 24(B)(2),
Tax Code).
5. Capital gains tax from sales of shares of stock not traded in the stock exchange (Sec. 24(C), Tax
Code); and

6. The 6% final withholding tax on presumed capital gains from sale of real property, classified as
capital asset, except capital gains presumed to have been realized from the sale or disposition of
principal residence (Sec. 24(D), Tax Code).

A Senior Citizen remains liable for other internal revenue taxes. The Regulations provide:

SEC. 9. Liability for Other Internal Revenue Taxes. — A Senior Citizen shall also be subject to the
following internal revenue taxes, among others, imposed under the Tax Code:

1. Value Added Tax (VAT) or other Percentages Taxes, as the case may be. If he is self-employed or
engaged in business or practice of profession, and his gross annual sales and/or receipts exceeds
P1,500,000 or such amount to which this may be adjusted pursuant to Sec. 109(1)(V) of the Tax Code, he
shall be subject to VAT. Otherwise, he shall be subject to the 3% percentage tax;

2. Donor’s Tax – All donations made by a Senior Citizen during any calendar year, unless exempt
under a specific provision of law, shall be subject to the donor’s tax imposed under Title III of the Tax
Code;

3. Estate Tax – In the event of death, the estate of the Senior Citizen may also be subject to the estate
tax following the rules enunciated under Title III of the Tax Code and its implementing Regulations;

4. Excise tax on certain goods;

5. Documentary stamp tax.

B. Discounts to senior citizens

The Regulations reiterate the expanded coverage of goods and services subject to the 20% discount
granted to Senior Citizens. In order to avail of the 20% discount, the Senior Citizen may present any of
the following:

1. an identification card issued by the Office of the Senior Citizen Affairs (OSCA) of the place where
the senior citizen resides: Provided, That the identification card issued by the particular OSCA shall be
honored nationwide;
2. the passport of the Senior Citizen concerned; or

3. other documents that establish that the Senior Citizen is a citizen of the Republic and is at least
sixty (60) years of age.

In the purchase of goods and services which are on promotional discount, the senior citizen can avail of
the promotional discount or the 20% discount, whichever is higher.

The 20% discount applies to the following:

1. on the purchase of medicines, including the purchase of influenza and pnuemococcal vaccines, and
such other essential medical supplies, accessories and equipment to be determined by the Department of
Health (DOH).
Under the Regulations, the grant of discount shall be subject to guidelines that will be issued by the
Bureau of Food and Drugs, Department of Health in coordination with the Philippine Health Insurance
Corporation.

The Regulations define “medicine” as referring to “both prescription and nonprescription medicines,
and articles approved by the BFAD-DOH, which are intended for use in the diagnosis, cure, mitigation,
treatment or prevention of disease in man; but do not include food and devices or their components,
parts, or accessories.”

2. on the professional fees of attending physician/s in all private hospitals, medical facilities,
outpatient clinics and home health care services;
3. on the professional fees of licensed professional health providing home health care services as
endorsed by private hospitals or employed through home health care employment agencies;
4. on medical and dental services, diagnostic and laboratory fees in all private hospitals, medical
facilities, outpatient clinics, and home health care services, in accordance with the rules and regulations
to be issued by the DOH, in coordination with the Philippine Health Insurance Corporation (PhilHealth);
The Regulations define: (1) “medical services” as “hospital services, professional services of physicians
and other health care professionals and diagnostic and laboratory tests that are necessary for the
diagnosis or treatment of an illness or injury; (2) “dental services” as “oral examination, cleaning,
permanent and temporary filling extractions and gum treatments, restoration, replacement or
repositioning of teeth, or alteration of the alveolar or periodontium process of the maxilla and the
mandible that are necessary for the diagnosis or treatment of an illness or injury” and (3) “home health
care service” as “health or supportive care provided to the Senior Citizen patient at home by licensed
health care professionals to include but not limited to, physicians, nurses, midwives, physical therapists
and caregivers.”

5. in actual fare for land transportation travel in public utility buses (PUBs), public
utility jeepneys(PUJs), taxis, Asian utility vehicles (AUVs), shuttle services and public railways, including
Light Rail Transit (LRT), Mass Rail Transit (MRT), and Philippine National Railways (PNR);
6. in actual transportation fare for domestic air transport services and sea shipping vessels and the
like, based on the actual fare and advanced booking;
7. on the utilization of services in hotels and similar lodging establishments, restaurants and recreation
centers;
The Regulations define the terms “hotel/hostels”, “lodging establishments,” “restraurants,” and
recreation centers.”

8. on admission fees charged by theaters, cinema houses and concert halls, circuses, leisure and
amusement; and
9. on funeral and burial services for the death of senior citizens;
The beneficiary or any person who shall shoulder the funeral and burial expenses of the deceased Senior
Citizen shall claim the discount, such as casket, embalmment, cremation cost and other related services
for the Senior Citizen upon payment and presentation of his death certificate.

C. Special discount on public utilities

The Regulations reiterate the requirement imposed under the Act that the monthly utilization of water
and electricity by the Senior Citizen supplied by public utilities will be subject to a five percent (5%)
discount upon concurrence of the following:

1. the individual meters for the said utilities are registered in the name of the Senior Citizen residing
therein;

2. the monthly consumption does not exceed one hundred kilowatt hours (100kwh) of electricity and
thirty cubic meters (30 m3) of water; and

3. the privilege is granted per household regardless of the number of Senior Citizens residing therein.
 What are the penalties for refusal to honor senior citizen cards?

Any person who refuses to honor a senior citizen card or violates any provision of RA 9994 shall suffer
these penalties:

First violation:

 imprisonment of not less than 2 years but not more than 6 years, and

 fine of not less than Php50,000 but not exceeding Php100,000

 possible cancellation or revocation of business permit, permit to operate, franchise and other similar
privileges

Subsequent violations:

 imprisonment of not less than 2 years but not more than 6 years, and

 fine of not less than Php100,000 but not more than Php200,000

 possible cancellation or revocation of business permit, permit to operate, franchise and other similar
privileges

On the other hand, those who try to abuse the privileges being offered by the Expanded Senior Citizens
Act will suffer will also be penalized, to wit:

 imprisonment of not less than 6 months, and

 fine of not less than Php50,000, but not more than Php100,000
REVENUE REGULATIONS NO.5-2017 –
Rules and Regulations Implementing
Republic Act No. 10754
REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE
April 11, 2017
REVENUE REGULATIONS NO.5-2017
SUBJECT : Rules and Regulations Implementing Republic Act No. 10754,
entitled “An Act Expanding the Benefits and Privileges of Persons with
Disability (PWD) “Relative to the Tax Privileges of Persons with Disability and Tax
Incentives for Establishments Granting Sales Discount, and Prescribing the
Guidelines for the Availment Thereof, Amending Revenue Regulations No. 1-2009

TO: All Internal Revenue Officers and Others Concerned

SECTION 1. SCOPE.
Pursuant to the provisions of Section 244 of the Tax Code of 1997, as last amended by
Republic Act No. 9504, in relation to Sec. 3 of Republic Act (R.A.) No. 10754, otherwise
known as “An Act Expanding The Benefits And Privileges Of Persons With
Disability” (hereinafter referred to as the “Act”), these Regulations are hereby
promulgated to:
1. Prescribe the guidelines for the implementation of the tax privileges of persons with
disability and their benefactor; and tax incentives for establishments granting twenty
percent (20%) sales discount and exemption from Value-added Tax (VAT) under
Sections 32 and 33 of R.A. 7277, as amended by R.A. No. 9442, otherwise known
as the “Magna Carta for Persons with Disability” and R.A. No. 10754; and
2. Amend certain provisions of Revenue Regulations No.1-2009.
SECTION 2. DEFINITION OF TERMS.
For purposes of these Regulations, the following terms and phrases shall be defined as
follows:
2.1 Act – shall refer to Republic Act No. 7277, as amended by Republic Act No. 9442
otherwise known as the “Magna Carta for Persons with Disability” and R.A. No. 10754
otherwise known as “An Act Expanding the Benefits and Privileges of Persons with
Disability (PWD)”
2.2 Person with Disability (PWD) – are those who have a long-term physical, mental,
intellectual or sensory impairments which in interaction with various barriers may hinder
their full and effective participation in society on an equal basis with others. For
purposes of these Regulations, the term “PWD” shall be further classified/categorized
by the Department of Health (DOH).
2.3 Disability – shall mean a physical or mental impairment that substantially limits one
or more psychological, physiological or anatomical function of an individual or activities
of such individuals, a record of such an impairment; or being regarded as having such
an impairment.
2.4 Benefactor – shall refer to a Filipino citizen or resident alien, caring for, giving chief
support and living with the PWD, who is in the fourth (4th) civil degree of consanguinity
or affinity claiming such PWD as dependent.
2.5 PWD-Dependent – shall refer to a Filipino citizen who is a PWD, whether minor or
of legal age, related to the benefactor within the fourth (4th) civil degree of consanguinity
or affinity, not gainfully employed and who is living with and chiefly dependent upon
such benefactor for his/her support.
2.6 Sales Discount – shall refer to the actual discount, or that discount, or that
discount which in no case shall exceed 20% of the gross selling price of goods sold or
services rendered to PWD by certain business establishments enumerated under the
Act and these Regulations.
2.7 Establishment – shall refer to any entity, public or private, duly licensed and/or
authorized by the national government agencies or by the local government units to
operate.
SECTION 3. SALES DISCOUNTS WHICH MAY BE CLAIMED BY
QUALIFIED PERSONS WITH DISABILITY (PWD).
Qualified PWD shall be entitled to claim at least twenty percent (20%) discount from the
following establishments relative to the sale of goods and services for their exclusive
use and enjoyment or availment of the PWD:
3.1 Hotels and similar lodging establishments; restaurants and recreation centers;
3.2 Theaters, cinema houses, concert halls, circuses, carnivals and other similar places
of culture, leisure and amusement;
3.3 All drugstores regarding purchase of generic and branded medicine;
3.4 Medical and dental services including diagnostic and laboratory fees (e.g., x-rays,
computerized tomography scans and blood tests) and professional fees of attending
doctors in all government facilities or all private hospitals and medical facilities subject
to the guidelines to be issued by the DOH, in coordination with the Philippine Health
Insurance Corporation (Phil Health);
3.5 Domestic air and sea transportation based on the actual fare. For promotional fares,
the PWD can avail the establishment’s offered discount or the 20% discount provided
herein, whichever is higher and more favorable;
3.6 Land transportation privileges based on the actual fare such as, public utility buses
or jeepneys (PUBs/PUJs). taxis, Asian Utility Vehicles (AUVs), shuttle services and
public railways such as Light Rail Transit (LRT), Metro Rail Transit (MRT), Philippine
National Railways (PNR), and such other similar infrastructure that will be constructed,
established and operated by public or private entity; and
3.7 Funeral and burial services for the death of the PWD: Provided, that the beneficiary
or any person who shall shoulder the funeral and burial expenses of the deceased PWD
shall claim the discount under this rule for the deceased PWD upon presentation of the
death certificate and PWD Identification Card (ID) or in its absence, the
original or certified true copy of the proof of registration from the issuing local
government unit. Such expenses shall cover the purchase of casket or urn, embalming,
hospital morgue, transport of the body to intended burial site in the place of origin, but
shall exclude obituary publication and the cost of the memorial lot.
All other goods and services sold by the foregoing establishments not included in the
above enumeration expressly provided by law shall not be considered for the 20%
discount privilege notwithstanding that the same are for the exclusive use and
enjoyment or availment of the PWD.
SECTION 4. COMPUTATION OF THE DISCOUNT AND VAT EXEMPTION GRANTED
TO QUALIFIED PERSONS WITH DISABILITY.
VAT on sale of goods or services with sales discounts granted by business
establishments enumerated under Section 3 hereof shall be computed in accordance
with the following formula:
Amount of sale (with VAT) P1,120.00
Less: 12% VAT 120.00
Total Amount 1,000.00
Less: 20% Sales Discount 200.00
Total Amount Due P800.00

The Two Hundred Pesos (P200.00) cost of the discount in the above illustration, shall
be allowed as a deduction from gross income for the same taxable year that the
discount is granted: Provided that, the total amount of the claimed tax deduction net of
VAT, if applicable, shall be included in their gross sales receipts for tax purposes and
shall be subject to proper documentation in accordance with the provisions of the Tax
Code. This means that for the
establishment to be allowed to claim the discount as a deduction, the amount of sales
that must be reported for income tax purposes is the VAT-exclusive selling price of
P1,000.00 and not the amount of sales net of the discount – P800.00.
SECTION 5. AVAILMENT BY ESTABLISHMENTS OF SALES DISCOUNTS
AS DEDUCTION FROM GROSS INCOME.
Establishments granting sales discounts to PWD on their sale of goods and/or services
shall be entitled to deduct the said sales discount from their gross income subject to the
following conditions:
5.1 All establishments which granted sales discounts on their sale of goods and/or
services to PWD may claim the said discount as deduction from the gross income for
the same taxable year that the discount is granted; Provided that, the name of PWD and
the PWD Identification Card (PWD ID) No. are reflected in the required record of sales
for PWD.
As expressly provided by law, the total amount of the claimed tax deduction net of VAT,
if applicable, shall be included in their gross sales receipt for tax purposes and shall be
subject to proper documentation and to the provisions of National Internal Revenue
Code (NIRC), as amended, thus if there are no name of PWD and
PWD Identification Card (PWD ID) No. in the records of sales, the sales discount
claimed as deduction by business establishments shall be disallowed.
For percentage tax payer, the amount of sales discounts shall be excluded for purposes
of computing the three percent (3%) percentage tax but shall be included as part of the
gross sales/receipts for income tax purposes. The sales discount granted shall then be
accounted as deduction from the gross income of the establishment for the same
taxable year that the discount was granted.
Computation of Discount on Non-VAT Taxpayer:
Sales/Receipts P1,120.00
Less:20% Discount 224.00
Amt. Payable by PWD/Received by
896.00
Seller
Multiply by tax rate X 3%
Percentage Tax Due P26.88
5.2 Only that portion of the gross sales exclusively used, consumed or enjoyed by the
PWD shall be eligible for the deductible sales discount;
5.3 The seller must record its sales inclusive of the discount granted, not as a reduction
of sales to arrive at net sales, but as a deduction from its gross income (sales less cost
of sales). Thus the entry to record the transaction as illustrated in Section 4 and Section
5.1 hereof in the books of the seller should be as follows:
a. VAT
Debit – Cash P800
Debit – PWD Discount
200
Expense
Credit – Sales P1,000
b. Non-VAT
Debit – Cash P896
Debit – PWD Discount
224
Expense
Credit – Sales P1,120
###
Debit – Percentage Tax Due P26.88
Credit – Tax
P26.88
Payable

5.4 The sales discount shall be treated as a necessary and ordinary expense duly
deductible from the gross income of the seller falling under the category of itemized
deductions;
5.5 The sales discounts shall not be accounted as deductible expense for taxpayers
availing the Optional Standard Deduction (OSD);
5.6 The amount of sales discount shall only be allowed as itemized deduction from
gross income for the same taxable year that the discount is granted;
5.7 The gross selling price and the sales discount must be separately indicated in the
official receipt or sales invoice issued by the establishment for the sale of goods or
services to the PWD;
5.8 Only the actual amount of the sales discount granted or a sales discount not
exceeding 20% of the gross selling price or gross receipts can be deducted from the
gross income, net of value added tax, if applicable, and shall be subject to proper
documentation under pertinent provisions of the Tax Code of 1997m as
amended; and
5.9 The business establishment giving sales discount to qualified PWD is required to
keep separate and accurate records of sales, which shall include the name of the
person with disability, PWD ID Number, gross sales/receipts, sales discount granted,
date of transactions and invoice number for every sales transaction to PWD.
SECTION 6. PROHIBITION ON AVAILMENT OF DOUBLE DISCOUNTS.

The foregoing privileges granted to PWD shall not be claimed if the said PWD claims a
higher discount as may be granted by the commercial establishment and/or under other
existing laws or in combination with other discount program/s. Thus, a PWD who is at
the same time a senior citizen can only claim one 20% discount on a particular sales
transaction.
SECTION 7. EXEMPTION FROM VALUE-ADDED TAX (VAT) ON SALE OF GOODS
OR SERVICES TO QUALIFIED PERSONS WITH DISABILITY.
7.1 Sales of any goods and services under Sections 3 of these Regulations to PWD
shall be exempt from the value-added tax. To ensure the full entitlement of the person
with disability to the discount prescribed in the Act, the sellers are precluded from
billingany VAT to the PWD.
7.2 The sale to a person with disability must follow the invoicing requirements
prescribed under Revenue Regulations (RR) No. 16-2005, as amended by RR Nos. 2-
2007 and 4-2007 and Revenue Memorandum Order No. 12-2013. If the seller uses a
Point of Sale Machine, Cash Register Machine, e-Invoicing or other receipting
software/application in lieu of the manual sales invoice, the machine/system
receipts/invoices must properly segregate the exempt sales from the taxable sales and
must follow the invoicing requirements prescribed under Revenue Regulations No. 10-
2015.
7.3 The input tax attribute to VAT exempt sale is considered as cost or an expense
account by business establishments and shall not be allowed as an input tax credit.
7.4 If there is no name of PWD and PWD ID No. indicated in the records of sales, the
input tax attributable to VAT exempt sale claimed as an expense by business
establishments shall be disallowed.
7.5 The exemption herein granted will not cover other indirect taxes that may be passed
on by the seller to a PWD buyer, such as percentage tax, excise tax, etc. In such a
case, the discount must be on the total cost of the goods or services charged by the
seller exclusive of the VAT.
SECTION 8. ADDITIONAL EXEMPTIONS OF BENEFACTORS OF
QUALIFIED PERSONS WITH DISABILITY.
8.1 Effective taxable year 2016, a Benefactor of a qualified PWD, may claim the
additional exemption of twenty-five thousand pesos (P25,000) for each PWD, if such
PWD, regardless of age, satisfies all of the following:
a. Filipino citizen;
b. within the fourth (4th) civil degree of consanguinity or affinity to the
taxpayer/benefactor;
c. not gainfully employed; and
d. chiefly dependent upon and living with the taxpayer/benefactor.
8.2 The total number of dependents (qualified dependent children and/or qualified
dependent PWD) for which additional exemptions may be claimed by the
taxpayer/benefactor shall not exceed four (4);
8.3 The additional exemptions for qualified dependent PWD shall be claimed only by
one taxpayer or by one of the spouses in the case of married individuals;
8.4 In the case of legally separated spouses, additional exemptions may be claimed
only by the spouse who has custody of the child or children or PWD: Provided, that the
number of additional exemptions that may be claimed by both shall not exceed the
maximum additional exemptions of four (4);
8.5 The Taxpayer/Benefactor of the persons with disability shall submit the following
documentary requirements to the Revenue District Office (RDO) where he is
registered in order to claim the additional exemption, for the first year of claiming the
exemption and after three (3) years or upon renewal of the PWD ID whichever comes
first:
a. Duly accomplished BIR Form No. 2305;
b. Photocopy of PWD Identification Card Issued by the Persons with Disability Affairs
Office (PDAO) or the City/Municipal Social Welfare and Development Office
(C/MSWDO) of the place where the person with disability resides or the National
Council on Disability Affairs (NCDA);
c. Sworn Declaration/Identification of Qualified Dependent PWD, Support and
Relationship (Annex A):
d. Birth Certificate of PWD;
e. Medical Certificate attesting to disability issued by in accordance with the
Implementing Rules and Regulations of R.A. 10754; and
f. Barangay Certification certifying that the PWD is living with the benefactor.8.6 The
submitted records of the PWD to the RDO must be used as reference for every taxable
year, in order to validate the claimed additional exemption for the same PWD. Such
record must be renewed by Taxpayer/Benefactor after three (3) years or upon
renewal of the PWD ID whichever comes first. In case of Employee-Benefactor, the
aforementioned documentary requirements must be submitted to the employer for
record and withholding tax purposes.
8.7 Illustrations.
No. 1: In 2016, M, CPA, is a widower who supports the following dependents living with
him:
A – Mother of deceased wife, 65 years old, unemployed;
B – Legitimate child of deceased wife with her first husband, 20 years old;
C – Legitimate child, 18 years old;
D – Legitimate new born child;
E – Brother, 24 years old, physically defective, gainfully employed
F – Nephew, 2 years old, with hearing disability, illegitimate son of his deceased sister;
G – Sister, 26 years old, widow, with speech impairment, unemployed;
H – Legitimate daughter of his widowed sister, 3 years old;
I – Foster child, 5 years old.
In October 2016, C married and G became gainfully employed.
What is M’s personal and additional exemptions for the years 2016 and 2017?
2016
Basic personal exemption: P50,000.00
Additional exemptions:
100,000.00
P25,000 x 4 (any of the ff:
C,D,F,G and I )
Total P150,000.00

M may claim additional exemptions if he cares for and supports any legitimate,
illegitimate, or legally adopted child, foster child or a PWD (regardless of age) who is
within the 4th civil degree of consanguinity or affinity to M, who is chiefly dependent
upon and living with him, and not gainfully employed.
If during the taxable year, any of the dependent children got marries or any of the
dependents became employed, M may still claim the additional exemption as if C got
married and G became gainfully employed at the close of such year1.
His mother-in-law A (a senior citizen without any disability), stepchild B, brother E and
niece H are not dependents of M for purposes of claiming additional exemptions.
Note: (1) M has five qualified dependents (C, D, F, G and I) but can only claim a
maximum of four qualified dependents.
(2) M can claim an additional exemption for his stepchild B, only if he legally adopts him.
(3) M cannot claim his mother-in-law A and brother E, a PWD, as his dependents since
his mother-in-law is a senior citizen2 without any disability and his brother is gainfully
employed.
(4) M cannot claim H, his niece, as his additional exemption.
(5) Single status also applies to those who are widowed; and the civil status of legally
separated is married, for taxation purposes.
2017
Basic personal exemption: P50,000.00
Additional exemptions:
P25,000 x 3 (D, F and I) 75,000.00
Total P125,000.00
M cannot claim anymore the additional exemption for his legitimate child C and his
sister G, who got married and became gainfully employed respectively in 2016.
No.2: X and W are husband and wife with six (6) minor children. They were legally
separated in 2015, where the custody of five (5) children were awarded by the court to
X, and one (1) child to W. W supports his brother L, who is mute, unmarried,
unemployed and living with him. What is the personal and additional exemption of X and
W in 2016?
X:
Basic personal exemption: P50,000.00
Additional exemptions:
P25,000 x 3 (3 children) 75,000.00
Total P 125,000.00
W:
Basic personal exemption: P50,000.00
Additional exemptions:
P25,000 x 1 (1 child) 25,000.00
Total P75,000.00
X is legally separated spouse with five (5) qualified dependent children in his custody.
W is also a legally separated spouse with two (2) qualified dependents in her custody, a
child and a PWD, who is within the fourth degree
of consanguinity. X can claim additional exemptions for three (3) qualified dependent
children while W can claim additional exemption for one (1) qualified dependent child.
The total amount of additional exemptions that may
be claimed by both spouses shall not exceed the maximum allowed of four (4) qualified
dependents.
No.3: Z, a CPA and Y, an employee are husband and wife with four (4) minor children.
Y supports her 14-year-old brother J, a PWD, living with them. Z claims the additional
exemptions for their four (4) children. Can Y claim for
additional exemption for her brother who is a PWD? Answer: No. The total amount of
additional exemptions that may be claimed by both spouses shall not exceed the
maximum allowed of four (4) qualified dependents.
Suppose, Z and Y have only three (3) qualified dependent children, can Y claim for
additional exemption for her brother who is a PWD?
Answer: No. Only one spouse can claim the additional exemption for qualified
dependent PWD. Z may claim the additional exemption for his brother-in-law J, who is
related within the second (2nd) civil degree of affinity to the brother of his wife.
SECTION 9. The privileges under the Act and in these Regulations available to PWD
who are Filipino citizens may only be granted upon presentation of any of the following
proof of his/her entitlement thereto:
9.1 An identification card issued by the Office of Persons with Disability Affairs (PDAO)
or the City/Municipal Social Welfare and Development Office (C/MSWDO) of the place
where the PWD resides; or
9.2 The passport of the PWD concerned with apparent disability; or
9.3 An identification Card (ID) issued by the National Council on Disability Affairs
(NCDA).
SECTION 10. PENALTIES.
10.1 Any violation of these Regulations shall be subject to the corresponding penalties
under pertinent provisions of the Tax Code of 1997, as amended, and other
applicable regulations issued by the BIR;
10.2 Further, any person who violates any provision of R.A. 10754 shall suffer the
following penalties:
10.2.1 For the first violation of any provision of the Act and these Regulations, a fine of
not less than Fifty thousand pesos (P50,000) but not exceeding One hundred thousand
pesos (P100,000) or imprisonment of not less than six
months but not more than two years, or both at the discretion of the court;
10.2.2 For any subsequent violation thereto, a fine of not less than One hundred
thousand pesos (P100,000) but not exceeding Two hundred thousand
pesos (P200,000) or imprisonment for not less than two years but not more than
six years, or both at the discretion of the court.
10.2.3 Any person who abuses the privileges granted under the Law shall be punished
with imprisonment of not less than six months or a fine of not less than Five thousand
pesos (P5,000), but not more than Fifty thousand pesos (P50,000), or both, at the
discretion of the court.
If the violator is a corporation, organization or any similar entity, the officials thereof
directly involved shall be liable therefor.
If the violator is an alien or a foreigner, he shall be deported immediately after service of
sentence without further deportation proceedings.
Upon filing of an appropriate complaint, and after due notice and hearing, the proper
authorities may also cause the cancellation or revocation of the business permit, permit
to operate, franchise and other similar privileges granted to any business entity that fails
to abide by the provisions of the Act and these Regulations.
SECTION 11. SEPARABILITY CLAUSE
If any portion or provisions of these Regulations is declared unlawful, the remainder of
these Regulations or any provisions not affected thereby shall remain in force and
effect.
SECTION 12. REPEALING CLAUSE
All revenue regulations and other revenue issuances or parts thereof inconsistent with
the provisions of these Regulations are hereby repealed or modified accordingly.
SECTION 13. EFFECTIVITY
These Regulations shall take effect fifteen (15 days) after publication in the Official
Gazette or in any two newspapers of general circulation, whichever comes earlier.
CARLOS G. DOMINGUEZ III
Secretary of Finance
Recommending Approval:
CAESAR R. DULAY
Commissioner of Internal Revenue