Title R.A. 7432 R.A. 9257 – Expanded R.A.

9994 - Expanded
Senior Citizens Act of Senior Citizens Act of
2003 2010
Definition of Terms 1. Senior Citizen – 1. Senior Citizen – 1. Senior Citizen –
Any resident of the Any **resident Same as R.A. 9257
Philippines at least citizen of the 2. *Nearest Surviving
60 years old Philippines at least Relative – legal
60 years old spouse who survives
the deceased senior
citizen; if there is no
spouse, the limited
relatives should be in
the following order
of degree of kinship:
children, parents,
siblings,
grandparents,
grandchildren, uncles,
and aunts.
3. *Indigent Senior
Citizen – any elderly
who is frail, sickly, or
with disability, and
without pension or
permanent source of
income or financial
assistance from
his/her relatives to
support his/her basic
needs.

Privileges 1. 20% discount 1. 20% discount 1. 20% discount –

1.1. Transportation 1.1. Transportation same list as R.A.
Services Services 9257 but with *VAT
(domestic; air, (domestic; air, Exemption
sea, land) sea, land) 2. 5% discount
1.2. Hotels and 1.2. Hotels and 2.1. Basic necessities
similar lodging similar lodging and prime
establishments establishments commodities
1.3. Admission fees (including 2.2. *Utility discount
on theaters, *funeral and 2.2.1. Water –
cinema, circus, burial monthly
concerts, and services) consumption
etc. 1.3. Admission fees does not
1.4. Purchase of on theaters, exceed 30
medicines cinema, circus, cubic meters
 2. Other Privileges concerts, and 2.2.2. Electricity –
2.1. Exempt from etc. monthly
payment of 1.4. Purchase of consumption
income tax medicines does not
(MWE) 1.5. *Medical and exceed 100
2.2. Exempt from dental services kWh
training fees of including 2.2.3. Individual
socioeconomic professional of meter should
programs attending be registered
2.3. Free medical doctors in the name
and dental (private of the Senior
services (gov’t) hospitals and Citizen
2.4. Continuance of med facilities) 2.2.4. Granted per
GSIS, SSS, 2. *5% discount household
and PAG-IBIG 2.1. Basic regardless of
benefits. necessities and number of
prime senior citizen
commodities residing
3. Other Privileges therein
3.1. Exempt from 3. Other Privileges –
payment of Same list with R.A.
income tax 9257 but with
(MWE) additional provisions
3.2. Exempt from below
training fees of 3.1. *Free
socioeconomic vaccination
programs against the
3.3. Free medical influenza virus
and dental and
services (gov’t) pneumococcal
3.4. Continuance of disease for
GSIS, SSS, indigent senior
and PAG-IBIG citizen patients
benefits. 3.2. *Death benefit
3.5. *Educational assistance of a
Assistance minimum of Two
3.6. *Retirement thousand pesos
benefits (Php2, 000.00)
shall be given to
the nearest
surviving
relative
Private May claim it as tax **May claim it as May claim it as tax
establishments credit tax deduction deduction (itemized)
granting discounts (itemized)
Government 1. *Employment –
1. Senior Citizen shall Same list with R.A.
Assistance be treated as 15% additional 9257 but with
dependents for the deduction to private *Additional
individual caring for establishment Government
them employing senior Assistance below
2. Incentive for foster citizen 1. Social Pension -
care 2. *Education – Indigent senior
2.1. Realty tax DepEd, TESDA, citizens shall be
holiday for the CHED entitled to a monthly
first five (5)3. *Health – stipend amounting to
years starting integrated health Five hundred pesos
from the first service for Senior (Php500.00). (review
year of Citizens every 2 years by the
operations 4. *Social Services Congress)
2.2. Priority in the 4.1. Self and social 2. Mandatory PhilHealth
building and/or enhancement Coverage
maintenance of services 3. Social Safety Nets -
provincial or 4.2. After care and Social safety
municipal follow up assistance intended
roads leading services to cushion the effects
to the aforesaid 4.3. Neighborhood of economics shocks,
home support disasters and
services calamities shall be
4.4. Substitute available for senior
family care citizens.
4.5. Grant of 50%
discount for
consumption of
electricity,
water and
telephone by
senior citizens
center.
5. *Housing –
establishment of
housing units
6. Incentive to foster
care – same with
R.A. 7432
Penalties Imprisonment of 1. **First Violation 1. First Violation
not exceeding 1.1. Fine of not 1.1. Fine of not less
one (1) month or a less than than P50,000 but
fine not P50,000 but not exceeding
exceeding One not exceeding P100,000 and
thousand pesos P100,000 and 1.2. **Imprisonment of
not less than 2
 (P1,000.00) or 1.2. Imprisonment years but not
both. of not less more than 6
than 6 months years
but not more 2. Subsequent Violation
than 2 years 2.1. Fine of not less
2. **Subsequent than P100,000
Violation but not
2.1. Fine of not exceeding
less than P200,000 and
P100,000 but 2.2. Imprisonment of
not exceeding not less than 2
P200,000 and years but not
2.2. Imprisonment more than 6
of not less years
than 2 years 3. Any person who
but not more abuses the privilege
than 6 years 3.1. **Fine of not less
3. Any person who than P50,000 but
abuses the not more than
privilege P100,000 and
3.1. Fine of not 3.2. Imprisonment of
less than not less than 6
P5,000 but not months
more than
P50,000 and
3.2. Imprisonment
of not less
than 6 months

LEGEND:
* - Additional Provisions
** - Amendments
 Senior Citizens or Elderly-
o Is a Filipino citizen and resident citizen of the Philippines
o At least 60 years of age
o May pertain to senior citizen who is a holder of “dual citizenship” provided
that they provide evidence of residency and have at least six (6) months
residency in the Philippines
 Income Tax for Senior Citizens
o General Rule: Qualified Senior Citizens deriving returnable income
within the taxable year, whether from compensation or otherwise, must file
their income tax return (ITR) and pay the appropriate taxes.
 Exceptions:
 a.) If the returnable income of the Senior Citizen is purely from
compensation and otherwise falls within the category of
Minimum Wage Earners under RA 9504, he shall be exempt
from income tax on the said compensation income subject to
the Revenue Regulation applicable to Senior Citizens
 b.) If the aggregate returnable income of the Senior Citizen
does not exceed his personal exemptions (basic and
additional) likewise, he shall be exempt from income tax and
shall not be required to file his income tax return.
 Availment of Income Taxes for Senior Citizens
o A Senior Citizen must first be qualified as such by the CIR or his duly
authorized representative (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
o He 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
o If qualified, his name shall be recorded by the RDO in the Master List of
Tax‐Exempt Senior Citizens
 Other taxes still liable:
 20% FWT on interest income from currency deposits.
 20% FWT on prizes and winnings above 10,000.
 15% FWT on interest income from depository bank under
expanded foreign currency deposit system, trust funds,
deposit substitutes and other similar arrangements.
 6% CGT on sale of shares not traded in the local stock
exchange market
  20& FWT on royalties except books and other literary works
and musical composition which shall be imposed of 10%
FWT.
 10% FWT-
o On cash or property dividends from a domestic
corporation or from join stock company
o Share in the distributable net income of the partnership
except GPPs of which he is a partner.
o On share in the net income of after tax of an
association, joint venture, or consortium taxable as a
corporation of which he is a venturer
 6% CGT on capital gains from sale of real property classified
as capital assets except capital gains realized from sale of
principal residence.
 On full amount of deposits, trust funds, investments and the
like prescribed by the BSP, pre terminated before the 5th year
shall be imposed the appropriate taxes as follows:
o 4 years to less than 5 years - 5%
o 3 years to less than 4 years- 12%
o Less than 3 years- 20%
 VAT and percentage taxes- self-employed having an annual
gross sales/ receipts exceeding 1,500,000 liable to VAT,
otherwise 3% percentage tax
 Donor’s tax unless exempt by specific provision of law
 Estate taxes
 Excise tax
 Documentary stamp tax
 VAT Exemption Treatment
o Sales of any goods and services under Sections 4 and 5 of RR-07 to Senior
Citizens shall be exempt from VAT.
o Exempt Sales must be properly segregated from the taxable sales
o The input tax attributable to the exempt sale shall not be allowed as an input
tax credit and must be closed to cost or expense account by the seller.
o Only VAT shall be excluded from the total cost of goods or services, in
such cases where other indirect taxes that may passed to seller are
involved such as excise taxes, these taxes shall be included in the total
cost of goods or services
 Privileges
o 20% Discount and VAT exempt on goods as follows:
 Purchase of medicine (there should be a prescription of a doctor)
  Professional fees of attending physician in all private hospitals,
medical facilities, outpatient clinic and home health care services.
 Professional fees of licensed professional health providing home
health care services as endorsed by private hospitals or employed
through home health care employment agencies
 Medical and Dental services (private establishments)
 Actual fare for land transportation travel
 Actual transportation fare for domestic air transport services and sea
shipping vessels and the like (should be paid by senior citizen)
 Utilization of services in hotels and similar lodging establishments,
restaurants, and recreation centers
 FOR RESTAURANTS THE FOLLOWING MUST BE
OBSERVED:
o Dine in services- discount must be availed of
personally by the senior citizens, no proxies or
authorization in favor other person
o Discount is only for exclusive enjoyment of senior
citizens, hence not applicable to pre contracted party
packages and bulk orders as well as for “children
meals”
o Any purchase by the senior citizen must be accounted
for separately from his non eligible companions.
o If consists of qualified senior citizens, all presented
OSCA ID, each shall be entitled to said discount
o Discount is available also to take out/ take home/ drive
thru, provided that the Senior Citizen is present and
personally orders, presenting valid OSCA ID
o For delivery orders, senior citizen must give ID number
over telephone and present ID upon receipt of delivery
o Most expensive combination meals is also allowed for
discount provided that the establishment will adjust is
accordingly to the consumption of Senior Citizen
- Most expensive combination meal- most
expensive and biggest single serving meal with
beverage
 Admission fees on theaters, concert halls, circuses, leisure and
amusement
 For Cinema ticket discounts
o Depending on local government
o Minimum of 20% discount
 Funeral and burial services for the death of senior citizens
o 5% Discount on monthly utilization of electricity and water supply.
 PROVIDED:
  Individual meters for said utilities is registered in the name of
the Senior Citizen
 Monthly consumption does not exceed 100 kWh of electricity
and 30 m^3 in water.
 Only granted per household regardless of the number of
senior citizen residing therein.
o 50% discount on utilities such as water, electricity and telephone for Senior
Citizen Centers or Institution organized for care of neglected, abandoned,
sick and the like Senior Citizens by nonprofit non stock domestic corporation
subject to the guidelines applied by DSWD. (should be operating more than
6 months)
***For other transactions, senior citizens are still liable for VAT***
 Requirements to Avail SC discount
o 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;
o The passport of the senior citizen concerned; and
o Other documents that establish that the senior citizen is a citizen of the
Republic and is at least sixty (60) years of age as further provided in the
implementing rules and regulations.
 Tax Treatment for Discounts granted to Senior Citizens
o May claim the discounts granted as a tax deduction based on the cost of
the goods sold or services
o The selling price to be charged by the seller must be net of VAT because
the sale to Senior Citizens is exempt from VAT
o The income statement of the seller must reflect the discount, not as a
reduction of sales to arrive at net sales, but as a deduction from its gross
income
 Benefit for the establishment offering discounts to Senior Citizen:
o Qualified establishment may claim the discounts granted to the Senior
Citizen as a tax deduction for the taxable year where discounts are granted.
 PROVIDED:
 Discounts furnished shall be treated as an ordinary and
necessary expense deductible to its gross income
 Only applicable to establishment employing Itemized
Deductions and are disallowed for those employing OSD for
the quarter/taxable year.
o Requisites for deductibility of Senior Citizen Discount:
  Only the portion of gross sales exclusively used, enjoyed, or
consumed by the Senior Citizen shall be eligible for the deductible
sales discount
 Gross selling price and sales discount must be separately indicated
in the Official Receipt and/ or Sales Invoice for the sale of goods and
services to Senior Citizen
 The seller must record its sales inclusive of the discount granted
 The discount can only be allowed as a deduction on the taxable year
when the discount is granted.
 Only the actual amount of the discount granted or a sales discount
not less than the statutory rate (20%, 5% or 50% when applicable),
whichever is higher, based on the gross selling price can be
deducted from the gross income, net of value added tax, if
applicable, for income tax purposes, and from gross sales or gross
receipts of the business enterprise concerned, for VAT or other
percentage tax purposes.
 The business establishment giving sales discounts to qualified
Senior Citizens is required to keep a separate and accurate record
of sales, which shall include the
o Name of the Senior Citizen,
o OSCA ID,
o Gross sales/receipts,
o Sales discount granted,
o Dates of transactions and
o Invoice numbers for every sale transaction to Senior
Citizen.
 Other exclusion from the gross income of establishments for compensation
paid to senior citizens
o Private establishments employing senior citizens are entitled to additional
5% deduction from its gross income equivalent to the total amount paid as
salaries to senior citizens.
 PROVIDED:
 Employment must be at least 6 months in time
 The annual taxable income of the Senior Citizen does not
exceed the poverty level as may be determined by the NEDA
thru the NSCB.
o The senior citizen must submit to his/her employer-
sworn statement that his annual taxable income does
not exceed the poverty level.
Cases:

1. A group of Ten consist of 5 senior citizens and 5 non-senior citizen went to a restaurant and
ordered a group meal worth P5,000. How should the discount be granted?

- To compute for the 20% discount and exemption from VAT, this formula shall be use:

*it should be noted that the total billing amount in the computation of 20% discount is the
amount exclusive of VAT.

ADDITIONAL INFORMATION:

 If they ordered 3 extra rice worth P100 and a gravy worth P50. How will be the
treatment for the additional orders?

- Condiments and side products shall be covered by the senior citizen discount and VAT
exemption.

 If all of them are Senior Citizen and each of them have valid ID card, then the entire
food purchase or the group meal shall be entitled to a 20% discount and VAT
exemption.

2. Melania, Carmelita and Francia , who are all senior citizens, purchased 1 family pizza, 1 whole
cake and a bucket of beer for their get together. What is the rule on the purchase of pizza,
cake and beer?

- Family pizza and whole cake is considered a “group meal”. Since they are all senior
citizen, they shall be entitled to the 20% discount and VAT exemption.

- Alcoholic beverages are not subject to the 20% discount and VAT exemption
especially if purchased “in bucket”. However, if served as a single serving drink, its
purchase by a senior citizen is entitled to the 20% discount and VAT exemption.

3. Joselito, a senior citizen, purchased a box of milk candy in a pasalubong store in Cagayan. Is
he entitled to the 20% discount and VAT exemption?

-No, because box of milk candy is not for the personal and exclusive consumption of
Joselito. However, if he purchased solo pack of milk candy, then he is entitled to the
discount because it is for his personal and exclusive consumption.
 4. Suppose Mr. H, a senior citizen, bought his medicine in a grocery store, will he still be able to
avail the Senior Citizen Discount and VAT Exemption?

-Yes. The 20% discount and VAT exemption privilege shall also apply to medicines
purchased from drug stores, hospital pharmacies, medical and optical clinics and similar
establishments including non-traditional outlets dispensing medicines.

Special Discount on Basic Commodities

-A special discount of five percent (5%) of the regular retail price of basic necessities and prime
commodities

- According to R.A. No. 7581, The Price Act, "Basic necessities" includes: rice; corn; bread; fresh, dried and
canned fish and other marine products, fresh pork, beef and poultry meal; fresh eggs; fresh and processed
milk; fresh vegetables; root crops; coffee; sugar; cooking oil; salt; laundry soap; detergents; firewood;
charcoal; candles; and drugs classified as essential by the Department of Health;

Case:

1. Mr. A, a senior citizen, went to buy basic necessities in a grocery store. Will he be able to claim
exemption from VAT?

-No. Purchases of basic necessities and prime commodities by Senior Citizens are NOT
exempt from VAT.

ADDITIONAL INFORMATION:

-Toiletries such as toothpaste, bath soap, and tissue papers are NOT entitled to 5% special
discount. Only the items listed under RA No. 7581 or the Price Act are identified as prime
commodities and basic necessities entitled to the 5% special discount.

-However, powdered, liquid, bar laundry and detergent soap are considered basic
necessities subject to 5% special discount.