Taxwise Or Otherwise
By Patricia Loren C. Roma
Persons with Disability (PWDs) have persistently expressed their need for inclusion and to be given equal footing in society. Recognizing the Constitutional mandate to protect their rights, the government enacted Republic Act (RA) Nos. 9442 and 10754, also known as The Magna Carta for Persons with Disability and An Act Expanding the Benefits and Privileges of Persons with Disability (PWD). The main objectives of these laws are to provide PWDs with the opportunity to participate in mainstream society and to support their total well-being.
Under the Magna Carta for PWDs, the government may grant special discounts for PWDs to cover their basic necessities. In line with this, the government issued the Joint DTI-DA-DoE Administrative Order No. 17-01, series of 2017 in February 2017, granting PWDs a special discount of 5% off the regular retail price of the basic necessities and prime commodities as defined in the Price Act, but without exemption from the value-added tax (VAT).
The total purchases of basic necessities and prime commodities should not exceed P1,300 per calendar week without carry-over of the unused amount and the amount needs to be spent on at least four kinds of listed necessities and commodities commensurate to the personal and exclusive consumption of the PWD within the calendar week.
As defined in The Price Act (Republic Act No. 7581, as amended by RA 10623 in 2013), basic necessities are goods vital to the needs of consumers for their sustenance and existence, while prime commodities are goods considered essential to consumers.
Basic necessities include rice, corn, bread, fish and other marine products, fresh meat products, eggs, potable water in bottles and container, milk (excluding those labeled as food supplements), fresh fruits and vegetables, locally-manufactured instant noodles, coffee and creamer, sugar (excluding sweeteners), cooking oil, salt, laundry soap, firewood, candles, charcoal, kerosene and liquefied petroleum gas in specified amounts.
Prime commodities include flour, processed meat products, onions, garlic, vinegar, patis (fish sauce), soy sauce, bath soap, fertilizer, pesticides, herbicide, animal feed, veterinary products, school supplies, nipa shingles, cement, clinker, GI sheets, hollow blocks, plywood, plyboard, construction nails, electrical supplies, steel wire, and batteries (excluding mobile phone and automotive batteries).
Although the 5% special discount has been in place since 2017, not many may be aware of this additional incentive for PWDs. On this note, many will welcome the issuance of Revenue Regulations (RR) No. 9-2019, which reiterates all the above guidelines, and integrates all existing policies on PWD benefits, granted by agencies of the government, for the guidance of its stakeholders.
This RR supplements RR No. 5-2017 issued by the Bureau of Internal Revenue (BIR) on April 2017 implementing RA 10754. Although this recent RR took effect only on Sept. 12, 2019, the special discount should have already been available back in 2017 when the Joint Administrative Order became effective.
In granting the 5% special discount, business establishments assume the responsibility of correctly identifying if their inventory qualifies as either necessities or commodities, which are eligible for the discount. The Tax Code and previous BIR guidelines have clarified that those granting discounts are required to keep separate and accurate records of sales to PWDs. Otherwise, the sales discount may be disallowed as a deduction for income tax purposes.
Moreover, the 5% special discount on basic necessities and prime commodities should not be confused with the 20% discount applicable to select purchase of goods and services by PWDs such as medicine, food service at restaurants and travel expenses. One main distinction is that only goods and services covered by the 20% discount comes with absolute VAT exemption. On the other hand, the goods covered by the 5% special discount will only be VAT-exempt if they are agricultural and marine food products in their original state pursuant to Section 109 of the Tax Code.
Needless to say, a senior citizen who is also incidentally a PWD would not be entitled to cumulative benefits. They can only claim the special discount as a PWD or as a senior citizen, not both.
Overall, the 5% special discount is undoubtedly favorable to PWDs since the enumerated goods are used and consumed in every Filipino household. For their part, business establishments are reminded of their legal and social responsibility to give what is due, hopefully without PWDs having to demand the enjoyment of their rights.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
Patricia Loren C. Roma is a senior consultant at the Tax Services Department of Isla Lipana & Co., a Philippine member firm of the PwC network.
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