As a sports fan, I empathize with our athletes and coaches, who have spent a considerable amount of time preparing for the 2020 Summer Olympics, only for the Games to be postponed due to the pandemic. Nonetheless, these efforts do not go unnoticed. The state recognizes the invaluable contributions of athletes and coaches in bringing honor to our country by providing them with much-deserved privileges. With the Games now rescheduled to commence on July 23, it is an opportune time to recall Republic Act (RA) No. 10699 or the National Athletes, Coaches, and Trainers Benefits and Incentives Act. Signed into law on Nov. 13, 2015, RA 10699 provides a 20% discount to national athletes and coaches on their purchases of goods and services from various establishments.
While the Implementing Rules and Regulations (IRR) of this law mention the scope and qualifying conditions of the discount, some business establishments are reluctant to grant the privilege due to lack of clear-cut guidelines on their tax treatment. To address these misgivings, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 13-2020, which comprehensively discusses the rules on granting the discount and the corresponding tax treatment from the perspective of business establishments.
Among the prerequisites for availing of the discount, the RR requires national athletes and coaches to be recognized and accredited by the Philippine Sports Commission (PSC) and the Philippine Olympic Committee (POC), including athletes with disabilities (AWD) who have represented the country in international sports competitions. They must then secure a Philippine National Sports Team Identification Card (PNST ID) and booklet from the PSC for presentation to business establishments.
Section 4 of the RR enumerates the goods and services that are entitled to the 20% discount, which are limited to those for the actual and exclusive use of the qualified national athletes and coaches. Services include transportation (i.e., land transportation including PUBs, PUJs, taxis and TNVS; domestic air and sea fares, including baggage allowance), accommodation (e.g., hotels, resorts and other lodgings), food (i.e., dine-in, take-out, and delivery, subject to conditions), as well as recreation (e.g., fees for use of sports facilities and equipment, admission fees for theaters, amusement parks, etc.). Stock, non-profit, and exclusive sports and country clubs are not required to grant the discount.
On the other hand, goods covered by the discount include medicine (including vaccines, vitamins and mineral supplements) and sports equipment such as balls, racquets, nets, footwear, protective and training equipment). The athlete/coach will need an endorsement from the appropriate National Sports Association to avail of the discount on sports equipment.
The 20% discount is computed based on the VAT-exclusive sales price, if the establishment is VAT-registered, and based on the gross selling price for non-VAT establishments. Moreover, the discount only applies to the amount of the sales attributable to the goods or services that are for the actual and exclusive use or enjoyment of the qualified athlete or coach. The illustration below provides how to compute the discounts for a VAT and non-VAT enterprise.
Business establishments granting the discounts may claim them as a deduction for income tax purposes, subject to proper substantiation requirements under the RR and the Tax Code. However, just like any other expense deduction, taxpayers who opt for the Optional Standard Deduction or the 8% income tax cannot claim it as a deduction.
Effectively, while labeled a “discount,” it is more akin to an “expense” incurred by the business establishments; thus, such discount would not be deducted from the gross selling price/gross receipts for purposes of computing VAT and the 3% percentage tax. While not expressly mentioned in the RR, the input tax arising from the purchases of the vendors related to the discounted sales should be creditable against any output tax of VAT-registered vendors since these are not VAT-exempt, unlike discounted sales to senior citizens and persons with disabilities (PWDs).
If the AWD also has a PWD ID, the AWD can use either the 20% discount under RA 10699 or under RA 10754 as a PWD. While the AWD can enjoy the privileges under both laws, they cannot avail of the 20% discounts conjunctively.
As a requirement under the RR, business establishments granting the discount must keep a record of sales to national athletes and coaches, consisting of the name, PNST ID number, date of transaction, gross sales/receipts, discount granted, and invoice number of every transaction. Failure to maintain these required records may be grounds for disallowance by the BIR of the discounts claimed as deductions for income tax purposes.
To manage potential abuse by athletes, trainers, or business establishments, the RR penalizes violators with fines and/or imprisonment upon the court’s discretion.
As the country’s torchbearers in the international arena, our national athletes and trainers deserve more than the applause, accolades, and medals they earn. They, who put their heart and soul into the games, certainly deserve more. For now, the least that business establishments can do is to recognize and implement RA 10699 effectively. Perhaps, in better days, legislation will expand the benefit further given their patriotic contributions.
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.
Carl Noah Luis A. Javier is an Associate at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
+63 (2) 8845-2728
carl.n.luis.javier@pwc.com
