Magna Carta for Disabled

Persons
Topic 3
 Relevant Laws Issued for PWDs
• RA #7277 approved by President Corazon Aquino on March 24, 1992
• RA #9442 approved by President Gloria Arroyo on April 30, 2007
• RA #10754 approved by President Benigno Aquino III on March 23,
2016
Revenue Regulations No. 5-2017
 Scope
• Tax privileges of persons with disability and their benefactor
• Tax incentives for establishments granting 20% sales discount and
exemption from VAT
 Person with Disability (PWD)
- Those who have 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
 Disability
- 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
- Being regarded as having such an impairment
Benefactor
- A Filipino citizen or resident alien, caring for, giving chief support and
living with the PWD, who is in the 4th civil degree of consanguinity or
affinity claiming such PWD as dependent
 PWD – Dependent
- Filipino citizen who is a PWD, whether minor or of legal age, related
to the benefactor within the 4th civil degree of consanguinity or
affinity, not gainfully employed and who is living with and chiefly
dependent upon the benefactor for his/her support
 Sales discount
- The actual 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
 Establishment
- Any entity, public or private, duly licensed and/or authorized by the
national government agencies or by the local government units to
operate
 Sales discounts for PWDs
- Qualified PWD shall be entitled to claim at least 20% discount from
selected establishments on goods and services for their exclusive use,
enjoyment or availment
Establishments required to give 20% discount
to PWDs
1. Hotels and similar lodging establishments; restaurants and
recreation centers
2. Theaters, cinema houses, concert halls, circuses, carnivals and other
similar places of culture, leisure and amusement
3. All drugstores regarding purchase of generic and branded medicine
Establishments required to give 20% discount
to PWDs…(continued)
4. Medical and dental services including diagnostic and laboratory fees
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 PhilHealth
Establishments required to give 20% discount
to PWDs…(continued)
5. Domestic air and sea transportation based on the actual fare. For
promotional fares, the PWD can avail of the establishment’s offered
discount or the 20% discount, whichever is higher and more favorable
6. Land transportation privileges based on the actual fare of public
utility buses, jeepneys, taxis, Asian Utility Vehicles, shuttle services ,
LRT, MRT, PNR and such other similar infrastructure that will be
constructed, established and operated by public or private entity
Establishments required to give 20% discount
to PWDs…(continued)
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 upon
presentation of the death certificate and PWD ID or in its absence, the
original or certified true copy of the proof of registration from the
issuing local government unit. Covered by the discount are the
purchase of casket or urn, embalming, hospital morgue & transport of
the body to intended burial site in the place. Costs of obituary
publication and memorial lot are not covered by the discount
 Not considered for the 20% discount
- All other goods and services sold by the foregoing establishments not
included in those expressly mentioned in the list SHALL NOT be
considered for the 20% discount privilege notwithstanding that the
same are for the exclusive use, enjoyment or availment of the PWD.
 Computation of the discount & VAT
exemption
VAT on sale of goods or services with sales discounts granted by business
establishments shall be computed in this manner:
Amount of sale (with VAT) P1,120
Less: 12% VAT 120
Sale, net of VAT P1,000
Less: 20% Sales Discount 200
Total amount due P 800
Entry:
Cash 800
PWD Discount expense 200
Sales 1000
 Computation of the discount & VAT
exemption…(continued)
• The P200 discount in the foregoing computation 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 shall be included in their gross sales or receipts for tax purposes
& shall be subject to proper documentation
• In the foregoing example, the amount of sales that must be reported
for income tax purposes is the VAT-exclusive selling price of P1,000
and not the net amount due of P800
 Availment by establishments of sales
discounts as deduction from gross income
Establishments granting sales discounts to PWD on their sale of goods
or services shall be entitled to deduct the sales discount from their
gross income in the same year that the discount was granted subject to
these conditions:
1. The name of PWD & the PWD ID are reflected in the required
record of sales to PWD.
2. For percentage taxpayers, the amount of sales discounts shall be
excluded for purposes of computing the 3% percentage tax but shall
be included as part of the gross sales/receipts for income tax
purposes.
 Availment by establishments of sales discounts as deduction from
gross income…(continued)
Computation of Discount on Non-VAT Taxpayer:
Sales/Receipts P1,120.00
Less: 20% Discount 224.00
Amount payable by PWD P 896.00
Multiply by tax rate x 3%
Percentage tax P 26.88
Entries:
Cash 896
PWD Discount Expense 224
Sales 1120
#
Percentage tax expense 26.88
Percentage tax payable 26.88

Sales must be recorded inclusive of the discount granted NOT as a reduction from
sales to arrive at net sales. PWD discount is part of deductions from gross income.
Availment by establishments of sales discounts as
deduction from gross income…(continued)
3. Only that portion of the gross sales exclusively used, consumed or
enjoyed by the PWD shall be eligible for the deductible sales discount

4. The sales discount shall be treated as a necessary & ordinary

expense deductible from gross income as part of itemized deductions.

5. The sales discount shall not be a deductible expense for taxpayers

availing of OSD.
Availment by establishments of sales discounts as
deduction from gross income…(continued)
6. The PWD discount shall only be allowed as itemized deduction from
gross income for the same taxable year the discount is granted

7. The gross selling price & PWD discount must be separately indicated
in the official receipt/invoice

8. Only the actual amount of the sales discount granted or a sales

discount not exceeding 20% of gross selling price/receipts can be
deducted from gross income, net of VAT.
Availment by establishments of sales discounts as
deduction from gross income…(continued)
9. The establishment giving sales discount to qualified PWD is required
to keep separate & 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 transaction and invoice
number for every sales transaction to PWD.
 Prohibition on availment of double discounts
• The 20% PWD discount shall not be claimed if the said PWD claims a
higher discount as may be granted by the establishment or under
other existing laws or in combination with other discount programs.
Thus, a PWD who is also a senior citizen can only claim one 20%
discount on a particular sales transaction
 Exemption from VAT on sale of goods or
services to qualified persons with disability
• Sales of any goods and services by covered establishments shall be
exempt from the VAT, thus covered sellers are precluded from billing
any VAT to the PWD
• The sale to PWDs must follow invoicing requirements prescribed
under existing regulations
• The input tax attributable to VAT exempt sale is considered as cost or
an expense account by business establishments & shall not be
allowed as an input tax credit
 Exemption from VAT on sale of goods or services
to qualified persons with disability…(continued)
• If there is no name of PWD and PWD ID indicated in the record of
sales, the input tax attributable to VAT exempt sale claimed as an
expense shall be disallowed
• 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 and excise tax
 Additional exemptions of benefactors of
qualified persons with disability
• Effective year 2016, a benefactor of a qualified PWD, may claim the
additional exemption of P25,000 for each PWD, if such PWD,
regardless of age, satisfies all of the following:
a. Filipino citizen
b. Within 4th degree of consanguinity or affinity to the taxpayer
c. Not gainfully employed
d. Chiefly dependent upon & living w/taxpayer or benefactor

Repealed by TRAIN Law

For sellers to grant discount & VAT exemption,
PWD buyer must present:
1. An ID issued by the Office of Persons w/ Disability Affairs (PDAO)
2. Passport of the PWD with apparent disability
3. ID issued by the National Council on Disability Affairs (NCDA)
 Penalties
• First offense: fine of not less than P50,000 but not exceeding
P100,000 or imprisonment of not less than 6 months but not more
than 2 years or both at the discretion of the court
• Subsequent offense: fine of not less than P100,000 but not exceeding
P200,000 or imprisonment for not less than 2 years but not more
than 6 years or both at the discretion of the court
 Penalties…(continued)
• Any person who abuses the privileges granted under the law shall be
punished with imprisonment of not less than 6 months or a fine of
not less than P5,000, but not more than P50,000, or both at the
discretion of the court
• If violator is a corporation, organization or any similar entity, the
officials thereof directly involved shall be liable therefor
• If the violator is an alien, he shall be deported immediately after
service of sentence without further deportation proceedings.
 Penalties…(continued)
• 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 law.
Revenue Regulations 9-2019
 Additional Terms
Basic Necessities – goods vital to the needs of consumers for their
sustenance and existence. These include:
Fresh & processed milk (excluding
All kinds & variants of rice milk labeled as food supplement) Salt
Corn Fresh vegetables including root Powdered, liquid, bar laundry and
crops detergent soap
All kinds of bread (pastries & cakes
not included) Fresh fruits Firewood
Fresh, frozen dried & canned fish Locally manufactured instant
& other marine products noodles Charcoal
Fresh pork, beef & poultry meat Coffee and coffee creamer All kinds of candles
All kinds of fresh eggs (excluding All kinds of sugar (excluding Household LPG, not more than 11
quail eggs) sweetener) kilos, once every 5 months
Potable water in Kerosene, not more than 2 liters
bottles/containers All kinds of cooking oil per month
 Additional Terms
Prime commodities – are goods not considered as basic necessities but
are essential to consumers. These include
Flour Herbicides Plywood
Dried, processed & canned pork, Poultry feeds, livestock feeds &
beef & poultry meat fishery feeds Plyboard
Dairy products not falling under Batteries (excluding cellphone and
the definition of basic necessities Veterinary products automotive batteries)
Onions and garlic Paper, school supplies Construction nails
Vinegar, patis and soy sauce Nipa shingle Electrical supplies and light bulbs
Toilet/Bath Soap Sawali Steel wires
Fertilizer Cement, clinker, GI sheets
Pesticides Hollow blocks
 Additional PWD Privilege
• Every PWD shall enjoy a special discount of 5% of the regular retail
price, without exemption from VAT of basic necessities and prime
commodities
• Total amount of purchase shall not exceed P1,300 per calendar week
without carry-over of unused amount
• Amount shall be spent on basic necessities and prime commodities
commensurate to his personal exclusive consumption and enjoyment
within the calendar week
• Amount shall be spent on at least 4 kinds of items listed as basic
necessities and prime commodities
 Relevant Tax provisions in RA 7277 not
covered by the Revenue Regulations
• Private entities that employ disabled persons who meet the required
skills or qualifications, either as regular employee, apprentice or
learner, shall be entitled to an additional deduction from their gross
income equivalent to 25% of the total amount paid as salaries and
wages to disabled persons
Conditions:
1. Employers must present proof as certified by DOLE that disabled
persons are under their employ
2. The disabled employees are accredited by DOLE & DOH as to his
disability, skills and qualifications
Relevant Tax provisions in RA 7277 not covered by
the Revenue Regulations…(continued)
• Private entities that improve or modify their physical facilities in order
to provide reasonable accommodation for disabled persons shall also
be entitled to an additional deduction from their net taxable income,
equivalent to 50% of the direct costs of the improvements or
modifications
End