SPECIAL LAWS

RELATING TO INCOME
TAXATION
• Senior’s Citizen Law (RA 7432)
• Magna Carta for Disabled Persons (RA 7277)
• Barangay Micro Business Enterprises (BMBE’s) Act
(RA 9178)
 SENIOR’S CITIZEN LAW (RA 7432)
AN ACT TO MAXIMIZE THE CONTRIBUTION OF SENIOR CITIZENS TO
NATION BUILDING, GRANT BENEFITS AND SPECIAL PRIVILEGES AND FOR
OTHER PURPOSES.

SECTION 1. Declaration of Policies and Objectives – Pursuant to Article XV, Section 4

of the Constitution, 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.
 POLICIES OF THIS ACT

A.) To motivate and encourage the senior citizens to contribute to nation building;
B.) To encourage their families and communities they live with to reaffirm the
valued Filipino tradition of caring for the senior citizens.

In accordance with these policies, this act aims to:

1.) Establish mechanism whereby the contribution 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 that they serve.
 Sec. 3. INCOME TAX BENEFIT AND PRIVILEGES FOR THE SENIOR
CITIZENS
a) Exemption from the payment of individual income tax provided that their annual
taxable income does not exceed the poverty level of P60,000.00 or such amount as
may be determined by the NEDA for a certain taxable year.
b) A 20% discount from all establishments relative to utilization of transportation
services, hotels and similar lodging establishments, restaurants and recreation center,
and on purchases of medicine anywhere in the country.
c) A minimum of twenty percent (20%) discount on admission fees charged by theaters,
cinema houses and concert halls, circuses, carnivals and other similar places of
culture, leisure, and amusement
 Sec. 4. RECORDING/BOOKKEEPING REQUIREMENTS FOR PRIVATE
ESTABLISHMENTS
Private establishments, i.e., transport services, hotels and similar lodging establishments,
restaurants, recreation centers, drugstores, theaters, cinema houses, concert halls, circuses,
carnivals and other similar places of culture leisure and amusement, giving 20% discounts
to qualified senior citizens are required to keep separate and accurate record of sales made
to senior citizens, which shall include the name, identification number, gross
sales/receipts, discounts, dates of transactions and invoice number for every transaction.
 Sec. 5. AVAILMENT OF INCOME TAX EXEMPTION
A. Certified true copy of his Birth Certificate/Baptismal Certificate or in the absence thereof, a
certification from the National Statistics and Census Bureau or an affidavit by two (2)
disinterested credible persons who know personally the senior citizen.
B. If he has a benefactor as defined in Section 2 (f) of these Regulations, Certification as to
the name, address, occupation, Office or business address (office/business) and TIN of his
benefactor:
C. If employed, a copy of his withholding tax statement (BIR Form W-2) for the preceding
taxable year;
D. If self-employed, (i.e., practice of profession, or in business as single proprietorship) a
copy of his income tax return (ITR) for the preceding taxable year together with the annual
license or permit issued by the city or municipality where he has his principal place of
business, supported by a copy of his declaration of sales or income.
 Sec. 6. TAXABILITY OF SENIOR CITIZENS TO OTHER INTERNAL REVENUE TAXES.
a. A senior citizen whose annual taxable income exceeds the poverty level of P60,000 or such amount as may
thereafter be determined by the NEDA for a certain taxable year shall be liable to the individual income tax in
the full amount thereof on his taxable income net of allowable deductions.
b. Regardless of the amount of taxable income, a senior citizen who derives income from self-employment,
business and practice of profession shall be subject to other internal revenue taxes which include but are not
limited to the value added tax, caterer’s tax, documentary stamp tax, overseas communications tax, excise
taxes, and other percentage taxes. He shall therefore, file the corresponding business tax returns in accordance
with existing laws, rules and regulations.
c. He shall be subject to the 20% final withholding tax on, interest income from Philippine Currency bank deposit,
yield and other monetary benefit from deposit substitutes, trust fund and similar arrangements; royalties, prizes
(except prizes amounting to P3,000 or less which shall be subject to income tax at the rates prescribed under
Section 21, paragraph (a) or (f), NIRC) as the case may be, and winnings (except Philippine Charity
Sweepstakes winnings).
d. Capital gains from sales of shares of stock (Sec. 21 (d), NIRC).
e. Capital gains from sales of real property (Sec. 21 (e), NIRC).
ITEMS ENTITLED TO 12% VAT EXEMPTION AND
20% DISCOUNT TO SENIOR CITIZENS
1. Medicine
2. Doctor’s Fee
3. Health Workers Fee
4. Medical and Dental Fees (private hospitals)
5. Public Transport Fares
6. Hotels, Restaurants and Recreation Centers
7. Theaters, Cinema Houses and Amusement Places
8. Funeral and Burial Services
20% SENIOR CITIZEN DISCOUNT AND 12% VAT
EXEMPTION
Illustrative case #1: A senior citizen bought medicine and medical supplies in a VAT
registered drug store priced at P1,000 (VAT inclusive). How much would be the amount to
be paid by the senior citizen?

Sale with VAT P1,000.00

Less: VAT (1,000 / 112% x 12%) 107.14
VAT Exempt Sale P 892.86
Less: SC Discount (P892.86 x 20%) 178.57
Amount to be paid P 714.29
Illustrative case # 2: If a group of 5 individuals composed of 4 non-senior citizens and 1 senior citizen dines-
in a VAT registered restaurant whose total amount ordered is P2,500 (VAT inclusive), how should the group
be billed?
(Total billing amount / # of customer) less 12% VAT x 20% = SC Discount)
Sale with VAT P 2,500.00
# of customer 5
Sale attribute to SC P 500.00
VAT (P500 / 112% x 12%) 53.57
VAT Exempt Sale P 446.43
Less: SC Discount (446.43 x 20%) 89.29
Discounted VAT Exempt Sale P 357.14
Sale Attributed to Non-SC 2,000.00
Amounted to be billed P 2,357.14
MAGNA CARTA FOR DISABLED PERSONS
(RA 7277)
AN ACT PROVIDING FOR THE REHABILITATION, SELF-
DEVELOPMENT AND SELF-RELIANCE OF DISABLED PERSONS
AND THEIR INTEGRATION INTO THE MAINSTREAM OF
SOCIETY AND FOR OTHER PURPOSES.
Person with Disability (PWD) - shall refer to an
individual suffering from restriction or different
abilities, as a result of mental, physical or sensory
impairment to perform an activity in a manner or
within the range considered normal for human being
(RR 1-2009).
Incentives for Employers (b) 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 twenty-five
percent (25%) of the total amount paid as salaries and wages to disabled persons. (c)
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 fifty percent (50%) of the direct
costs of the improvements or modifications.
RIGHTS AND PRIVILEGES OF DISABLED PERSONS

• Equal Opportunity for Employment - No disable person shall be denied access

to opportunities for suitable employment. Five percent (5%) of all casual
emergency and contractual positions in the Departments of Social Welfare and
Development
• Sheltered Employment -If suitable employment for disabled persons cannot be
found through open employment as provided in the immediately preceding
Section, the State shall endeavor to provide it by means of sheltered employment.
• Apprenticeship - Subject to the provisions of the Labor Code as amended,
disabled persons shall be eligible as apprentices or learners.
ITEMS ENTITLED TO 12% VAT-EXEMPTION AND
20% DISCOUNT TO PWD
1. Hotels, Restaurant and Recreation Centers
2. Theaters, Cinema Houses and Amusement Places
3. Medicine
4. Medical and Dental Fees (Gov’t)
5. Medical and Dental Fees(Private)
6. Air and Sea Transport Fares
7. Public Transport Fares
8. Funeral and Burial Services
 BARANGAY MICRO BUSINESS
ENTERPRISES (BMBE’S) ACT (RA 9178)
AN ACT TO PROMOTE THE ESTABLISHMENT OF BARANGAY MICRO
BUSINESS ENTERPRISES (BMBEs), PROVIDING INCENTIVES AND BENEFITS
THEREFOR, AND FOR OTHER PURPOSES

This Act refers to any business entity or enterprise engaged in the production,
processing or manufacturing of products or commodities, including agro-processing, trading
and services, whose total assets including those arising from loans but exclusive of the land
on which the particular business entity’s office, plant and equipment are situated, shall not
be more than Three Million Pesos (P3,000,000).
REGISTRATION AND OPERATION OF BMBES
• Registration and Fees - Any such application shall be processed within fifteen
(15) working days upon submission of complete documents. A charge a fee not
exceeding One Thousand Pesos (P1,000.00). The Certificate of Authority shall be
effective for a period of two (2) years, renewable for a period of two (2) years for
every renewal.
• Who are Eligible to Register - Any person, natural or juridical, or cooperative, or
association, having the qualifications as defined in Sec. 3.
• Transfer of Ownership - The BMBE shall report to the city or municipality of any
change in the status of its ownership structure, and shall surrender the original copy
of the BMBE Certificate of Authority for notation of the transfer.
INCENTIVES AND BENEFITS

• Exemption from Taxes and Fees

• Exemption from the Coverage of the Minimum Wage Law.
• Credit Delivery
• Technology Transfer, Production and Management Training, and Marketing
Assistance
• Trade and Investment Promotion
• Information Dissemination
PENALTY
Penalty - Any person who shall wilfully violate any provision of this Act or who shall in
any manner commit any act to defeat any provision of this Act shall, upon conviction, be
punished by a fine of not less than Twenty-five Thousand Pesos (P25,000.00) but not more
than Fifty Thousand Pesos (P50,000.00) and suffer imprisonment of not less than six (6)
months but not more than two (2) years.
In case of non-compliance with the provisions of Sec. 9 of this Act, the BSP shall impose
administrative sanctions and other penalties on the concerned government financial
institutions, including a fine of not less than Five Hundred Thousand Pesos (P500,000.00).