Preferential Taxation [1]

Preferential Taxation
Senior Citizens (R.A. 9994)
 exemption from the payment of individual income taxes of senior citizens who are considered to be minimum wage earners in
accordance with Republic Act No. 9504
 the grant of twenty percent (20%) discount and exemption from the value -added tax (VAT), if applicable, on the sale of the
following goods and services from all establishments, for the exclusive use and enjoyment or availment of the senior citizen
o on the purchase of medicines, including the purchase of influenza and pnuemococcal vaccines, and such other
essential medical supplies, accessories and equipment to be determined by the Department of Health (DOH).
o on the professional fees of attending physician/s in all private hospitals, medical facilities, outpatient clinics and home
health care services
o on the professional fees of licensed professional health providing home health care services as endorsed by private
hospitals or employed through home health care employment agencies
o on medical and dental services, diagnostic and laboratory fees in all private hospitals, medical facilities, outpatient
clinics, and home health care services, in accordance with the rules and regulations to be issued by the DOH, in
coordination with the Philippine Health Insurance Corporation (PhilHealth)
o in actual fare for land transportation travel in public utility buses (PUBs), public utility jeepneys (PUJs), taxis, Asian
utility vehicles (AUVs), shuttle services and public railways, including Light Rail Transit (LRT), Mass Rail Transit
(MRT), and Philippine National Railways (PNR)
o in actual transportation fare for domestic air transport services and sea shipping vessels and the like, based on the
actual fare and advanced booking
o on the utilization of services in hotels and similar lodging establishments, restaurants and recreation centers
o on admission fees charged by theaters, cinema houses and concert halls, circuses, leisure and amusement
o on funeral and burial services for the death of senior citizens

Disabled Persons (R.A. 10754)

 Republic Act (RA) No. 10754 granting PWDs additional benefits such as exemption from value-added tax (VAT) on the
purchase of particular goods and services on top of the 20% discount
o Charges of hotels and other similar lodging establishments, restaurants and recreation centers;
o Admission fees by theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture,
leisure and amusement;
o Purchase of medicines in all drugstores;
o Medical and dental services and professional fees of attending doctors in all government facilities and in all private
hospitals and facilities, subject to the guidelines to be issued by the Department of Health, in coordination with the
Philippine Health Insurance Corporation;
o Transportation fares; and
o Funeral and burial services.
 Further, those caring for and living with qualified PWD, up to the fourth civil degree of consanguinity or affinity, can claim an
additional tax exemption of P25,000 against their annual income tax. Under the RA, the PWD, regardless of age, may be
considered a qualified dependent subject to additional exemption under Section 35 (b) of the Tax Code provided that the PWD
is not gainfully employed and is chiefly dependent upon the taxpayer.

Special Economic Zone Act (R.A. 7915)

Enterprises locating or operating within the ecozones shall register with the Philippine Export Zone Authority (PEZA)
 Income tax holiday (ITH) (3/4/6) and subject to extension under certain conditions. This ITH does not extend to the real
property tax on land owned by developers.
 Upon expiration of ITH they shall pay a tax equivalent to five percent (5%) of their gross income. (5% Special Income tax)
 Exemption from taxes and duties on imported equipment, raw materials and supplies directly needed for its operations
 Zero percent VAT purchase for use on registered activity.

Omnibus Investment Code (E.O. 226)

 Tax Exemptions
o Income Tax Holiday (ITH)
o Exemption from Taxes and Duties on Imported Spare Parts
o Exemption from Wharfage Dues and Export Tax, Duty, Impost and Fees
o Tax Exemption on Breeding Stocks and Genetic Materials
 Tax credits
o For agricultural producers, 10-years tax credit equivalent to one hundred percent (100%) of the value of national
internal revenue taxes and customs duties on domestic breeding stocks and genetic materials.
o Tax credit equivalent to the national internal revenue taxes and duties paid on raw materials, supplies and semi-
manufacture of export products and forming part thereof.
 Additional Deductions
Preferential Taxation [2]

o 5-years additional deduction for labor expense, equivalent of fifty percent (50%) of the wages of additional skilled and
unskilled workers in the direct labor force. This incentive shall be granted only if the enterprise meets a prescribed
capital to labor ratio and shall not be availed simultaneously with ITH.
o Registered enterprises locating in LDAs or in areas deficient in infrastructure, public utilities and other facilities may
deduct from taxable income an amount equivalent to the expenses incurred in the development of necessary and
major infrastructure works. This privilege is not granted to mining and forestry-related projects.

Barangay Micro Business Enterprises (BMBE) (R.A. 9178)

 The Barangay Micro Business Enterprises Act of 2002, or RA 9178, is a law that (theoretically) allows businesses with assets
worth less than 3 million pesos to be exempted from paying income tax.
 BMBE, 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, 000,000.00).
o BMBEs are first approved by the municipal hall, before BIR can grant the exemption. (Note: Just because you are
approved as a BMBE by the municipal/city hall does not necessarily mean you will be granted income tax exemption
by the BIR.)
o The exemption is for INCOME TAX, the business is still liable for Business Tax
 In lieu of an income tax return, an income tax exempt BMBE is required to submit an Annual Information Return. This is filed
on or before the 15th day of the 4th month after the close of the taxable year with an Account Information Form, which contains
data from its financial statement and Sworn Statement of Assets Owned and/or Used.

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