STAX
Preferential Taxation Exemption from coverage of the Minimum Wage Law
Republic Act no. 9178 Barangay Micro Business
Enterprises (BMBE) Act of 2002
BMBE, Defined
 Any business enterprise engaged in production,
processing, or manufacturing of products, including
agro-processing, as well as trading and services,
with total assets of not more than 3 Million.
 It does not include those who exercise their
profession (e.g. Accountant, Lawyer, Doctor, etc.)
Classification of Tax Payers
Gross sales:
 Micro: Less than P3 Million
 Small: P3 Million to less than P20 Million
 Medium: P20 Million to less than P1 Billion
 Large: P1 Billion and above
DOF Department Order 17-04: An enterprise can only qualify
for registration as BMBE if it is not a branch, subsidiary,
division or office of a large scale enterprise and its policies are
not determined by persons who are not owners of the
enterprise (e.g. franchises)
Barangay based means:
1. Majority of its employees are residents of the
municipality of principal office location.
2. Principal activity consist in the application of skill
peculiar to the locality or business operations
BMBE Registration (Sec.4 of RA 9178 has been repealed
by Sec.5b of RA 10644 or the “Go Negosyo Act”)
The DTI, through the Negosyo Center in the City or municipal
level, shall have the sole power to issue the Certificate of
Authority for BMBEs to avail of the benefits provided by
RA9178. Upon approval, the Negosyo Center shall issue the
Certificate of Authority, renewable every two (2) years. It
may charge a fee which shall not be more than P1,000.00 to
be remitted to the National Government.
Incentive:
Income tax exemption
• Only those income from related activities are
exempted.
• In lieu of ITR, BMBE files Annual Information Return.
• BMBEs are still subject to business taxes (3% OPT
or 12% VAT) and other internal revenue taxes such
as DST.
• BMBE employees will still receive the same Social
Security and Health care benefits as other
employees.
1. Change of business address
2. Value of assets exceed 3M
3. Voluntary surrender of the Certificate of Authority
4. Death of Sole Proprietor
5. Merger or consolidation with an entity not registered as
BMBE
6. Sale or transfer of the BMBE enterprise
7. Falsification of documents
8. Retirement from business, cessation/suspension of
operations for 1 year
Republic Act no.7277, as amended by RA 9442 and
RA10754
Magna Carta for PWDs: An Act Providing for the
Rehabilitation and Self-reliance of PWDs and their Integration
into the Mainstream of Society and for Other Purposes
PWD, Defined
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 (RR 5-2017).
Income Tax of PWD
• No income tax exemption for PWDs. PWD deriving
income during the taxable year, whether from
compensation or otherwise, are required to file
income tax returns and pay the tax due thereon.
• However, if s/he qualifies as a minimum wage earner
under RA 9504, s/he shall be exempted from income
tax subject to the rules under RR 10-2008.
20% Discount and VAT Exemption
• Fees and charges relative to the utilization of all
services in hotels and similar lodging
establishments; restaurants, and recreation centers;
• Admission fees charged by theaters, cinema
houses, concert halls, circuses, carnivals, and other
similar places of culture, leisure and amusement;
• Purchase of medicines in all drugstores;
• Medical and dental services including diagnostic
and laboratory fees, and professional fees of
attending doctors in all private hospitals and medical
facilities.
• Fare for domestic air and sea travel
STAX
• Actual fare of land transportation travel such as, Basic Necessities Prime Commodities
but not limited to, PUBs/PUJs, taxis, AUVs, shuttle - Goods vital to the needs of - Not considered basic
services, LRT, MRT, and PNR consumers for their necessities but are
• Funeral and burial services for the death of the sustenance and existence. essential to consumers.
PWD, excluding obituary publication and the cost of - E.g. rice, corn, bread, - E.g. Flour, vinegar, patis,
memorial lot. marine products, poultry soy sauce, toilet soap,
meat, eggs, water, milk, fertilizers, pesticides,
Treatment of discounts
vegetables and fruits, veterinary products, school
Establishments may claim the discounts as tax deductions noodles, coffee, sugar, oil, supplies, cement, plywood,
based on the net cost of the goods sold or services rendered; salt, soap, detergent, batteries, electrical
provided, however, that the cost of discount shall be allowed candles, LPG and kerosene supplies, and steel wires
as deduction from gross income for the same taxable year that
the discount is granted. Provided, further, that the total
Republic Act no. 9994 Expanded Senior Citizens Act of
amount of the claimed tax deduction net of VAT shall be
2010
included in their gross sale receipts for tax purposes and shall
be subject to proper documentation. Senior Citizen, Defined
Additional Compensation Expense Any resident citizen of the Philippines at least sixty (60)
years old. It may apply to senior citizens with dual citizenship
Private entities that employs disabled persons who meet the
status provided they prove their Filipino citizenship and have
required skills or qualifications, either as regular employees,
at least 6 months residency in the Philippines.
apprentice or learner, shall be entitled to an additional
deduction from gross income equivalent to 25% of the total Taxation of Senior Citizens
amount paid as salaries and wages to disabled persons.
• Income tax. Generally, Senior citizens are required
Treatment of Input VAT attributable to sale to PWDs to file ITR and pay the tax as they file.
• Business tax. Generally exempt from VAT aside
Input tax attributable to the VAT-exempt sale is considered
from entitlement of 20% discount on certain
as cost or an expense account by businesses and shall not
purchases of goods and/or services as provided by
be allowed as input tax credit. If there is no name of PWD or
law
ID no. indicated in the records of sales, the input tax
attributable to it shall be disallowed. Benefits of Senior Citizens (20% Discount and VAT
Exemption)
Invoicing Requirements
• Medicine and drug purchases including essential
The business establishment giving sales discount to a PWD
medical supplies, accessories and equipment.
is required to keep a separate and accurate record of sales,
• Professional fee of attending physicians in all
which shall include the following: name of the PWD, ID no.,
private hospitals, medical facilities, outpatient clinics
gross sales, sales discounts granted, date of
and home health care services.
transactions, and invoice number
• Professional fees of licensed health workers
5% Special discount for PWDs (RR 9-2019) providing home health care services.
• Funeral and burial services of senior citizens.
Every PWD shall enjoy a special discount of 5% of the regular
• Medical and dental services, diagnostic and
retail price, without exemption from the VAT, of basic
laboratory fees
necessities and prime commodities. The discount is limited to
• Actual fare for land transportation travel.
purchases not exceeding 1,300 per calendar week without
• Actual fare for domestic air transport and sea
carry-over of the unused amount. Said items shall be
shipping vessels.
commensurable to his personal exclusive consumption.
• Utilization of services in hotels and similar lodging
Provided, further, that the amount shall be spent to at least
establishments, restaurant, recreation centers.
4 items listed as basic necessities and prime
• Admission fees charged by theaters, cinema
commodities.
houses and concert halls, circuses, carnivals and
other similar places of culture.
STAX
Treatment of discounts
Establishments may claim the discounts as tax deductions
based on the net cost of the goods sold or services rendered;
provided, however, that the cost of discount shall be allowed
as deduction from gross income for the same taxable year that
the discount is granted. Provided, further, that the total
amount of the claimed tax deduction net of VAT shall be
included in their gross sale receipts for tax purposes and shall
be subject to proper documentation.
Additional Compensation Expense
Private entities that employs senior citizens shall be entitled
to an additional deduction from gross income equivalent to
15% of the total amount paid as salaries and wages to
senior citizens. Provided, however, that such employment
shall continue for a period of at least 6 months. Provided,
further, that the annual income of the senior citizen does not
exceed the latest poverty threshold as determined by the
NSCB of NEDA for that year.
Treatment of Input VAT attributable to sale to Senior
Citizens
Input tax attributable to the VAT-exempt sale is considered
as cost or an expense account by businesses and shall not
be allowed as input tax credit. If there is no name of senior
citizen or ID no. indicated in the records of sales, the input tax
attributable to it shall be disallowed.
BIR Revenue Regulations No. 7-2010
Subject: Implementing the Tax Privileges Provisions of
Republic Act No. 9994, Otherwise Known as the "Expanded
Senior Citizens Act of 2010", and Prescribing the Guidelines
for the Availment Thereof
To: All Internal Revenue Officers and Others Concerned
SEC. 5. Special Discount granted to Senior Citizens and
Senior Citizens Centers. – The monthly utilization of water
and electricity by the Senior Citizen supplied by public utilities
will be subject to a five percent (5%) discount upon
concurrence of the following:
1. the individual meters for the said utilities are
registered in the name of the Senior Citizen residing
therein;
2. the monthly consumption does not exceed one
hundred kilowatt hours (100kwh) of electricity and
thirty cubic meters (30 m3) of water; and
3. the privilege is granted per household regardless of
the number of Senior Citizens residing therein.
For the consumption of water, electricity and telephone, there
shall be granted by public utilities a discount of at least fifty
(50%) per cent on the consumption by a Senior Citizens
Center and residential care/group homes that are run by the
Government or by a non-stock, non-profit domestic
corporation organized and operated primarily for the purpose
of promoting the well-being of abandoned, neglected,
unattached, or homeless Senior Citizens, subject to the
guidelines formulated by the Department of Social Welfare
and Development (DSWD).
Provisions of Section 4 and the foregoing paragraphs of this
Section, notwithstanding, if any of the foregoing goods or
services is offered by the establishment at a promotional
discount, the discount that shall be granted to the Senior
Citizen shall be the promotional discount or the minimum
discount prescribed in this Regulation. This means that, in no
case shall be the discount granted to Senior Citizens be less
than 20%, or in the case of water and electricity supplied by
public utility companies, be less than 5%. The minimum
discount shall not be treated as an addition to the promotional
discount, provided that, if the promotional discount is less than
the minimum discount prescribed in the Act for Senior
Citizens, the seller shall increase the discount to meet the said
minimum discount prescribed for Senior Citizens.
SEC. 6. Determination of the Amount of Discount. – The
grant of the discount is only for the purchase of goods and
services enumerated in the Act for the EXCLUSIVE USE AND
ENJOYMENT OR AVAILMENT OF THE SENIOR
CITIZEN. The following rules shall be observed in granting the
discount:
Medical-Related Privileges:
(a) MEDICINE AND DRUG PURCHASES – The 20%
discount and VAT exemption shall apply to the purchase of
generic or branded medicines and drugs by or for senior
citizens, including the purchase of influenza and
pneumococcal vaccines. The 20% discount and VAT
exemption shall also be granted to the purchase of vitamins
and mineral supplements which are medically prescribed by
an attending physician for prevention and treatment of
diseases, illness, or injury whose prescription is in the name
of the Senior Citizen.
(b) ESSENTIAL MEDICAL SUPPLIES, ACCESSORIES AND
EQUIPMENT – The 20% discount and VAT exemption
privilege shall also apply to the purchase of eyeglasses,
hearing aids, dentures, prosthetics, artificial bone
replacements like steel, walkers, crutches, wheelchairs
whether manual or electric-powered, canes/quad canes,
geriatric diapers, and other essential medical supplies,
accessories and equipment by or for senior citizens.
STAX
(e) Food, drinks and other consumable items provided in
Section 3 (a) and (b), and Section 4, paragraph 2 of Article 7
purchased by the senior citizen shall be processed separately
as an independent transaction from his/her non-eligible
companions to ensure that it is for his/her exclusive
consumption and to enable computation of the 20% discount
and the exemption from the Value Added Tax (VAT), which
only the senior citizen is entitled to.
However, if the group of diners is composed entirely of senior
citizens, all of whom present valid senior citizen IDs, each
shall be entitled to a 20% discount and exemption from Value
Added Tax.
(f) The 20% discount shall apply to Take-Out/Take-
Home/Drive-Thru orders (excluding bulk orders) as long as it
is the senior citizen himself/herself who is present and
personally ordering, and he/she can show a valid senior
citizen ID card.
(g) For Delivery Orders (excluding bulk orders), the 20%
discount shall likewise apply subject to certain conditions; i.e,
senior citizen ID card number must be given while making the
order over the telephone; the senior citizen ID card must also
be presented upon delivery to verify the identity of the senior
citizen entitled to the 20% discount. Delivery fee charged
separately are not entitled to the discount and is subject to tax.
(h) For the above-mentioned transactions under paragraphs
(f) and (g) of Section 3 of Article 7, the Most Expensive Meal
Combination (MEMC) shall apply to food purchases by senior
citizens. The MEMC is an amount corresponding to the
combination of the most expensive and biggest single-serving
meal with beverage served in a quick service restaurant, is
deemed flexible and is adjusted accordingly by food
establishments to estimate a single food purchase for an
individual senior citizen.
The selling price to be charged by the seller must be net of
VAT because the sale to Senior Citizens is exempt from VAT.
The cost of the discount in the above illustration is P10.00 and
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, if
applicable, shall be included in their gross sales receipts for
tax purposes and shall be subject to proper documentation in
accordance with the provisions of the Tax Code. This means
that for the establishment to be allowed to claim the discount
as a deduction, the amount of sales that must be reported for
tax purposes is the undiscounted selling price and not the
amount of sales net of the discount. The income statement of
the seller must reflect the discount, not as a reduction of sales
to arrive at net sales, but as a deduction from its gross income
(sales less cost of sales). Thus the entry to record the
transaction in the books of the seller should be as follows:
Debit – Cash P40
Senior Citizen Discount Expense 10
Credit – Sales P50
Revenue Memorandum Circular No. 38-2012
Subject: Questions and Answers Further Clarifying the
Provisions of Revenue Regulations (RR) No. 7-2010, as
amended by RR No. 8-2010, Implementing the Tax Privileges
Provisions of Republic Act (RA) No. 9994, Otherwise Known
as the "Expanded Senior Citizens Act of 2010"
To: All Internal Revenue Officers and Others Concerned

SEC. 7. Tax Treatment of the Discount Granted to Senior

Citizens. – All establishments supplying any of the goods and
services referred to in Section 4 and Section 5 of these
Regulations, may claim the discounts granted as a tax
deduction based on the cost of the goods sold or services
rendered to Senior Citizens. By way of example, if a VAT-
registered drug store sells ten (10) pieces of Allopurinol to a
Senior Citizen at an undiscounted selling price of P5.00 per
piece, the cost of the discount is computed as follows:

Selling Price (VAT-exempt) of 10 pcs. At P5.00/pc ——P50.00

Less: 20% Discount ————————10.00
Amount Payable by the Senior Citizen ———————P40.00
STAX
Can a Senior Citizen avail 20% discount for kiddie meals? Joint Memorandum (JMC) No. 01, s. 2022

Subject: Guidelines on the Provision of the Mandatory

Statutory Benefits and Privileges of the Senior Citizens and
Are “pasalubong” purchases of Senior Citizen subject to Persons with Disabilities on their Purchases through Online
20% discount? (E-Commerce) and Phone Call/SMS

Question to ponder:

1. Can SC/PWD avail both 20% discount and

Can a Senior Citizen avail 20% discount for alcoholic promotional discount of the establishment at the
products? same time?
2. A person is both Senior and PWD, how much is the
total Discount?

Can a Senior Citizen avail 20% discount for cigarettes?

Can a Senior Citizen avail 20% discount for delivery

fees/charges?

Are toll fees subject to 20% discount?

Can a representative avail discount for a SC/PWD?

STAX
Republic Act 11861 Expanded Solo Parents Welfare Act Solo Parent Discount Criteria (RR 1-2023):
(Amending RA 8972)
1. Has child/children with age of 6 or under
What is a Solo Parent? 2. Earning less than 250,000 annually

Categories of Solo Parent according to Section 4 of RA11861: Solo Parent ID Card

1. A parent who provides sole parental care and support Issued by the Solo Parent Office (SPO), together with the
of the child or children due to – booklet, and is a competent proof of identification and primary
evidence of his/her status. This shall be valid for 1 year
A. Birth as a consequence of rape, even without final
conviction Discount and Benefits
B. Death of the spouse;
C. Detention of the spouse for at least three (3) months The 10% discount and VAT exemption shall apply to a
or service of sentence for a criminal conviction; qualitied Solo Parent's purchase of the following goods
D. Physical or mental incapacity of the spouse as identified in the Act from drug stores. pharmacies. grocery
certified by a public or private medical practitioner; stores, and similar establishments, and subject to the
E. Legal separation or de facto separation for at least guidelines thar shall be issued by the Department of Health
six (6) months (DOH), in coordination with the Food and Drug Administration
F. Declaration of nullity or annulment of marriage (FDA), PhilHealth, and the Department of Interior and Local
G. Abandonment by the spouse for at least six (6) Government (DILG):
months;
1. Baby’s milk;
2. Spouse or any family member of an OFW, or the guardian 2. Food supplements and Micronutrient supplements;
of the child or children of an OFW: Provided, That the said 3. Sanitary diapers;
OFW belongs to the low/semi-skilled worker category and 4. Medicines;
is away from the Philippines for an uninterrupted period 5. Vaccines; and
of 12 months 6. Other medical supplements
3. Unmarried mother or father who keeps and rears the
child or children; PEZA and BOI Registered Entities
4. Any legal guardian, adoptive or foster parent who
solely provides parental care and support to a child or Difference between PEZA and BOI
children; Philippine Economic Board of Investment
5. A pregnant woman who provides sole parental care and Zone Authority (PEZA) (BOI)
support to the unborn child or children. • Republic Act 7916 • Executive Order
6. Any relative within fourth (4th) civil degree of • Within the Ecozone no.226
consanguinity or affinity of the parent or legal • Business Activities: • No specific location as
guardian who assumes parental care and support of the long as the business
child or children as a result of the death, abandonment, - Export manufacturing activity is registered
disappearance or absence of the parents or solo parent - IT Service Support with the BOI
for at least 6 months: Provided, That in cases of solo - Tourism • Business Activities:
grandparents who are senior citizens but who have the - Medical Tourism
sole parental care and support over their grandchildren - Agro-industrial export/ - Preferred Activities in
who are unmarried, or unemployed and twenty-two (22) biofuel manufacturing the Investments
years old or below, or those twenty-two (22) years old or - Logistics and Priority Plan (IPP)
over but who are unable to fully take care or protect warehousing services - Mandatory list in the
themselves from abuse, neglect, cruelty, exploitation, or - Facilities provider IPP
discrimination because of a physical or mental disability - Utilities - Export activities
or condition, they shall be entitled to the benefits of this
Act in addition to the benefits granted to them by
Expanded Senior Citizens Act.
STAX
Board of Investment (BOI) • Said tax shall be shared and distributed to the National
government (3%) and to the Treasurer’s Office where the
Enterprise may still be entitled to incentives if the activity is not enterprise is located (2%).
listed in the IPP as long as: • Fill-out only one ITR, then submit to BIR and just give a
copy to the LGU.
• At least 50% of its production is for export (if Filipino
owned enterprise)
• At least 70& of its production is for export (if majority
foreign-owned)

Tax Incentives of enterprises registered under PEZA and BOI

are covered by Title XIII of the Tax Code, as amended by
CREATE law.

Categories of Incentives of Ecozone Enterprises

1. Income Tax Holiday (ITH) and Gross Income Tax

(GIT)
2. Gross Income Tax (GIT)

*Depends on the law creating the Ecozone

PEZA-locators:

ITH Ext.

Pioneer 6 + 2 = 8 yrs

Non-pioneer 4 + 2 = 6 yrs

*5% GIT (no more other taxes); and 25% RCIT

Covered Enterprises

Computation of GIT