Accounting and Taxation for Sales Discounts

Granted to Persons with Disabilities

(An Act by VAT and Non-VAT Business Establishments
R.A. 9442 7277 or
n d ing R A
Ame r
a Carta fo
the Magn
a b led Pe rsons, and
Dis
Purposes
for Other R.A. 107
te d 0 4-3 0-07) 54 (An A
da Expandi c
ng the B t
and Priv en
ileges o efits
Persons f
w
dated 1 ith Disability
2-01-16
)
Revenu
e Regula
5-2017 tion No
dated 0 .
4-11-17

TAXPAYER AWARENESS PROGRAM- RDO 046

 VAT-Registered Business
Sales (with VAT) 1,120.00
Less: 12% VAT 120.00
Sales (net of VAT) 1,000.00
Less: 20% Sales Discount 200.00
Amount payable by PWD 800.00

Journal entries:
Cash 800.00
PWD Discount Expense 200.00
Sales 1,000.00
TAXPAYER AWARENESS PROGRAM- RDO 046
 Non-VAT-Registered Business
Sales 1,120.00
Less: 20% Sales Discount 224.00
Amount payable by PWD 896.00
Multiply by Tax Rate 1%
Percentage Tax 8.96

Journal entries:
Cash 896.00
PWD Discount Expense 224.00
Percentage Tax Due 8.96
Sales 1,120.00
Percentage Tax Payable 8.96

TAXPAYER AWARENESS PROGRAM- RDO 046

Important Notes to Remember:

1. A separate record book for sale to PWD must be

provided, otherwise sales discounts granted can’t
be claimed as deductions.

The record book must contain the following:

1. Name of PWD
2. PWD ID Card No.
3. Gross Sales/ Receipts
4. Sales Discount Granted
5. Date of Transaction
6. Invoice Number
TAXPAYER AWARENESS PROGRAM- RDO 046
Important Notes to Remember:

2. The gross selling price and the sales discount must

be separately indicated on the official receipt or
sales invoice

3. Sales discount granted to PWD can be claimed as

expense under Itemized Deductions. It can’t be
claimed as expenses for taxpayers availing
Optional Standard Deduction.

TAXPAYER AWARENESS PROGRAM- RDO 046

Important Notes to Remember:

4. Input tax attributable to VAT-exempt sale is

considered as cost or an expense, not an input tax
credit.

5. Sales discounts can be claimed as deduction from

gross income in the same taxable year that the
discount is granted.

TAXPAYER AWARENESS PROGRAM- RDO 046

Important Notes to Remember:

6. A PWD who is at the same time a senior citizen

can only claim one 20% discount on a particular
sales transaction

TAXPAYER AWARENESS PROGRAM- RDO 046