I get a lot of queries on the Senior Citizen’s Discount and Tax Privileges.
Here are more FAQ on Senior Citizen’s Discount and Tax Priviliges.
Are cigars and cigarettes considered “consumables” subject to the 20% discount?
Cigarettes/cigars are not the food or essential items deemed subject to the 20% discount.
It must be emphasized that one of the objectives of RA No. 9994 is to promote the health and benefits of the elderly. Thus, the State adopted an integrated and comprehensive approach to health development which endeavors to make essential goods, health, and other social services available to the elderly people at affordable costs.
Cigars and cigarettes, although considered consumables, are not essential goods and are considered hazardous to the health of the Senior Citizens.
If medicine is bought in a grocery, supermarket, or convenience store, is it subject to the 20% discount and VAT exemption?
Yes. The 20% discount and VAT exemption privilege shall also apply to medicines purchased from drug stores, hospital pharmacies, medical and optic clinics and similar establishments including non-traditional outlets dispensing medicines.
Are delivery fees/charges for delivery orders subject to the 20% discount?
A distinction must be made. If the delivery fee/charge is not billed separately, it is subject to the 20% discount. However, if such delivery fee/charge is billed separately, it is not entitled to the 20% discount and is subject to VAT.
Are toll fees subject to the 20% discount?
No. Toll fees are not the same as “fares”. Hence, it is not subject to the 20% Senior Citizen Discount.
Are taxi fares subject to the 20% discount?
Yes. Taxi fares are subject to the 20% Senior Citizen discount.
In the case of purchase of goods and services which are on promotional discount, e.g., discounted sale upon use of a membership/privilege card, may the Senior Citizen still avail of the 20% discount?
No. In the purchase of goods and services which are on promotional discount, the Senior Citizen shall avail of either the promotional discount or the 20% discount, whichever is higher.
However, the discount that must be given to the Senior Citizen shall in no case be less than 20%.
If the Senior Citizen used his privilege card/promotional discount which is higher than the 20% SC discount, is the sale exempt from VAT?
Yes. The sale of goods and services on promotional discount is still exempt from VAT.
Is there an additional expense or loss on the part of the retailers arising from the 20% discount and VAT exemption on the purchases by Senior Citizens?
Any additional expense or loss arising from the 20% discount and VAT exemption on the purchases of the Senior Citizens shall be shouldered by the State.
The 20% discount given by business establishments are deductible from their gross income during the same taxable year when the said discounts are given and the input tax attributable to the VAT exempt sale is considered as a cost or an expense account by business establishments.
Hence, both the discount and input VAT that are treated as cost or expense accounts are being absorbed by the State.
It is a loss of revenue on the part of the State when the sellers claim deductions arising from the discounts and VAT-exempt sale to Senior Citizens. This Republic Act is a social legislation which entails a moral obligation upon the society to contribute on the policies of the State.
In case of business establishments which are not subject to VAT but to Percentage Tax because their gross annual sales/receipts do not reach the threshold amount of P1,919,500.00 under RR 16-2005, as amended by RR 16-2011, are Senior Citizens also exempt from the payment of the percentage tax on their purchases of goods and/or services which are otherwise exempt from VAT?
No. While RA 9994 expressly provides for the VAT exemption of Senior Citizens on their purchase of certain goods and services, the law does not include exemption from the payment of Percentage Tax.
It is a settled rule that tax exemption must be clear and unequivocal. It cannot arise from vague inference.
A taxpayer claiming a tax exemption must point to a specific provision of law conferring on the taxpayer, in clear and plain terms, exemption from a common burden. Any doubt whether a tax exemption exists is resolved against the taxpayer. (Digitel Telecommunications, Inc. v. City Government of Batangas, GR No. 156040 dated December 11, 2008)
Thus, the exemption does not cover other indirect taxes that may be passed on by the seller to a Senior Citizen buyer, such as percentage tax. In such a case, the discount must be on the total cost of the goods or services charged by the seller exclusive of the tax.
ON THE FIVE PERCENT (5%) SPECIAL DISCOUNT ON THE SALE OF PRIME COMMODITIES AND BASIC NECESSITIES TO SENIOR CITIZENS
The 5% Special Discount granted to Senior Citizens on the sale of prime commodities and basic necessities are discount privileges subject to the guidelines of Department of Trade and Industry (DTI) and Department of Agriculture (DA).
What rate of discount shall be granted to Senior Citizens on their purchase of basic necessities and prime commodities?
A special discount of five percent (5%) of the regular retail price of basic necessities and prime commodities as defined under Section 2 of the joint DTI-DA Administration Order No. 10-02, series of 2010, shall be granted to Senior Citizens on their purchases thereof, taking into consideration that said purchases shall be for the personal and exclusive consumption and/or enjoyment of the Senior Citizen.
Are purchases of basic necessities and prime commodities exempt from payment of VAT?
No. Purchases of basic necessities and prime commodities by Senior Citizens as defined under Section 2 of the joint DTI-DA Administrative Order No. 10-02, Series of 2010, are NOT exempt from VAT.
Are purchases of toothpaste, bath soap, tissue papers subject to 5% special discount?
No. Toiletries such as toothpaste, bath soap, and tissue papers are NOT entitled to 5% special discount. Only the items listed under RA No. 7581 or the Price Act are identified as prime commodities and basic necessities entitled to the 5% special discount.
However, powdered liquid, bar laundry, and detergent soap are considered basic necessities subject to 5% special discount (Section 2 of Joint DTI-DA Administrative Order No. 10-02, Series of 2010).
How much is the maximum amount of purchase per calendar week?
“Maximum purchase per week” means that Senior Citizens shall enjoy a special discount of 5% of the regular retail price, without exception from VAT, of basic necessities and prime commodities provided under Section2(a) and (b) of Joint DTI-DA Administrative Order No, 10-02, provided that the total amount of said purchase shall not exceed the maximum amount of purchase per calendar week.
The maximum amount of purchase is One Thousand Three Hundred Pesos (P1,300) per calendar week, after combining set limits under prime commodities and basic necessities, without carryover of the unused amount.
ON THE IMPLEMENTATION OF THE DISCOUNT AND EXEMPTION FROM VAT AND PENALTIES THEREFOR
Is there a final guidance or rule implementing the 20% Senior Citizen Discount?
Yes, The Implementing Rules and Regulations of RA No. 9994 was issued to provide mechanisms for the implementation of the Expanded Senior Citizens Act of 2010. The IRR was formulated by the inter-agency committee headed by the DSWD. Other government agencies are mandated to provide supplemental guidelines to fill in specific details within their respective jurisdictions.
For complaints relative to the implementation of the Expanded Senior Citizen Act of 2010 (RA No. 9994), to what office are we going to file the complaint? Is there any Hotline?
RA No. 9994 provides that the filing of complaints against violators shall be with the Office for Senior Citizen Affairs (OSCA) under the Mayor’s Office.
But for clarifications and other queries, you may contact the proper government agency which issued the pertinent or applicable guideline. Policy questions which deal with vague provisions or grey areas may be raised to the National/Regional Coordinating and Monitoring Boards with the DSWD acting as secretariat.
DSWD – (02) 951-7120
DOH (02)651-7800 LOC. 1752