RR No. 7-2010: Implements the tax privileges provisions of RA No. 9994, otherwise known as the “Expanded Senior Citizens Act of 2010”, and prescribes the guidelines for the availment thereof

Key points

1. Income tax filing and exemption. Qualified Senior Citizens with returnable income file an ITR and pay as they file. A minimum wage earner under RA No. 9504 is exempt on that compensation, and a Senior Citizen whose gross income does not exceed the personal exemptions (basic and additional) is exempt and need not file, if qualified by the RDO with a certified OSCA ID copy, a Sworn Statement filed on or before January 31 each year, and listing in the RDO’s Master List of Tax-Exempt Senior Citizens.
2. Taxes the exemption does not cover. The exemption does not reach the 20% FWT on bank deposit interest and similar income, the 7.5% FWT under the expanded foreign currency deposit system, the 10% FWT on dividends and shares in partnership or association income, Capital Gains Tax on unlisted shares, and the 6% FWT on presumed capital gains from real property (except the principal residence). Pre-terminating a 5-year deposit or investment is taxed at 5%, 12% or 20% depending on the holding period.
3. Other taxes still due. Senior Citizens remain subject to VAT, or the 3% Percentage Tax, if self-employed or in business or practice of profession with gross annual sales or receipts above P1,500,000. Donor’s Tax, Estate Tax, Excise Tax on certain goods and Documentary Stamp Tax also apply.
4. 20% discount and 5% utility discount. Establishments give a 20% discount on medicines, doctors’ and health workers’ professional fees, medical and dental services, land, air and sea fares, hotels, restaurants and recreation centers, admission fees, and funeral and burial services. Water and electricity get a 5% discount if the meter is in the Senior Citizen’s name and monthly use does not exceed 100kwh of electricity and 30 m3 of water, granted per household.
5. Seller deduction and conditions. Sellers treat the discount as an itemized deduction from gross income, only if they do not opt for the Optional Standard Deduction. They must show the gross selling price and the discount separately on the receipt or invoice, keep separate records with the Senior Citizen’s name and OSCA ID, and may not bill VAT to the Senior Citizen.
6. Benefactors, employers and penalties. A benefactor may claim the basic personal exemption of P 50,000.00 but not the additional P 25,000.00 for a dependent Senior Citizen. Private employers get an additional deduction of 15% of salaries and wages paid to Senior Citizens if employment lasts at least six (6) months and the Senior Citizen’s annual taxable income does not exceed the poverty level. Violations carry a fine of P 50,000.00 to P 100,000.00 and imprisonment of two (2) to six (6) years for a first offense.

Who is affected

• Qualified Senior Citizens
• Establishments selling goods and services to Senior Citizens
• Benefactors of Senior Citizens
• Private establishments employing Senior Citizens

Deadlines and effectivity

• Sworn Statement for exemption: on or before January 31 every year
• Employment of Senior Citizen for the employer deduction: at least six (6) months