RR No. 5-2017: Prescribes the rules and regulations implementing RA No. 10754 [An Act Expanding the Benefits and Privileges of Persons with Disability (PWD)] relative to the tax privileges of persons with disability and tax incentives for establishments granting sales discount, and the guidelines for the availment, amending RR No. 1-2009

Key points

1. 20% discount. Qualified PWD get at least a 20% discount on goods and services for their exclusive use from listed establishments. These include hotels, restaurants, cinemas, drugstores, medical and dental services, domestic air and sea transport, land transport and funeral and burial services. Goods and services not listed are not covered.
2. VAT exemption. Sales to PWD under the listed items are VAT exempt, and sellers may not bill VAT to the PWD. Other indirect taxes such as Percentage Tax and Excise Tax are not covered by the exemption. Input tax attributable to the exempt sale is treated as cost or expense, not as an input tax credit.
3. Seller’s deduction. Establishments may deduct the discount from gross income for the same taxable year it is granted, up to the actual discount or 20% of the gross selling price or gross receipts, net of VAT if applicable. The PWD’s name and PWD ID No. must be in the sales records, or the discount is disallowed. Taxpayers using the Optional Standard Deduction cannot account for it as a deductible expense.
4. Records and receipts. The gross selling price and the sales discount must be shown separately on the official receipt or sales invoice. Establishments keep separate records with the PWD’s name, PWD ID No., gross sales or receipts, discount, date and invoice number for each sale.
5. One discount only. The privileges cannot be claimed if the PWD gets a higher discount or combines other discount programs. A PWD who is also a senior citizen can claim only one 20% discount per transaction.
6. Additional exemption for benefactors. Effective taxable year 2016, a benefactor may claim an additional exemption of P 25,000 for each qualified PWD dependent. The PWD must be a Filipino citizen, within the fourth civil degree of consanguinity or affinity, not gainfully employed, and chiefly dependent upon and living with the benefactor. The total number of dependents, including qualified children, cannot exceed four (4).

Who is affected

• Persons with disability
• Establishments granting PWD sales discounts
• Benefactors of qualified PWD

Deadlines and effectivity

• Additional exemption effective taxable year 2016
• Benefactor documents resubmitted after three (3) years or upon renewal of the PWD ID, whichever comes first