The bureau has issued Revenue Regulations (RR) No. 5-2017 recently about the Rules and Regulations Implementing Republic Act. No. 10754, entitled "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 Prescribing the Guidelines for the Availment Thereof, Amending RR No. 1-2009.
These regulations prescribe the guidelines for the implementation of the tax privileges of persons with disability and their benefactor; and tax incentives for establishments granting twenty percent (20%) sales discount and exemption from Value-added Tax (VAT) under Sections 32 and 33 of R. A. 7277, as amended by R. A. No. 9442, otherwise known as the "Magna Carta for Persons with Disability" and R. A. No. 10754; and amend certain provisions of RR No. 1-2009.
Computation of the Discount and VAT Exemption Granted to Qualified Persons with Disability
VAT on sale of goods or services with sales discounts granted by business establishments enumerated under Section 3 hereof shall be computed in accordance with the following formula:
Amount of sale (with VAT) P 1,120.00
Less: 12% VAT 120.00
Total Amount 1,000.00
Less: 20% Sales Discount 200.00
Total Amount Due P 800.00
The Two Hundred Pesos (P200.00) cost of the discount in the above illustration, 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 income tax purposes is the VAT - exclusive selling price of P1,000.00 and not the amount of sales net of the discount - P800.00
Computation of Discount on Non-VAT Taxpayer:
Sales/Receipts P 1,120.00
Less: 20% Discount 224.00
Amt. Payable by PWD/Received by Seller 896.00
Multiply by tax rate x 3%
Percentage Tax Due P 26.88
Please refer https://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202017/RR%20No.%205-2017/RR%20No.%205-2017.pdf of the Definition of Terms, Sales Discounts which may be Claimed by Qualified Persons with Disability (PWD) and the full text of RR No. 5-2017.
