Question & AnswerQ&A (BIR REVENUE REGULATION NO. 8-93)
The main purpose is to promote the welfare of disabled persons, encourage their gainful employment, provide tax incentives for employers who hire them, and offer tax exemptions for donations to government agencies and organizations engaged in the rehabilitation of disabled persons.
Disabled persons are those with restriction or different abilities due to mental, physical, or sensory impairments that limit their ability to perform activities considered normal for a human being.
Private entities employing qualified disabled persons as regular employees, apprentices, or learners are entitled to an additional deduction equivalent to 25% of the total salaries and wages paid to such persons, over and above the usual deductions.
They must present proof certified by the Department of Labor and Employment (DOLE) of employing qualified disabled persons, certification from DOLE and the Department of Health (DOH) regarding the disability and qualifications of the persons employed, and evidence of actual payment of salaries and withholding tax if applicable.
These entities are entitled to an additional deduction equivalent to 50% of the direct costs of improvements or modifications made to provide reasonable accommodations, except for modifications required under Batas Pambansa Blg. 344.
Such donations are exempt from donor's tax and may be deducted from the donor's gross income subject to specific provisions in the National Internal Revenue Code.
Not more than 30% of the donations shall be used for administrative purposes; the rest must be used exclusively for rehabilitation or welfare projects for disabled persons.
Reasonable accommodations include improvements and modifications to physical facilities to make them accessible and usable by disabled persons, changes in work schedules, reassignment to vacant positions, modifications of training materials and examinations, provision of auxiliary aids, and similar adjustments.
They must keep accurate books of accounts and records of donations and income, file an annual information return with audited financial statements by April 15 each year, and allow verification by BIR to ensure compliance with tax exemption requirements.
They may face suspension or cancellation of their Certificate of Registration, lose the right to receive tax-free donations, and have claims for deductibility of donations disallowed.