Definitions
- Senior Citizen/Elderly: Filipino citizens 60 years or older, including dual citizens meeting residency requirements.
- Resident Citizen: Filipino with permanent residence or intent to reside in the Philippines.
- Benefactor: Person providing primary care/support to senior citizen, certified by local social welfare office.
- Dependent: Senior citizen reliant on a benefactor for chief support.
- Minimum Wage Earner: Worker earning statutory minimum wage in private/public sector.
- OSCA: Office of Senior Citizens Affairs, headed by senior citizen, term of 3 years.
- Other terms: NEDA, NSCB, Annual Taxable Income, Sales Discount, Establishment defined for context.
Income Tax Exemption for Senior Citizens
- Senior citizens generally must file income tax returns unless their income is below exemption threshold.
- Minimum wage earners exempt from income tax on compensation income.
- Exemption does not apply to:
- Final withholding on interest, royalties, dividends, capital gains, and other taxes.
- Pre-termination penalties on long-term investments.
Mandatory Discounts to Senior Citizens
- Establishments supplying specified goods/services must give 20% discount to senior citizens.
- Goods/services covered include:
- Medicines, vaccines, essential medical supplies.
- Professional fees for physicians and licensed health workers.
- Medical and dental services, labs, diagnostic tests.
- Public land and domestic air/sea transport fares.
- Hotel accommodations, restaurants, recreation centers.
- Admission fees to cultural and entertainment venues.
- Funeral and burial services.
Discounts on Utilities and Senior Citizens Centers
- Senior citizens receive 5% discount on monthly water and electricity consumption under certain conditions.
- Senior Citizens Centers and care homes get at least 50% discount on utilities.
- Promotional discounts offered by establishments apply if higher than statutory discount.
Determination and Application of Discounts
- Discounts apply only to goods/services for exclusive use and enjoyment of senior citizen.
- Medical-related supplies and services include discounts on medicines, medical equipment, professional fees.
- Transportation discounts include fares for domestic air, sea, land transport.
- Hotels, restaurants, recreation centers, and funeral services have detailed definitions and discount rules.
- Discounts must be personally availed; no proxies allowed except for funeral services.
- For dine-in and take-out, senior citizen must be present and identify himself/herself.
Tax Treatment for Establishments Granting Discounts
- Establishments may claim discounts given as tax deductions from gross income.
- The sales must be recorded inclusive of discounts but treated as a separate deduction from gross income.
- Conditions for deduction include proper documentation and separate record-keeping.
- Only actual discounts granted or statutory minimum discounts can be claimed.
- Businesses cannot claim Optional Standard Deduction if claiming senior citizen discount deduction.
Procedures for Availing Income Tax Exemption
- Senior citizen must submit certified OSCA ID to the Revenue District Officer.
- File sworn statement annually that taxable income does not exceed poverty level.
- RDO maintains master list of tax-exempt senior citizens.
- Substituted filing applies for income subjected to withholding tax but exceeding poverty level.
Other Tax Liabilities of Senior Citizens
- Senior citizens may be liable for:
- VAT or percentage taxes if self-employed/business exceeds thresholds.
- Donor's tax on donations.
- Estate tax on death.
- Excise tax on certain goods.
- Documentary stamp tax.
VAT Exemption on Sales to Senior Citizens
- Sales of goods/services enumerated in discounts are VAT-exempt.
- Sellers must issue VAT-exempt invoices or segregate exempt sales on POS receipts.
- Input taxes attributable to exempt sales cannot be claimed as input tax credits.
- Exemption does not cover other indirect taxes passed to senior citizens.
Personal Exemptions of Benefactors
- Benefactors may claim basic personal exemption of P50,000.
- Dependent senior citizen doesn’t entitle benefactor to additional P25,000 exemption.
- Additional exemptions only allowed for qualified dependent children.
- Benefactor must disclose dependent senior citizen information on income tax return.
Additional Deductions for Employing Senior Citizens
- Private employers get 15% additional deduction on salaries paid to senior citizen employees.
- Conditions:
- Employment period at least 6 months.
- Senior citizen's annual taxable income below poverty level.
- Senior citizen must certify income status to employer.
Penalties and Sanctions
- Violations incur penalties under the Tax Code plus:
- First violation: fines P50,000 to P100,000; imprisonment 2-6 years.
- Subsequent violations: fines P100,000 to P200,000; imprisonment 2-6 years.
- Abuse of privileges punished by fine (P50,000-P100,000) and imprisonment (minimum 6 months).
- Foreign offenders may be deported after serving sentence.
- Corporate offenders hold responsible officials liable.
- Authorities may revoke business permits or franchises upon violations.
Repealing Clause
- Modifies, repeals, or revokes inconsistent prior Revenue Regulations related to senior citizens (Nos.4-2006,1-2007).
Effectivity
- Regulations effective 15 days after publication in Official Gazette or newspaper of general circulation, whichever occurs first.