Act expanding the benefits and privileges of PWDs — A closer look

SUITS THE C-SUITE By Joana T. Bongato

Business World (02/13/2017 – p.S1/2)

The Magna Carta for Disabled Persons enacted in 1992 affirms that the State shall give full support to the improvement and well-being of disabled persons and their integration into mainstream society.

The results of the 2010 Census of Population and Housing (2010 CPH) reported that of the 92.1 million household population in the country, 1.4 million persons (or 1.57%) had some form of disability. Albeit laborious, the Philippines has improved in enforcing and promoting benefits and privileges for Persons With Disabilities (PWDs).

The 2016 national and local elections saw not only a record-breaking voter turnout but also made voting more convenient for Filipino PWDs. Republic Act (RA) No. 10366, which authorized the Commission on Elections (COMELEC) to establish precincts assigned to accessible polling places (APPs) exclusively for PWDs and senior citizens, was fully implemented for the first time. As a result, more than 5,000 APPs nationwide were made available for the benefit of voting PWDs.

Shortly after Christmas last year, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 135-2016 circularizing the Implementing Rules and Regulations (IRR) of RA No. 10754, otherwise known as An Act Expanding the Benefits and Privileges of Persons with Disability.

Former President Benigno S.C. Aquino III signed the Act into law on March 23, 2016. Almost eight months since its passage, the Department of Social Welfare (DSWD), in consultation with the Department of Health (DoH), the Department of Finance (DoF), and the National Council on Disability Affairs (NCDA), promulgated the necessary rules and regulations for the effective implementation of the PWD law.

PWDs, as defined in the IRR, are those who have long-term physical, mental, intellectual or sensory impairments, which in interaction with various barriers, may hinder their full and effective participation in society on an equal basis with others. The DoF is set to further classify PWDs through a separate issuance. It is worthy to note that the said definition has since been reworded from what was originally provided under RA No. 7277, otherwise known as the Magna Carta for Disabled Persons. RA 7277 defined PWDs as those suffering from restriction or different abilities, as a result of a mental, physical or sensory impairment, to perform an activity in the manner or within the range considered as normal for a human being.

Pursuant to the IRR, PWDs are granted a 20% discount and VAT exemption on the purchase of certain goods and services from all establishments for their exclusive use, enjoyment or availment, such as:

1) Room accommodation and other amenities offered by lodging establishments, including dormitories in the case of students with disabilities;
2) Purchase of food, drinks, beverages, dessert and other consumable items served by restaurants;
3) Admission fees and charges in the utilization of services charged by recreation centers;
4) Purchase of prescribed generic and branded medicines and foods for special medical purposes;
5) Medical and dental services, diagnostic and laboratory fees, and professional fees of attending doctors, both government and private hospitals and medical facilities;
6) Actual fare for domestic air and sea travel, except in case of promotional fares;
7) Actual fare for land transportation travel; and
8) Funeral and burial services for the death of a PWD.

The IRR has also reinforced other benefits and privileges available to PWDs, as follows:

1) Educational assistance;
2) GSIS, SSS and Pag-IBIG benefits;
3) Special discounts in special government programs; and
4) Express lanes in all commercial and government establishments.

While these benefits and privileges are set to be enjoyed liberally by PWDs who are Filipino citizens (including Filipinos who hold foreign passports but are registered as dual citizens and Filipinos who have re-acquired their Filipino citizenship through RA No. 9225 or the Citizenship Retention and Re-acquisition Act of 2003), PWDs are still required to present valid identification as proof of the entitlement to these privileges.

CONSIDERATIONS FOR THE COVERED ESTABLISHMENTS

It should be noted that if the PWD has subsequent purchases from the same establishment on the same day, as applicable, the 20% discount and VAT exemption shall still be granted to them.

Following the No Double Discount rule, when purchasing goods and services that are already on promotional discounts, PWDs can avail either of the offered discount or the 20% discount, whichever is more favorable. Moreover, if the PWD is also a senior citizen entitled to a 20% discount, the PWD shall use either the PWD ID card or the Senior Citizen ID card to avail of the discount.

Establishments are allowed to claim the discounts granted to PWDs as tax deductions based on the net cost of the goods sold or services rendered, provided that the cost of the discount shall be allowed as deduction from gross income only in the same taxable year the discount is granted. Moreover, the total amount of the claimed tax deduction net of VAT, if applicable, shall be included in the gross sales or receipts for tax purposes and shall be subject to proper documentation.

The records of the establishments must contain the name of the PWD, PWD ID Card number, and if applicable, his/her Tax Identification Number (TIN). Failure of the establishment to include said details in their records would result in the disallowance of the 20% discount claimed as deduction and the input VAT attributable to the VAT-exempt sale claimed as cost or expense.

Local Government Units (LGUs) shall also ensure that the restaurants and recreation centers under their jurisdiction are compliant with the law by including the grant of PWD benefits as part of the terms and conditions in the issuance of business permits to the concerned establishments.

PWDS AS QUALIFIED DEPENDENTS

The IRR has clarified that individual taxpayers caring for and living with a PWD, up to the fourth degree of affinity or consanguinity, shall be treated as having a qualified dependent, as such, shall be entitled to the additional personal exemption of P25,000 per year. However, said treatment should not be construed to mean an increase in the maximum number of dependents, which is currently limited to four dependents, for which additional personal exemption may be claimed by the taxpayer. Simply put, this benefit will no longer be enjoyed in case the individual taxpayer already claims the maximum additional personal exemption on four qualified dependents, excluding the PWD.

While the promulgation of the IRR is a welcome development, the BIR has yet to issue corresponding rules to properly and uniformly implement the tax incentives provided under the law.

While the law extending more benefits to PWDs and its implementing rules are relatively new, it is hoped that the government will keep its commitment to look after their welfare. In the initial discussions on the ongoing tax policy reform, there was a proposal to remove the VAT exemption privileges of PWDs and senior citizens. Recent developments indicate that there is a softening of that position, for which beneficiaries are thankful and hopeful that there will not be any other proposed diminution of the benefits granted by the law.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of EY or SGV & Co.

Joana T. Bongato is a Tax Senior Director of SGV & Co.