“Enabling the disabled” by Czarina R. Miranda (February 08, 2010)

SUITS THE C-SUITE By Czarina R. Miranda
Business World (02/08/2010)

Today, more businesses are embracing corporate social responsibility (CSR) as part of their mission that is now broader and larger in scope than just generating profits and achieving the bottom line.

In SGV, we call it the “business of doing good.”

If your business does support CSR, why not extend that advocacy by helping persons with disabilities, giving them the same privileges enjoyed by senior citizens, such as the 20% discount on purchases they make from business establishments?

The Bureau of Internal Revenue (BIR) has issued Revenue Regulations (RR) No. 1-2009 providing incentives to businesses granting incentives to people with disability. These regulations implement the provisions of Republic Act 7227, as amended, otherwise known as the Magna Carta for Persons with Disability.

A person with disability is defined as a Filipino citizen who, as a result of mental, physical or sensory impairment, suffers from restrictions on the ability to perform an activity in a manner or within the range considered normal for a human being.

Under the rules, disabled persons can claim at least a 20% discount from the following establishments for their purchases of goods or services for their exclusive use or enjoyment:

»hotels and similar lodging establishments and restaurants;

»sports and recreation centers;

»theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture, leisure and amusement;

»all drugstores on their purchases of medicine;

»medical and dental privileges in government and private facilities, such as but not limited to diagnostic and laboratory fees (e.g., x-rays, computerized tomography scans and blood tests), including professional fees of attending doctors in private facilities, subject to guidelines to be issued by the Department of Health in coordination with the Philippine Health Insurance Corporation;

»domestic air and sea transportation based on the actual fare, except promotional fares. If the promotional fare discount is higher than the 20% discount to disabled persons, the disabled person may choose the promotional fare but will no longer be entitled to the 20% discount as a disabled person; and

»land transportation privileges involving public buses and railway services such as the Light Rail Transit, Metro Rail Transit, Philippine National Railways, and such other similar public conveyance that will be constructed, established and operated by a public or private entity. Tolls of skyways and expressways are likewise subject to the 20% discount; however, this privilege can be availed of only if the disabled person owns the vehicle.

Businesses which grant sales discounts to disabled persons can claim these discounts as tax deductions, subject to the following conditions:

»sales discounts are deducted from gross income after deducting the cost of goods sold or the cost of service;

»the discount will be allowed as a deduction for the same taxable year that it is granted;

»only that portion of the gross sales exclusively used, consumed or enjoyed by the disabled person will be eligible for the deductible sales discount;

»the gross selling price and the sales discount must be separately indicated in the sales invoice or official receipt issued to the disabled person;

»only the actual amount of the sales discount granted, or a sales discount not exceeding 20% of the gross selling price or gross receipts, can be deducted from gross income — net of value-added tax, if applicable — for income tax purposes, and from gross sales or gross receipts, for VAT or other percentage tax purposes. The discount will be subject to the proper documentation required under the Tax Code, as amended; and

»the business establishment is required to keep separate and accurate records of sales, which shall include the name of the disabled person, identification card (ID) number, gross sales/receipts, sales discount granted, date of transactions and invoice number for every sale transaction to a disabled person.

Privileges available to disabled persons may be granted, however, only upon presentation of any of the following proof of their entitlement:

»an identification card issued by the city or municipal mayor or the barangay captain of the place where the disabled person resides; or

»the passport of the disabled person; or

»transportation discount fare ID issued by the National Council for the Welfare of Disabled Persons (NCWDP).

Moreover, the privileges granted to disabled persons may not be claimed if they claim a bigger discount provided by the establishment or by existing laws, or in combination with other discount programs. Thus, a disabled person who is also a senior citizen may be entitled to only one 20% discount on a sales transaction.

Given the present economic realities, the tax incentives for establishments may not be that attractive in view of the additional administrative work entailed and the fact that the sales discounts granted may actually reduce business income.

However, one can find it rewarding in that such businesses can make the lives of our disabled citizens a little better. After all, businesses that embrace some sense of responsibility towards society do not exist for profit alone; but have committed to do good for the benefit of others.

(Czarina R. Miranda is a tax partner of SGV & Co.)

This article was originally published in the BusinessWorld newspaper. It 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 SGV & Co.