[Ask the Tax Whiz] Can senior citizens and PWDs avail VAT-exemption on their online transactions?

What are the benefits that Senior CItizens (SCs) and Persons with Disabilities (PWDs) can avail?

Senior citizens (SCs) and persons with disabilities (PWDs) have a 20% discount with VAT-exemption on the following goods and services:

Another privilege granted to them is the 5% special discount on “basic necessities” and “prime commodities.” However, only the higher of these two benefits (either the 20% discount with VAT-exemption or the 5% discount on basic necessities and prime commodities) would be applied.

What are the requirements that the SCs/PWDs shall provide the online sellers for their purchases to be considered VAT-exempt? 

Under Joint Memorandum Circular (JMC) No. 1-2022, as a general rule, SCs and PWDs must provide online sellers either a scanned copy/screenshot or image of their senior citizen ID and PWD ID which reflects the name, picture, date of birth, and nationality.

In addition, for the purchases of medicines, a copy of the medical prescription and copy of the front page and last entry page of the purchase booklet shall be attached by the SCs/PWDs upon placement of the order. For the purchase of basic necessities and prime commodities, a copy of the front page and last entry page of the purchase booklet shall be attached upon placement of the order.

Are there limitations for the SCs/PWDs in availing the discounts and VAT-exemption?

The limitation is that the total amount of the offline and online purchases of the SCs/PWDs per week should not exceed P1,300. Unused amounts are not carried over to succeeding weeks. However, purchase of medicines is not covered by the P1,300 ceiling.

Is the signature of the SCs/PWDs still required to appear in the Receipts/Invoices to be considered VAT-exempt?

Pursuant to Revenue Regulations No. 8-2023, the signature of the SCs/PWDs shall not be required for qualified purchases through online or mobile applications. However, the identification card number of the SCs/PWDs should still be provided to the seller upon placement of the order in order to avail the above mentioned discounts.

If you have more questions about the JMC 1-2023 and online VAT-exemption transactions and discounts for SCs and PWDs you may schedule a consultation with us through this site. – Rappler.com

References:

• Joint Memorandum Circular 01-2022
• Revenue Regulations 8-2023
• Revenue Regulations 7-2010
• Revenue Regulations 5-2017