Senior citizens may not yet enjoy higher tax exemptions

MANILA, Philippines - Senior citizens cannot yet avail of higher tax exemptions allowed under the Expanded Senior Citizens Act of 2010 until the government has issued the law’s implementing rules and regulations, Bureau of Internal Revenue (BIR) Commissioner Joel Tan-Torres yesterday said.

As such, he said business establishments cannot yet exempt senior citizens from paying the 12-percent value added tax (VAT) as mandated under the law signed by President Gloria Macapagal-Arroyo last month.

“The DSWD (Department of Social Welfare and Development), DOF (Department of Finance) and the BIR are working on the implementing rules. Hopefully, it will be finished in a few weeks. In the meantime, the law is not yet in effect,” Tan-Torres said.

The law exempts the 4.6 million senior citizens in the country from paying the 12 percent VAT on basic purchases and other essential goods and services.

Furthermore, the law enables senior citizens to enjoy fully the 20-percent discount on consumer goods and services provided under a 2003 legislation known as RA 7342, otherwise known as “An Act to Maximize the Contributions of Senior Citizens to Nation Building, Grant Benefits and Special Privileges, and for other Purposes.”

Under the law, the VAT exemption will apply to the medicines, accessories and equipment; fees of attending physicians; medical, dental fees and diagnostic and laboratory fees and fares for public transportation.

Furthermore, the discount will also be applied on admission fees in cinemas, leisure and culture, services in hotels, restaurants and similar establishments and to the funeral and burial services for the death of senior citizens.

The Department of Finance and the BIR have opposed the measure, saying that it would result in revenue losses of P1.68 billion and would only “complicate” the administration of the VAT.

Tan-Torres said the IRR that the BIR, DOF and the DSWD would issue hopes to address the complications that may arise in administering the VAT.