The Bureau of Internal Revenue (BIR), under the leadership of Commissioner Romeo D. Lumagui, Jr., has issued Revenue Regulations (RR) No. 1-2023 on January 18, 2023 to provide the guidelines for the availment of the tax privileges granted to establishments that are giving ten percent (10%) discount and VAT exemption to qualified Solo Parents on their sale of goods identified in the “Solo Parents Welfare Act” (RA No. 11861).
Per RR No. 1-2023, only Solo Parents that have a child/children (as defined in RA No. 11861) with the age of six (6) years or under and earning less than ₱ 250,000.00 annually are qualified to avail of the said tax privileges.
The 10% discount and VAT exemption shall apply to a qualified Solo Parent’s purchase of the following goods identified in the Act: baby’s milk, food supplements and micronutrient supplements, sanitary diapers, medicines, vaccines, and other medical supplements. To avail of the said discount and exemption, the Solo Parent should present his/her “Solo Parent Identification Card” (SPIC) and “Solo Parent Booklet”.
The SPIC should show that the Solo Parent is entitled to the 10% discount and VAT exemption by indicating that the Solo Parent is earning less than ₱ 250,000.00 annually, with the dorsal side of the SPIC showing the name/s, birth date/s, and relation to the Solo Parent of the qualified children and/or dependents with the age of six (6) years or under.
The grant of the discount is only for the purchase of goods identified in the Act for THE EXCLUSIVE USE AND ENJOYMENT OR AVAILMENT OF THE SOLO PARENT’S CHILD OR CHILDREN WITH THE AGE OF SIX (6) YEARS OR UNDER.
All establishments supplying any of the goods identified above may claim the discounts granted to Solo Parents as a tax deduction based on the cost of goods sold. The 10% discount granted by the seller of goods identified in the Act shall be treated as an ordinary and necessary expense deductible from the gross income of the seller falling under the category of itemized deductions, and can only be claimed if the seller does not opt for the Optional Standard Deduction during the taxable quarter/year.
The claim of the discount granted under the Act as an additional item of deduction from the gross income of the seller is subject to the conditions specified in RR No. 1-2023.
To ensure the full entitlement of the Solo Parent to the 10% discount, the sellers are precluded from billing any VAT to the sale of said identified goods to Solo Parents.
For more information, see the full text of Revenue Regulations No. 1-2023 posted at www.bir.gov.ph.