Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui Jr. has ordered all BIR officials to coordinate with other government agencies in its fight against the sale and use of fake Person with Disability (PWD) identification cards (ID). This tax evasion scheme has caused an estimated revenue loss of Php 88.2 billion in 2023 alone, according to a recent Senate probe.
“People who sell and use fake PWD IDs are not only committing tax evasion, they are also disrespecting legitimate and compliant PWDs. The discount given by law to PWDs is for the improvement of their well-being and easing of their financial burden. It is not some common discount card that is accessible to the general public. Expect the BIR to run after fake PWD ID sellers and users,” Commissioner Lumagui stated.
The 1987 Constitution of the Philippines recognizes the rights and needs of PWDs. Consistent with this constitutional provision, Republic Act (R.A.) No. 7277, as amended by R.A. No. 10754, was enacted to provide PWDs the opportunity to participate in mainstream society by offering benefits upon the presentation of a PWD ID. These benefits include a 20% discount and an exemption from Value-Added Tax (VAT) on certain goods and services for their exclusive use and enjoyment.
Unfortunately, unscrupulous individuals have exploited this system by selling fake PWD IDs to those fraudulently seeking to claim these benefits. These fake IDs are not only sold on the streets but also through online marketplaces, making them easily accessible.
On December 5, 2024, the Senate Committee on Ways and Means conducted a public hearing on Senate Resolution No. 1239 regarding the use of fake PWD IDs. The hearing highlighted the adverse effects on businesses and the government due to the proliferation and misuse of fake PWD IDs. The goal of the Senate Resolution is to find solutions to stop the sale of such fake IDs and prevent those without disabilities from taking advantage of benefits intended only for PWDs.
The Bureau of Internal Revenue (BIR) expresses gratitude to the Senate for its help to stop this scheme, which is detrimental to government revenues. The BIR recognizes the harmful effects of the widespread use of fake PWD IDs on the economy, as the government loses revenue that should be collected and used to finance various projects. Revenue Regulations No. 5-2017 were issued to provide strict guidelines on the availment of tax privileges granted to PWDs, including penalties for violators.
The BIR will continue to conduct tax audits on transactions involving PWDs reported by establishments. As required under the regulations, establishments must provide records of sales to PWDs, including the name of the PWD, ID number, disability, and the amount of discount and VAT exemption given. The BIR will verify the legitimacy of the IDs submitted by establishments. If the BIR finds that such PWD ID numbers are not legitimate, it will disallow the deductions claimed by the establishments. Additionally, VAT-exempt sales linked to fake IDs will be assessed with deficiency VAT, including penalties and interest. The Bureau will intensify its coordination with relevant government agencies, including the Department of Health and the National Council on Disability Affairs, to verify the legitimacy of PWD IDs.
The proliferation of fake PWD IDs has significant economic consequences, leading to substantial tax revenue losses and undermining the intent of RA No. 7277, as amended. With the assistance of key government agencies, strengthening enforcement and improving the monitoring of PWD-related transactions can help minimize fraud, ensure that benefits reach legitimate PWDs, and protect the integrity of the government’s tax system.
