Continued from yesterday May 15, 2017
The sale to a PWD must follow the invoicing requirements.
The input tax attributable to VAT-exempt sale is considered cost or an expense account by business establishments and shall not be allowed as an input tax credit. If there is no name of a PWD and PWD ID Number indicated in the records of sales, the input tax attributable to VAT-exempt sale claimed as an expense by business establishments shall be disallowed. The exemption herein granted will not cover other indirect taxes that may be passed on by the seller to a PWD buyer, such as percentage tax, excise tax, etc. In such cases, the discount must be applied to the total cost of the goods or services charged by the seller exclusive of VAT.
Effective the taxable year 2016, a benefactor of a qualified PWD may claim the additional exemption of P25,000 for each PWD, if such PWD, regardless of age, satisfies all of the following:
a. Filipino citizen
b. within the fourth civil degree of consanguinity or affinity to the taxpayer/benefactor
c. not gainfully employed
d. chiefly dependent upon and living with the taxpayer/benefactor
The total number of dependents (qualified dependent children and/or qualified dependent PWD) for which additional exemptions may be claimed by the taxpayer/benefactor shall not exceed four. The additional exemptions for qualified dependent PWD shall be claimed only by one taxpayer or by one of the spouses in the case of married individuals.
In the case of legally separated spouses, additional exemptions may be claimed only by the spouse who has custody of the child or children or PWD, provided that the number of additional exemptions that may be claimed by both shall not exceed the maximum additional exemptions of four.
The taxpayer/benefactor of the PWD shall submit documentary requirements to the Revenue District Office (RDO) where he is registered in order to claim the additional exemption for the first year of claiming the exemption, and after three years or upon renewal of the PWD ID, whichever comes first.
Any violation shall be subject to the corresponding penalties under pertinent provisions of the Tax Code of 1997, as amended, and other applicable regulations issued by the BIR. Further, any person who violates any provision of RA 10754 shall suffer the penalties under the said regulations, such as a fine of not less than P50,000 but not exceeding P100,000 or imprisonment of not less than six months but not more than two years, or both at the discretion of the court. Any person who abuses the privileges granted under the law shall be punished with imprisonment of not less than six months or a fine of not less than P5,000, but not more than P50,000, or both, at the discretion of the court.
If the violator is a corporation, organization, or any similar entity, the officials thereof directly involved shall be held liable. Upon filing of an appropriate complaint, and after due notice and hearing, the proper authorities may also cause the cancellation or revocation of the business permit, permit to operate, franchise and other similar privileges granted to any business entity that fails to abide by the provisions of the Act and these Regulations.
The author is a senior manager with the Tax & Corporate Services division of Navarro Amper & Co., the local member firm of Deloitte Southeast Asia Ltd. – a member firm of Deloitte Touche Tohmatsu Limited – comprising Deloitte practices operating in Brunei, Cambodia, Guam, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.