‘Good’ deals buying property
Both the law and the BIR issuance are prime readings not only for solo parents but also for business establishments that sell the products covered
Published in Daily Tribune on March 09, 2023
by: Vanessa Arrha A De Leon
Pursuant to the provisions of Republic Act 11861, or the Expanded Solo Parents Welfare Act, which was passed and took effect in late 2022, the Bureau of Internal Revenue, on 17 January, issued Revenue Regulation No. 1-2023 which provides guidelines in the implementation of the tax benefits and incentives provided in the said law.
Both the law and the BIR issuance are prime readings not only for solo parents but also for business establishments that sell the products covered in the said law.
But who is considered a solo parent under the law? RA 11861 provides the different categories of persons who are considered solo parents, but the common denominator among them is that they provide sole parental care and support to a child or children.
Aside from defining a solo parent, RA 11861, more importantly, enumerates the rights and benefits recognized as available to the parents under the law, such as a solo parent’s right against work discrimination and parental leaves, educational benefits, subsidy, discounts, and tax benefits.
On the matter of discounts and tax benefits, the law provides that solo parents are entitled to both a 10 percent discount and exemption from VAT on the purchase of the following products: baby’s milk, food, micronutrient supplements, and sanitary diapers, duly prescribed medicines, vaccines, and other medical supplements, purchased from the birth of the child or children up to six years of age, from drug stores, pharmacies, grocery stores, and similar establishments.
This tax benefit means that when such products are purchased by a qualified solo parent, the said solo parent must not only be given a discount but such discount must be applied to the selling price of the product net of VAT.
To avail of the benefits, the solo parent is required to present a Solo Parent Identification Card which shall show that the solo parent meets the following conditions for availing of the same which are: (1) the solo parent has a child/children six years of age or under, and (2) the solo parent is earning less than P250,000 annually. Notably, it is also stated under the said RR that the discount and tax benefit is valid only for the purchase of goods for the exclusive use and enjoyment of the solo parent’s child or children who are aged six years or under.
On the other hand, for those establishments that sell products covered under the said law, the RR provides that an establishment granting the 10 percent discount to a qualified solo parent is entitled to a tax incentive such that it may claim the discount it granted as a tax deduction from its gross income, reducing the amount of its income that is subject to tax.
However, like the solo parents who may seek to avail of the benefit, the establishment that seeks to claim the discount as a deduction must also meet certain conditions provided under the RR such as: (1) the establishment must separately indicate the gross selling price and the sales discount in its sales invoice; (2) the seller must record its sales inclusive of the discount granted; (3) the discount can only be allowed as a deduction from gross income for the same taxable year that the discount is granted; and (4) the business establishment giving sales discounts to qualified solo parents is required to keep a separate and accurate record of sales which shall include the name of the solo parent, SPIC number, name/s of child/children with the age of 6 years or under; gross sales, sales discount granted, date of transaction, and invoice number for every sale transaction to solo parent.
The BIR notes that for sales transactions contemplated by the law as well as the said RR, the invoicing requirements provided under RR 16-2005 must be followed so that exempt sales are properly segregated from those which are taxable.
Read more: https://tribune.net.ph/2023/03/09/discount-tax-benefits-for-solo-parents/
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