#AskTheTaxWhiz: VAT exemptions, discounts for PWDs

The Philippine Tax Whiz discusses the discounts available to persons with disabilities and which items are exempt from value-added tax

Mon Abrea

Published: 9:00 PM September 20, 2019

Updated: 9:00 PM September 20, 2019

As a person with disability (PWD), is it true that I am exempt from value-added tax (VAT)? Is this the same as the PWD discount?

The VAT exemption of PWDs depends on the nature of the product. As reiterated by Revenue Regulations (RR) No. 9-2019, only the following goods or services are exempt from VAT:

Any item not listed above is still subject to VAT. Note, however, that the VAT exemption is not the same as the PWD discount.

Under RR No. 5-2017, PWDs can claim at least a 20% discount on the items above.

In addition, RR No. 9-2019 also sets a special 5% discount on basic necessities and prime commodities (but those items will not be exempt from VAT), provided that the total amount of the purchase will not exceed P1,300 per calendar week and that it's spent on at least 4 kinds of the qualified items.

For the purpose of the new 5% discount, what kinds of products are considered basic necessities or prime commodities?

According to RR No. 9-2019, the following are considered basic necessities:

All kinds and variants of rice

Corn

All kinds of bread (except pastries and cakes)

Fresh, dried, and canned fish

Fresh pork, beef, and poultry meat

All kinds of fresh eggs (except quail eggs)

Potable water

Fresh and processed milk (except milk labeled as food supplement)

Fresh vegetables

Fresh fruits

Locally-manufactured instant noodles

Coffee and coffee creamer

All kinds of sugar (except sweetener)

All kinds of cooking oil

Salt

Powdered, liquid, bar laundry and detergent soap

Firewood

Charcoal

All kinds of candles

Household LPG

Kerosene

Under the same regulations, the prime commodities are:

Flour

Dried, processed, and canned pork, beef, and poultry meat

Dairy products

Onions and garlic

Vinegar, fish sauce, and soy sauce

Toilet bath soap

Fertilizer

Pesticides

Herbicides

Poultry feeds, livestock feeds, and fishery feeds

Veterinary products

Paper, school supplies

Nipa shingle

Sawali

Cement, clinker, GI sheets

Hollow blocks

Plywood

Plyboard

Construction nails

Batteries (except cellphone and automotive batteries)

Steel wires

The list above also refers to the items that are not covered by the VAT exemption for PWDs.

For VAT-registered businesses, it is important to take note of their sales to VAT-exempt customers as they will have to report these to the Bureau of Internal Revenue.

Got more questions? Contact us at consult@acg.ph or (02) 622-7720. – Rappler.com

Mon Abrea, popularly known as the Philippine Tax Whiz, is one of the 2017 Outstanding Persons of the World, a Move Awards 2016 Digital Mover, one of the 2015 The Outstanding Young Men of the Philippines (TOYM), an Asia CEO Young Leader of the Year, and founding president of the Asian Consulting Group (ACG) as well as the Center for Strategic Reforms of the Philippines (CSR Philippines). Assisting him in his column is JM Miñano, communications associate of ACG. He graduated with a bachelor's degree in Communication Arts from the University of the Philippines Los Baños.

For inquiries, you may email consult@acg.ph or visit www.acg.ph for tax-related concerns.