Republic Act 11861 or the Expanded Solo Parents Welfare Act, which took effect in June last year, provides benefits to millions of Filipinos who are deemed solo parents.
Among others, the Solo Parents Welfare Act entitles a solo parent to a 10 percent discount and exemption from value added tax on certain products such as infant milk, food, and other medical supplements, under certain conditions.
On 18 January, the Bureau of Internal Revenue issued Revenue Regulations 1-2023 to provide the guidelines for (1) the tax privileges granted to establishments that are giving ten percent discount on their sale of goods identified in the Solo Parents Welfare Act; and (2) the VAT exemption on the sale of goods identified in the said Act.
A solo parent, to qualify for the 10 percent discount and VAT exemption must meet the following conditions: (1) the solo parent has a child/children (as defined in the Solo Parents Welfare Act) with the age of six years or under; and (2) the solo parent is earning less than P250,000 annually.
The 10 percent discount and VAT exemption shall apply to a qualified solo parent’s purchase from drug stores, pharmacies, grocery stores, and similar establishments of the goods identified in the Solo Parents Welfare which are the following: baby’s milk, food supplements, and micronutrient supplements, sanitary diapers, medicines, vaccines, and other medical supplements.
RR No. 1-2023 provides that the solo parent should present his/her “Solo Parent Identification Card” and “Solo Parent Booklet” to claim the 10 percent discount and VAT exemption.
The SPIC should show that the solo parent is entitled to the 10 percent discount and VAT exemption by indicating that the solo parent is earning less than P250,000 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 years or under.
RR 1-2023 emphasizes that 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 aged six years and below.
In addition, the regulations provide specific rules to be observed in granting the 10 percent discount and VAT exemption.
For prescribed medicine, vaccine, and other medical supplements, the 10 percent discount and VAT exemption shall apply to the purchase of generic or branded medicines, vaccines, and medical supplements, which are medically prescribed by an attending physician for the prevention and treatment of diseases, illness, or injury whose prescription is in the name of the solo parent’s child/children with the age of six years or under.
For baby’s milk, food supplements and micronutrient supplements, and sanitary diapers, the 10 percent discount and VAT exemption shall apply to the purchase of generic or branded baby’s milk, food supplements, micronutrient supplements, and sanitary diapers, for the solo parent’s child/children with the age of six years or under.
RR 1-2023 instructs that 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 percent 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, which can only be claimed if the seller does not opt for the Optional Standard Deduction during the taxable quarter/year.
The claim of the 10 percent discount granted under the Solo Parents Welfare Act as an additional item of deduction from the gross income of the seller is subject to the conditions specified in RR 1-2023.
The sale of goods identified in the Solo Parents Welfare Act and under the RR 1-2023 shall be exempt from VAT. To ensure the full entitlement of the solo parent to the 10 percent discount, the sellers of goods are precluded from billing any VAT to the sale of goods identified in the Solo Parents Welfare Act.
Happy spending. Happy Easter!
