PWD Benefits Under RA 10754: VAT Exemptions and Discounts After TRAIN Law

PWD Benefits Under RA 10754: VAT Exemptions and Discounts After the TRAIN Law

Introduction

In the Philippines, the rights and welfare of persons with disabilities (PWDs) are protected and promoted through various laws, with Republic Act (RA) No. 10754 serving as a cornerstone. Enacted in 2016, RA 10754, also known as "An Act Expanding the Benefits and Privileges of Persons with Disability, Amending for the Purpose Republic Act No. 7277, as Amended, Otherwise Known as the Magna Carta for Persons with Disability, and Appropriating Funds Therefor," builds upon the foundational protections provided by RA 7277. This law mandates a range of benefits, including discounts and tax exemptions, to alleviate the financial burdens faced by PWDs and ensure their full participation in society.

A key aspect of these benefits is the 20% discount on specific goods and services, coupled with exemption from value-added tax (VAT). However, the passage of RA 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Law in 2017, introduced significant changes to the Philippine tax system, including adjustments to VAT exemptions and thresholds. This raised questions about the continuity and application of PWD benefits. Despite these reforms, the core privileges under RA 10754 remain intact, with clarifications from implementing agencies ensuring that PWDs continue to enjoy VAT exemptions and discounts without diminution. This article explores the scope, mechanics, and post-TRAIN implications of these benefits in detail.

Definition and Identification of Persons with Disabilities

Under RA 10754, a person with disability is defined as an individual who has a long-term physical, mental, intellectual, or sensory impairment that, in interaction with various barriers, may hinder their full and effective participation in society on an equal basis with others. This aligns with the United Nations Convention on the Rights of Persons with Disabilities, which the Philippines has ratified.

To avail of the benefits, PWDs must possess a valid PWD Identification Card (ID) issued by the local government unit (LGU) through the Persons with Disability Affairs Office (PDAO) or the National Council on Disability Affairs (NCDA). The ID serves as proof of entitlement and must be presented at the point of transaction. It includes details such as the type of disability, which can range from orthopedic, visual, hearing, psychosocial, chronic illness, learning, mental, or multiple disabilities. The law emphasizes that the ID is non-transferable and must be renewed periodically, typically every three years, to reflect any changes in the holder's condition.

Core Benefits: 20% Discount and VAT Exemption

RA 10754 amends Sections 32 and 33 of RA 7277 to explicitly provide a 20% discount and VAT exemption on the sale of certain goods and services to PWDs. These privileges apply to the following categories:

1. Lodging and Accommodation: Hotels, inns, motels, pension houses, and similar establishments offering lodging services.
2. Food and Beverage Services: Restaurants, eateries, and food establishments, including those within hotels or recreation centers.
3. Recreation and Entertainment: Admission fees to theaters, cinemas, concert halls, circuses, carnivals, and other places of culture, leisure, and amusement.
4. Medical and Dental Services: Professional fees for physicians, dentists, therapists, and other health professionals, as well as hospital and clinic services, including diagnostic and laboratory fees.
5. Purchase of Medicines and Medical Supplies: Medicines, vitamins, food supplements, and medical devices prescribed by a physician, including over-the-counter drugs when necessary for the disability.
6. Transportation Services: Domestic air and sea travel, as well as land transportation such as buses, trains, taxis, and ride-hailing services.
7. Funeral and Burial Services: Services provided by funeral parlors, including embalming, cremation, and interment.
8. Educational Assistance: Tuition fees, miscellaneous fees, and other school-related expenses in public and private educational institutions, including vocational and technical schools.

The 20% discount is applied to the gross selling price or gross receipts before any taxes. Importantly, the sale of these goods and services to PWDs is exempt from the 12% VAT under Section 109 of the National Internal Revenue Code (NIRC), as amended. This means that after applying the 20% discount, no VAT is added to the final amount payable by the PWD.

For example, if a meal at a restaurant costs PHP 1,000 (inclusive of potential VAT if not exempted), a PWD would receive a 20% discount, reducing it to PHP 800, and then be exempt from VAT on that amount. Establishments are prohibited from imposing minimum purchase requirements or other conditions that could undermine these benefits.

Mechanics of Availment and Establishment Incentives

To claim the benefits, PWDs must present their valid PWD ID along with a prescription or certification where applicable (e.g., for medicines). For family members or assistants accompanying the PWD, the benefits extend only to the portion directly attributable to the PWD's consumption. In cases of multiple PWDs in a group, each can claim their individual discount and exemption.

Establishments granting these privileges are entitled to incentives under Section 33 of RA 7277, as amended. The total amount of discounts granted to PWDs in a taxable year can be deducted from the establishment's gross income for income tax purposes, provided they maintain separate records or booklets for such transactions. Additionally, since sales to PWDs are VAT-exempt, establishments can claim these as input tax credits or refunds, subject to Bureau of Internal Revenue (BIR) regulations.

The Department of Social Welfare and Development (DSWD), in coordination with the NCDA, DOH, DepEd, and other agencies, issues implementing rules and regulations (IRR) to guide compliance. For instance, Joint Administrative Order No. 1, Series of 2009, and subsequent amendments detail the procedures for recording discounts and exemptions.

Impact of the TRAIN Law on PWD Benefits

The TRAIN Law (RA 10963), effective January 1, 2018, aimed to simplify the tax system, lower personal income taxes, and expand the VAT base by removing certain exemptions. Notably, it repealed or modified over 50 VAT exemptions under the old Tax Code, including those for senior citizens and PWDs in some interpretations. However, specific provisions ensured the preservation of PWD privileges.

Section 35 of RA 10754 explicitly states that the 20% discount and VAT exemption shall be granted "notwithstanding any provision of law to the contrary." This overriding clause protected these benefits from being curtailed by the TRAIN Law. In response to initial confusion, the BIR issued Revenue Regulations (RR) No. 1-2019, clarifying that sales of goods and services to PWDs remain VAT-exempt, provided the transaction qualifies under RA 10754.

Post-TRAIN adjustments include:

• Increased VAT Threshold: The TRAIN Law raised the VAT registration threshold from PHP 1.9195 million to PHP 3 million in annual gross sales. This indirectly benefits small establishments serving PWDs, as non-VAT registered businesses do not charge VAT anyway, but the exemption ensures consistency.
• Excise Taxes and Other Levies: While VAT exemptions persist, excise taxes on certain items (e.g., sweetened beverages, petroleum products) introduced by TRAIN are not waived for PWDs unless specifically provided. However, the 20% discount applies before such taxes.
• Harmonization with Senior Citizens' Benefits: RA 10754 aligns PWD benefits with those under the Expanded Senior Citizens Act (RA 9994), allowing double privileges for individuals qualifying as both (e.g., senior PWDs can claim up to 40% discount in some cases, though capped in practice).

Despite these safeguards, challenges arose in implementation, such as some establishments mistakenly charging VAT or refusing discounts post-TRAIN. Advocacy groups like the NCDA have conducted awareness campaigns to address this.

Additional Privileges and Protections

Beyond discounts and VAT exemptions, RA 10754 introduces other benefits:

• Express Lanes: Priority lanes in commercial and government establishments, similar to those for seniors.
• Educational Scholarships: Access to scholarships, grants, and financial aids without discrimination.
• Employment Incentives: Tax deductions for employers hiring PWDs, and prohibitions against discrimination.
• Accessibility Requirements: Mandates for barrier-free environments in public spaces.
• Health Services: Free rehabilitation, assistive devices, and sign language interpretation in government facilities.

The law also provides for the creation of the NCDA as the lead agency for monitoring compliance, with regional committees to handle local implementation.

Penalties for Non-Compliance

Violations of RA 10754, such as refusing to grant discounts or exemptions, are punishable under Section 46 of RA 7277, as amended. Penalties include fines ranging from PHP 50,000 to PHP 200,000, imprisonment from six months to six years, or both, depending on the offense's gravity. Repeat offenders may face business closure or license revocation. Complaints can be filed with the DSWD, NCDA, or local courts, with PWDs entitled to legal assistance from the Public Attorney's Office.

Conclusion

RA 10754 represents a progressive step in empowering PWDs in the Philippines by providing tangible financial relief through 20% discounts and VAT exemptions, even after the fiscal reforms of the TRAIN Law. These benefits not only reduce economic barriers but also promote inclusivity and dignity. While implementation challenges persist, ongoing efforts by government agencies and civil society ensure their effective realization. PWDs are encouraged to know their rights, secure their IDs, and report violations to fully benefit from these provisions. As Philippine society evolves, these laws underscore the commitment to leaving no one behind.