SECTION 1. Scope. - Pursuant to Section 245 of the National Internal Revenue Code (NIRC) as amended, in relation to Section 10 of Republic Act No. 7432, these regulations are hereby promulgated to (1) implement the provisions of Sections 4 and 5(a) of the said Act granting tax exemption and other privileges to senior citizens, and (2) prescribe the guidelines for the availment thereof.

SECTION 2. Definitions. - For purposes of these regulations:

a.  Act - refers to Republic Act No. 7432.

b.  Senior citizen - means any resident citizen of the Philippines at least sixty (60) years old, including those who have retired from both government offices and private enterprises, and has an income of not more than sixty thousand pesos (P60,000.00) per annum subject to review by the National Economic and Development Authority (NEDA) every three (3) years.

The term "qualified senior citizen" shall refer to a resident Filipino citizen who meets the statutory requirements of Section 2 of the Act and Section 2(b) of these regulations.

c.  Resident citizen - refers to a Filipino citizen with permanent/legal residence in the Philippines, and shall include those who, having migrated to a foreign country, have returned to the Philippines with a definite intention to reside therein, and whose immigrant visa has been surrendered to the foreign government.

d.  Dependent - a qualified senior citizen whether or not related to a benefactor with whom he leaves and who takes care of him/her.

e.  Head of the Family - an unmarried or legally, separated man or woman, with one or both parents, or with one or more brothers of sisters, or with one or more legitimate, recognized natural or legally adopted children, living with and dependent upon him/her for their chief support, where such brothers or sisters or children are not more than twenty-one (21) years of age, unmarried and not gainfully employed or where such children, brothers or sisters, regardless of age are incapable of self-support because of mental or physical defect.

The term 'head of family' includes an unmarried or legally separated man or woman who is the benefactor of a qualified senior citizen as defined in Section 2 of the Act and these regulations.

f.   Benefactor - any person whether or not related to the senior citizen who takes care of the latter as a dependent.

g.  OSCA - refers to the Office for Senior Citizens Affairs.

h.  Income/Annual Taxable Income of a resident Senior Citizen shall refer to the annual gross compensation, business and other income received during each taxable year from all sources as defined in Section 23 of the NIRC, which shall not exceed the poverty level of P60,000 or such amount as may thereafter be determined by the NEDA.

However, income derived by and qualified senior citizen from the following sources:

1.  Interest income from Philippine currency bank deposits, yield and other monetary benefit from deposit substitutes, trust fund and similar arrangements; royalties, prizes and winnings (Sec. 21(c), NIRC);

2.  Capital gains from sales of shares of stock (Sec. 21(d), NIRC); and

3.  Capital gains from sales of real property (Sec. 21(e), NIRC).

shall not be included in the determination of his 'income/annual taxable income' which should not exceed the poverty level of P60,000 or such amount as may thereafter be determined by the NEDA for a certain taxable year inasmuch as income from such sources shall be subject to the corresponding income tax rates prescribed under Section 21(c), (d) and (e) of the NIRC as amended.

i.   Tax Credit - refers to the amount representing the 20% discount granted to a qualified senior citizen by all establishments relative to their utilization of transportation services, hotels and similar lodging establishments, restaurants, drugstores, recreation centers, theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture, leisure and amusement, which discount shall be deducted by the said establishments from their gross income for income tax purposes and from their gross sales for value-added tax or other percentage tax purposes.

SECTION 3. Income Tax Benefit and Privileges for the Senior Citizens. - Senior citizens qualified as such by the Commissioner of Internal Revenue or his duly authorized representative who, for purposes of these regulations, is the Regional Director of the Revenue Region having jurisdiction of the city or municipality where they are permanent residents shall be entitled to the following tax benefit and privileges:

a.  Exemption from the payment of individual income tax provided that their annual taxable income does not exceed the poverty level of P60,000.00 or such amount as may be determined by the NEDA for a certain taxable year.

b.  A 20% discount from all establishment relative to utilization of transportation, services, hotels and similar lodging establishments, restaurants and recreation centers, and on purchases of medicine anywhere in the country.

c.  A minimum of twenty per cent (20%) discount on admission fees charged by theaters, cinema houses and concert halls, circuses, carnivals and other similar places of culture, leisure, and amusement.

SECTION 4. Recording/Bookkeeping Requirement for Private Establishments. - Private establishments, i.e., transport services, hotels and similar lodging establishments, restaurants, recreation centers, drugstores, theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture, leisure and amusement, giving 20% discounts to qualified senior citizens are required to keep separate and accurate record of sales made to senior citizens, which shall include the name, identification number, gross sales/receipts, discounts, dates of transactions and invoice number for every transaction.

The amount of 20% discount shall be deducted from the gross income for income tax purposes and from gross sales of the business enterprise concerned for purposes of the VAT and other percentage taxes.

SECTION 5. Availment of Income Tax Exemption. - A senior citizen who shall avail of the exemption from income tax is required to submit the following documents to the Revenue District Officer (RDO) of the place where he is a permanent resident, who shall make the necessary verification and report for purposes of the income tax exemption to be issued by the Commissioner of Internal Revenue or his duly authorized representative:

A.  Certified true copy of his Birth Certificate/Baptismal Certificate or in the absence thereof, a certification from the National Statistics and Census Bureau of an affidavit by two (2) disinterested credible persons who know personally the senior citizen.

B.  If he has a benefactor as defined in Section 2 (f) of these Regulations, Certification as to the name, address, occupation, Office or business address (office/business) and TIN of his benefactor;

C.  If employed, a copy of his withholding tax statement (BIR Form W-2) for the preceding taxable year;

c.1.	A senior citizen who derives taxable (fixed) compensation income from only one employer in an amount not exceeding P60,000 per annum shall be exempt from income tax and consequently from the withholding tax prescribed under section 72 Chapter 10, Title II of the National Internal Code, as amended.

D.  If self-employed, (i.e., practice of profession, or in business as single proprietorship) a copy of his income tax return (ITR) for the preceding taxable year together with the annual license or permit issued by the city or municipality where he has his principal place of business, supported by a copy of his declaration of sales or income.

d.1.	A senior citizen who derives taxable compensation income from two (2) or more employers, or who receives mixed income from employment and from business shall still file an income tax return.

The RDO concerned shall transmit his verification report/recommendation to the said Regional Director, as duly authorized representative of the Commissioner, for issuance of the certificate of income tax exemption to the senior citizen;

For purposes of applying for the OSCA ID Card, the duly stamped income tax return and or the BIR Certification shall be honored.

SECTION 6. Taxability of Senior Citizens to other Internal Revenue Taxes. -

a.  A senior citizen whose annual taxable income exceeds the poverty level of P60,000 or such amount as may thereafter be determined by the NEDA for a certain taxable year shall be liable to the individual income tax in the full amount thereof on his taxable income net of allowable deductions.

b.  Regardless of the amount of taxable income, a senior citizen who derives income from self-employment, business and practice of profession shall be subject to other internal revenue taxes which include but are not limited to the value added tax, caterer's tax, documentary stamp tax, overseas communications tax, excise taxes, and other percentage taxes. He shall, therefore, file the corresponding business tax returns in accordance with existing laws, rules and regulations.

c.  He shall be subject to the 20% final withholding tax on interest income from Philippine Currency bank deposit, yield and other monetary benefit from deposit substitutes, trust fund and similar arrangements, royalties, prizes (except prizes amounting to P3,000 or less which shall be subject to income tax at the rates prescribed under Section 21, paragraph (a) or (f), NIRC) as the case may be, and winnings (except Philippine Charity Sweepstakes winnings).

d.  Capital gains from sales of shares of stock [Sec. 21(d), NIRC].

e.  Capital gains from sales of real property, [Sec 21(e), NIRC].

SECTION 7. Basic Personal Exemption only for Benefactor. - A qualified senior citizen living with and taken cared of by a benefactor whether related to him or not, shall be treated as a dependent and his benefactor shall be entitled to the basic personal exemption of P12,000 as head of the family, as defined in Section 2(e) of these regulations.

For purposes of claiming personal exemption as head of family with dependent senior citizen, the identification card number issued by the OSCA shall be indicated in the ITR to be filed by the benefactor. The senior citizen shall indicate in a certification to be submitted to the RDO and the OSCA his benefactor who will be granted the exclusive right to claim him as dependent for income tax purposes.

Caring for a dependent senior citizen shall not, however, entitle the benefactor to claim the additional exemption allowable to a married individual or head of family with qualified dependent children under Sec. 29 (1) (2) of the NIRC, as amended.

SECTION 8. Repealing Clause. - All existing rules, regulations and other issuances or portions thereof inconsistent with the provisions of these regulations are hereby modified, repealed or revoked accordingly.

SECTION 9. Effectivity. - These regulations shall take effect fifteen (15) days after publication in the Official Gazette or newspaper of general circulation whichever comes first and shall apply to income earned beginning January 1, 1992.

Adopted: 23 Aug. 1993


(Sgd.) ERNEST LEUNG
Acting Secretary of Finance