RR No. 1-2023 — Implements the Ten Percent (10%) Discount and the VAT Exemption under RA No. 11861 (Expanded Solo Parents Welfare Act). (Published in Manila Times on January 23, 2023)

REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE National Office Building

17 JAN 2023

REVENUE REGULATIONS No. 1- 2023

SUBJECT Impiementing the Ten Percent (10%) Discount and the Value-Added Tax (VAT) Exemption under Republic Act (RA) No. I1861 or the "Expanded Solo Parents Welfare Act"

TO All Internal Revenue Officers and Others Concerned

the Implementing Rules and Regulations (IRR) of the Act, these Regulations are hereby promulgated to prescribe the guidelines for: of 1997, as amended (Tax Code), in relation to Section 15(b) of Republic Act No. 8972 or the "Solo Parents Welfare Act of 2000", as amended by RA No. 11861 or the "Expanded Sold Parents Welfare Act" (hereinafter referred to as the "Act"), and Section 33 b ). Arti le VI of SEC. 1. Scope. --- Pursuant to Section 244 of the National Internal Revenue Code

1. The tax privileges granted to establishments giving the ten percent (10%) d:scount on their sale of goods identified in the Act to Solo Parents; and

2. The VAT exemption on the sale of goods identified in the Act to Solo Parents by VAT-registered taxpayers.

phrases shall be defined as follows: SEC. 2. Definitions. - For purposes of these Regulations, the following terins and

a.-"Baby's milk" -- refers to breastmilk substitute, defined as any food being niart eted or . otherwise represented as partial or total replacement for breastmilk, whethet or not suitable for that purpose. Infant formula is a breastmilk surstitute ferrnulated Breastfeeding Act, Executive Order No. 51, series 1 986 and its Revised Iinpler ienting industrially in accordance with applicable Codex Alimentarius standards. to satisty the normal nutritional requirements of infants up to six (6) months of age and aic pted to Rules and Regulations issued as Administrative Order No 2006-0012; their physiological characteristics, pursuant to the Implementing Ruls and Regulations of Republic Act No. 10028 (RA No. 10023) or the F:xpauded

b.SPD" -- refers to the Solo Parents Division;

C.SPO" -- refers to the Solo Parents Office:

primary evidence of his/her status as a Solo Parent to enable him'her t5 avai: of the *Solo Parent Identification Card" and Booklet -- The Solo Parent Identifica icn Card (SPIC) is issued to the Solo Parent as his/her competent proof of identificaticn and the

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benefits under the Act. The SPIC together with the Bookiet are issued by the SPO of the province or city, or the SPD of the municipality. and shall be va id for oue (1) year.

e.- Sales discount --- the actual discount, or that discount, which in no case shall be lower than ten percent (10%) of the gross selling price of the goods identified in the Act sold to Solo Parents by certain establishments enumerated under the Act and in these Regulations.

herein mentioned: guidelines shall apply on the granting of the ten percent (10%) discount ant VAT exe:nption SEC. 3. Grant of Discounts and VAT Exemption to Solo Parents. -- The following

J Solo parents that meet all of the following conditions shall qualify fot' the 1o%

discount and VAT exemption:

1. Solo Parent has a child/children (as defined in RA No. 11 81) with the age of six (6) years or under; and 2. Solo Parent is earning less than P250.000.00 annually.

b. The Io% discount and VAT exemption shall apply to a qualitied Sol Parent's purchase of the following goods identified in the Act from dri g stores. pharmacies. issued by the Department of Health (DOH), in coordination with the Food and Drug Administration (FDA), PhilHealth, and the Department of' Interior and Local Government (DILG): grocery stores, and similar establishments, and subject to the guidelines that shall be

I.Baby's milk; 2. Food supplements and Micronutrient supplements; 3. Sanitary diapers; 4. Medicines; 5.Vaccines; and 6. Other medical supplements.

Memorandum Circular. Upon its release, the guidelines of the DOH shall be circularized through Revenue

solo parent of the qualified children and/or dependents with the age of six (6) years or un ler. discount and VAT exemption on qualified purchases, the Solo Parent shal present his/her SPIC and Solo Parent Booklet. The SPIC should show that the Solo Parent is eatitled to tre 10% discount and VAT exemption by indicating that the Solo Parent is earning less. than P250.00f).00 annually, and the dorsal side of the SPIC indicates the name/s, birth date's, and relatior to the SEC. 4. Presentation of the SPIC and Solo Parent Booklet. - To avail of tre 10%

granting the discount: 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 WITH THE AGE OF SIX (6) YEARS OR UNDER. The following rules stall be obse^ved in SEC. 5. Determination of the Amount of Discount. -- The grant of the discount is only

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(a) PRESCRIBED MEDICINE, VACCINE, AND OTHER MEDICAL SUPPLENENTs branded medicines, vaccines, and medical supplements, which are medically illness, or injury whose prescription is in the name of the Solc Parent's child/children with the age of six (6) years or under; and subiect to the guidelines that Shall be issued by the DOH. prescribed by an attending physician for the prevention and treatment of diseases. -- The 10% discount and VAT exemption shall apply to the purchase of g.neric or

{b} BABY'S SUPPLEMENTS; AND SANITARY DIAPERS -- The I0% discount and VAT supplements, micronutrient supplements, and sanitary diapers. fo - the Solo Parent's shall be issued by the DOH. exemption shall apply to the purchase of generic or branded saby's mill.. food child/children with the age of six (6) years or under and subject to the guide ir-es that MILK: FOODSUPPLEMENTS AND MICRONUTRIENT

supplying any of the goods identified in the Act and as referred to in S.ection 3 o: these Regulations may claim the discounts granted to Solo Parents as a tax deduction based on the cost SEC. 6. Tax Treatment of the Discount Granted to Soto Parents. -- A ll establis iments

at an undiscounted selling price of P200 for 340grams, the cost of the discount is coinpt ted as: of goods sold. By way of example, if a VAT-registered grocery store sells Similac Infant Milk

Amount Payable by the Solo Parent. Selling Price (VAT-exempt) Less: 10% Discount P2C0.00 P180.00 20.00

goods identified in the Act to a qualified Solo Parent is exempt from VAT. The cost of the discount in the above illustration is P20.00 and shall be allowed as a deduction from grcss income purposes and shall be subject to proper documentation in accordance with the provisions. of the deduction, the amount of sales that must be reported for tax purposes is the ur discounted selling price and not the amount of sales net of the discount. The income statement of the seller must gross income (sales less cost of sales). Thus the entry to record the transaction in the books of the seller should be as follows: for the same taxable year that the discount is granted, provided that, the tetal amount of the claimed tax deduction net of VAT, if applicable, shall be included in their gross sales for tax Tax Code. This means that for the establishment to be allowed to claim the discount as a reflect the discount, not as a reduction of sales to arrive at net sales, but as a deduction f'om its The selling price to be charged by the seller must be net of VAT because the sale of

Debit --Cash Debit -- Solo Parent Discount Expense Credit -- Sales P180 20 P200

the following conditions: the category of itemized deductions, and can only be claimed if the seller does mot omt for the an ordinary and necessary expense deductible from the gross income of the seller falling: under Optional Standard Deduction during the taxable guarter/vear. The claim of the discount granted under the Act as an additional item of deduction from the gross income of the seller is subject to The 10% discount granted by the seller of goods identified in the Act shall be treated as

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Only that portion of the gross sales exclusively used. consumed or enjoyed by the Solo Parent's child/children with the age of six (6) years or under shall be eligible for the deductible sales discount.

2. The gross selling price and the sales discount must be separately indicated in the sales invoice issued by the establishment for the sale of goods identified in tte Aci to the Solo Parent.

3. Only the actual amount of the discount granted or a sales discount not less than the statutory rate of 10%, whichever is higher, based on the gross selling priec can be other percentage tax purposes. deducted from the gross income, net of value added tax. if applicable.for income tax purposes. and from gross sales of the business enterprise concerned, for VAT or

4. The seller must record its sales inclusive of the discount granted.

5. The discount can only be allowed as a deduction from gross income for the same taxable year that the discount is granted.

6. The business establishment giving sales discounts to qualified Solo Parer ts is re:quired to keep a separate and accurate record of sales, which shall include the Narne of the Solo Parent. SPIC number, Name/s of child/children with the age of six (6) year or every sale transaction to Solo Parent. under, gross sales, sales discount granted, date of transaction, and invoice number for

7. Only business establishments selling any of the goods identified in the Act to Solo Parents where an actual discount was granted may claim the deduction.

8. The seller must not claim the Optional Standard Deduction during the taxahle year.

SEC. 7. Exemption from VAT of the Sale to Solo Parents.-

Parent to the discount prescribed in the Act, the sellers of goods are precluded froin billing any qualified Solo Parent who has a child with the age of six (6) years or under and is; earning less than P250,000.00 annually shall be exempt from VAT. To ensure the full entitlement of the Solo VAT to the sale of goods identified in the Act to Solo Parents. The sale of goods identified in the Act and under Section 3 of these Regalations to a

machine tape must properly segregate the exempt sales from the taxable sales. a Point of Sale Machine or a Cash Register Machine in lieu of the regular sales invoice. the requirements prescribed under Revenue Regulations No. 16-2005, as amended. If the seller uses The sale of goods identified in the Act to a Solo Parent must follow the invoicing

and must be closed to the cost or expense account by the seller. The input tax attributable to the exempt sale shall not be allowed as an input tax credit

these Regulations shall suffer the penalties provided in the Tax Code and RA. No. I 18n1. SEC. 8. Penalties and Other Sanctions. --- Any person who viotates any provision of

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other issuance or portions thereof inconsistent with the provisions of these Regulations are hereby modified, repealed or revoked accordingly. SEC. 9. Repealing Clause. --- The provisions of all existing rule:s, regulations and

publication in the Official Gazette or newspaper of general circulation, whichever comes first. SEC. 10. Effectivity. --- These Regulations shall take effect fifteen (15) days atter

C c c. BENJAMIN E. DIOKNO Secretary of Finance 66 13 2723 Recommending Approval:

Comssioner of Intefnal Revenue UMAGUI, JR

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