TAX NEWS - June 2010
Philippines Tax: Senior citizens' VAT relief readied
Finance Undersecretary Gil S. Beltran said in an interview that the rules would be signed, paving the way for publication and eventual coming into force.
Since President Gloria Macapagal-Arroyo signed the Expanded Senior Citizens Act in February, the Bureau of Internal Revenue had to clarify that VAT exemptions for the elderly could not be applied until the rules were released.
Signed last February 16, the new law enables the elderly to enjoy fully the 20-percent discount on purchases of consumer goods and services provided for under an older law that took effect in 2003.
The Department of Finance had urged President Arroyo to veto the VAT exemption for the elderly and proposed that the discount be raised to 30 percent.
Finance officials said such exemption would present a logistical nightmare for the BIR which was already short of resources to implement existing tax measures.
The DoF had opposed the provisions of the law when it was still a bill pending in Congress.
Instead, the DoF had been amenable to increase senior citizens' discount on purchases to 30 percent of their bills from 20 percent, instead of a VAT exemption.
Beltran said the country's treasury stood to lose P1.68 billion in tax collections in a year once the law is implemented.