REPUBLICOF THE PHILIPPINES

DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE
National Office Building
1%

REVENUE REGULATIONS No. 1- m 2 :

SUBJECT : Implementing the Ten Percent (10%) Discount and the Value-Added Tax
(VAT) Exemption under Republic Act (RA) No. l I86I or the “Expanded Solo
Parents Welfare Act"

TO : All Internal Revenue Officers and Others Concerned

SEC. 1. Scope. —— Pursuant to Section 244 of the National lntemal Revenue Code
of 1997. as amended (Tax Code). in relation to Section 15(b) o f Republic Act No. 8972 or
the “Solo Parents Welfare Act of 2000“, as amended by RA No. I [86] or the “Expanded Solo
Parents Welfare Act“ (hereinafter referred to as the “Act"), and Section 33I'b ) . Article VI of
the Implementing Rules and Regulations (IRR) of the Act. these Regulations are hereby
promulgated to prescribe the guidelines for:

1. The tax privileges granted to establishments giving the ten percent 00%) discount
on their sale of goods identified in the Act to Solo Parents; and

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

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

a. “Baby‘s milk“ - refers to breastmilk substitute, defined as any food being marl- eted or
. otherwise represented as partial or total replacement for breastmilk, whether or not
suitable for that purpose. Infant formula is a breastmilk substitute Formulated
industrially in accordance with applicable Codex Alimentarius standards to satisfy the
normal nutritional requirements of infants up to six (6) months of age and air ptcd to
their physiological characteristics, pursuant to the Implementing Rules and
Regulations of Republic Act No. [0028 (RA No. 10023) or the Expanded
Breastfeeding Act, Executive Order No. 51, series I986 and its Revised Implerrenting
Rules and Regulations issued as Administrative Order No 2006-0012;

b. “SPD‘~ - refers to the Solo Parents Division;

c. “SPO" — refers to the Solo Parents Office:

d.' “Solo Parent Identification Card“ and Booklet - The Solo Parent ldentifica.i(-n Card
(SPIC) is issued to the Solo Parent as his/her competent proof of identificat ion and the
primary evidence of his/her status as 3 Solo Parent to enable him’her to avai: of the

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 benefits under the Act. The SPlC together with the Booklet are issued by the SPO of
the province or city, or the SPD of the municipality. and shall be va id for one (I) year.

i 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.

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

a. Solo parents that meet all of the following conditions shall qualify for the 10%
discount and VAT exemption:
1. Solo Parent has a child/children (as defined in RA No. l 1861) with the age of
six (6) years or under;any.
2. Solo Parent is earning less than P250.000.00 annually.

b. The 10% discount and VAT exemption shall apply to a qualified Solo Parent's
purchase of the following goods identified in the Act from e g stores. pharmacies.
grocery stores, and similar establishments, and subject to the guidelines that shall be
issued by the Department of Health (DOH), in coordination with the Food and Drug
Administration (FDA), Phill-lealth, and the Department of lnterior and Local
Government (DILG):
l . Baby’s milk;
Food supplements and Micronutrient supplements;
Sanitary diapers;
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Medicines;
Vaccines; and
Other medical supplements.

Upon its release. the guidelines of the DOH shall be circularizcd through .t Revenue
Memorandum Circular.

SEC. 4. Presentation of the SPIC and Solo Parent Booklet. - To avail of he 10%
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 e1titled to tie [0%
discount and VAT exemption by indicating that the Solo Parent is earning less. than P25000000
annually. and the dorsal side of the SPIC indicates the name/s, birth date/s, and relatior to the
solo parent of the qualified children and/or dependents with the age of six (6) years or on:ler.

SEC. 5. Determination of the Amount of Discount. - The grant of the discount is only
for the purchase of goods identified in the Act for THE EXCLUSIVE USE AND
ENJOYMENT 0R AVAILMENT OF THE SOLO PARENT’S CHILD 0R CHILDREN
WITH THE AGE OF SIX (6) YEARS 0R UNDER. The following rules shall be close'ved in
granting the discount:
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 (a) PRESCRIBED MEDICINE, VACCINE, ANDOTHER MEDICAL SUPPLEMENTS
— The 10% 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 m of the Solo Parent‘s
child/children with the age of six (6) years or under; and subject to the guidelines that
shall be issued by the DOH.

(b) BABY’S MILK; FOOD SUPPLEMENTS AND MICRONUTRIENT

SUPPLEMENTS; AND SANITARY DIAPERS - The 10% discount and VAT
exemption shall apply to the purchase of generic or branded aaby‘s mill-.. food
supplements, micronutrient supplements, and sanitary diapers. fo- the Solo Parent‘s
child/children with the age of six (6) years or under and subject to the guideiir-es that
shall be issued by the DOH.

SEC.6. Tax Treatment of the Discount Granted to Solo Parents. — All establis tments
supplying any of the goods identified in the Act and as referred to in Section 3 or" these
Regulations may claim the discounts granted to Solo Parents as a tax deduction based on the cost
of goods sold. By way of example, if a VAT-registered grocery store sells Similac lnt'ant Milk
at an undiscounted selling price of P200 for 340grams, the cost of the discount is compt ted as:

Selling Price (VAT-exempt) P212000

Less: 10% Discount 20.00
Amount Payable by the Solo Parent.................................. m

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

Debit — Cash P180

Debit — Solo Parent Discount Expense 20
Credit — Sales P200

The 10% 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, and can only be claimed if the seller does not nptfbr the
Optional Standard Deduction during the taxable quarter/wan 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 following conditions:

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 1. Only that portion of the grosssales 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 he Act 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 price can be
deducted from the gross income, net of value added tax. if applicable.lbr income
tax purposes. and from gross sales of the business enterprise concerned, for VAT or
other percentage tax purposes.

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 Parerts is required
to keep a separate and accurate record of sales. which shall include the Name of the
Solo Parent, SPlC number, Name/s of child/children with the age of six (6) year or
under. gross sales, sales discount granted. date of transaction. and invoice number for
every sale transaction to Solo Parent.

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 taxable year.

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

The sale of goods identified in the Act and under Section 3 of these Regulations to a
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 ofthe Solo
Parent to the discount prescribed in the Act, the sellers of goods are precluded from billing any
VAT to the sale o f goods identified in the Act to Solo Parents.

The sale of goods identified in the Act to a Solo Parent must follow the invoicing
requirements prescribed under Revenue Regulations No. l6-2005, as amended. if the seller uses
a Point of Sale Machine or a Cash Register Machine in lieu of the regular sales invoice. the
machine tape must properly segregate the exempt sales from the taxable sales.

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

SEC. 8. Penalties and Other Sanctions. — Any person who violates any provision of
these Regulations shall suffer the penalties provided in the Tax Code and RA No. l l8r51.
«- ‘

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

SEC. 1 0 . Effectivity. -— These Regulations shall take effect fifteen ([5) days after
publication in the Official Gazette or newspaper of general circulation. whichever comes first.

€4Q
BENJAMIN E. DIOKNO
Secretary of Finance
Wt 13 2023
Recommending Approval:

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