BIR grants tax perks to solo parents

THE Bureau of Internal Revenue (BIR) announced last Tuesday it has issued Revenue Regulations (RR) 1-2023 last January 18 to provide the guidelines for the availment of the tax privileges granted to establishments that are giving ten-percent discount and value-added tax exemption to qualified solo parents on their sale of goods identified in Republic Act (RA) 11861 or the “Solo Parents Welfare Act.”

“Per RR 1-2023, only solo parents that have a child/children (as defined in RA 11861) with the age of six years or under and earning less than P250,000 annually are qualified to avail of the said tax privileges,” the BIR said.

The BIR said that the 10-percent discount and VAT exemption shall apply to a qualified solo parent’s purchase of the following goods identified in the law: baby’s milk; food supplements and micronutri- ent supplements; sanitary diapers; medicines; vaccines; and, other medical supplements. To avail of the said discount and exemption, the solo parent should present his or her “Solo Parent Identification Card” (SPIC) and “Solo Parent Booklet.”

The BIR said the ID card should show that the solo parent is entitled to the discount and VAT exemption by indicating that he or she is earning less than P250,000 annually, with the dorsal side of the SPIC showing the name/s, birth date/s and relation to the solo parent of the qualified children and/or dependents with the age of six years or under.

The BIR said the grant of the discount is only 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 years or under.

“All establishments supplying any of the goods identified above may claim the discounts granted to solo parents as a tax deduction based on the cost of goods sold,” the BIR said. “The 10-percent 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 opt for the ‘Optional Standard Deduction’ during the taxable quarter/year.”

The BIR said 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 conditions specified in RR 1-2023.

To ensure the full entitlement of the Solo Parent to the 10 percent discount, the sellers are precluded from billing any VAT to the sale of said identified goods to solo parents, the BIR added.