How to Compute for Senior Citizen Discount in the Philippines?

Two months ago, I read in the news that two (2) restaurant establishments were sued for violation of Republic Act 9994, also known as the Expanded Senior Citizens Act of 2010, because they denied giving the complainant 20% senior citizen discount and VAT exemption.  This news prompted me to write this article.

In this article, I will share with you how to properly compute the VAT Exemption, 20% senior citizen discount and amount collectible from your senior citizen customers.

3 Steps in Computing Amount Billable to Senior Citizen

1.) Determine the amount of VAT Exempt Sale

A senior citizen is exempted from paying Value-Added Tax (VAT). As such, you need to deduct the amount of VAT from the selling price. Here’s how to compute the VAT Exempt Sales to senior citizen:

Selling Price:       P1,000.00

VAT Rate:                      12%

Formula:

VAT Exempt Sales =  Selling Price ÷ 1.12

Computation:

P1,000.00 ÷ 1.12 = P892.86

Note: This applies only if you’re company is VAT-registered. If you are NON-VAT registered, you can skip this step.  The whole selling price will be considered VAT exempt sale.

2.) Deduct the 20% discount

The 20% senior citizen discount will be computed from the VAT Exempt Sale.  Here’s how to compute for the discount:

Formula:

Senior Citizen Discount = VAT Exempt Sale x 20%

Computation:

P892.86 x 0.20 = P178.57

3.) Compute the billable amount

Once you’ve figured the VAT Exempt Sale and the senior citizen discount, you may now compute the amount billable or collectible to senior citizen. Here’s how:

Formula:

Amount Collectible = VAT Exempt Sale – Senior Citizen Discount

Computation:
P892.86 – P178.57 = P714.29

PS

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Disclaimer: The content of this article may become outdated because of changes in the rules and regulations over time. It does not substitute the need for inquiring professional advice.

Comments

  1. Miss universe says:

    Thanks for sharing this info. I found this very helpful since I’m the one buying my lola’s meds.

  2. Hi,
    May I ask what is the Definition of 1.12 , i was just confused where 1.12 came from on the Formula .

    Your immediate response is highly appreciated

    • Hi Max, it means that the Sale Price of P1,000.00 is inclusive of VAT. To get the Sales net of vat, you need to remove the VAT by dividing 1.12 (112%). Here’s an illustration:

      If Sales, net of VAT = 100%
      VAT = 12%
      Sales, gross of VAT = 112% or 1.12

      Hope this helps.

  3. What if they comes in groups or availed a room good for two with only one senior citizen?

  4. Dr. Dean n. Climaco says:

    Sir,
    If a senior citizen orders food in a restaurant by phone, is he entitled to a discount ?
    Usually restaurants refuses to give a discount.
    May I ask your opinion.