RR 1-2023 provides guidelines for the grant of 10% discount and VAT exemption to solo parents, meeting the following conditions:
- Solo parent has a child/children aged 6 or under; AND
- Solo parent is earning less than Php250,000 annually.
The 10% discount and VAT exemption shall apply to the purchase from drug stores, pharmacies, grocery stores, and similar establishments by qualified solo parents of any of the following goods for the exclusive use and enjoyment/availment of the solo parent's child or children aged 6 years or under:
- Baby's milk
- Food supplements and micronutrient supplements
- Sanitary diapers
- Medicines
- Vaccines; and
- Other medical supplements
Tax treatment of the discount granted to solo parents
The establishments supplying the covered goods may claim the discounts granted to solo parents as a deduction from gross income for the same year that the discount is granted based on the cost of goods sold. The discount shall be treated as an ordinary and necessary expense deductible as itemized deductions, and thus, cannot be claimed if the seller opts for Optional Standard Deduction during the taxable quarter/year.
Exemption from VAT on sale to solo parents
The sellers of goods are precluded from billing any VAT on the sale of covered good to solo parents. 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.