Magna Carta for Persons with

Disability
DEFINITIONS

Under Republic Act (R.A.) No. 7277 as amended by Republic Act No. 9442 and
Republic Act No. 10754, Sec. 4 (a) thereof defines persons with disabilities and
related terms as follows:

Persons with disability are those suffering from restriction of different

abilities, as a result of a mental, physical or sensory impairment, to perform
an activity in the manner or within the range considered normal for a human
being;
Impairment is any loss, diminution or aberration of psychological,
physiological, or anatomical structure of function;
Disability shall mean (1) a physical or mental impairment that substantially
limits one or more psychological, physiological or anatomical function of an
individual or activities of such individual; (2) a record of such an impairment;
or (3) being regarded as having such an impairment;
Handicap refers to a disadvantage for a given individual resulting from an
impairment or a disability, that limits or prevents the functions or activity,
that is considered normal given the age and sex of the individual

Currently based on the implementing rules and regulations (IRR) of the same
law, disabilities are classified but are not limited to:

1. Ortho/Moving Disabilities 5. Chronic Illnesses with Disability

2. Communication Deficits 6. Mental Disabilities
3. Visual/Seeing Disabilities 7. Psychosocial and Behavioral
4. Learning (Cognitive or 8.
Intellectual Disabilities)
9.
 10.SALES DISCOUNTS WHICH MAY BE CLAIMED BY PERSONS WITH DISABILITY
11.

12.Republic Act No. 10754 which was signed into law last 23 March 2016
granted PWDs additional benefits such as exemption from value-added
tax (VAT) on the purchase of particular goods and services on top of
the 20% discount previously enjoyed under the Magna Carta as revised by
Republic Act No. 9442. Among the items covered by this tax privilege are the
following:

a. At least twenty percent (20%) discount and exemption from the value-added
tax (VAT), if applicable, on the following sale of goods and services for the
exclusive use and enjoyment or availment of the PWD:
13.
14. Exclusive Use or Enjoyment of Persons with Disability refers to the discount privilege
that can be availed only by persons with disability.
1. Charges of hotels and other similar lodging establishments, restaurants
and recreation centers;
15. Hotels and Similar Lodging Establishments The discount shall
be for room accommodation and other amenities offered by the establishment
such as but not limited to massage parlor, sauna bath, food, drinks and other
services offered. It will only apply to persons with disability. No discount will be
given to companion without disability.
16.
17. Restaurant The discount shall be for the purchase of food drinks,
beverages, dessert and other consumable items served by the establishments
including value meals and other similar food counters, fast food, cooked food
and short orders including take-outs. To safeguard the establishments from
abuse of this privilege, the orders should be limited only to persons with
disability personal consumption.For a group of people with a person with
disability, only the proportionate share of person with disability will be given
discount. In case of banquet and catering services especially in seminars and
other similar activities the discount will apply only to customers with disability.
18.
19. Sports and Recreational Centers The discount shall apply to all
charges in the utilization of the services including rentals of all facilities and
equipments and other accessories and gadgets relative to the enjoyment of
the sports and recreational services. The discount shall also include rooms or
halls for PWDs seminars, art workshops and other persons with disability
activities.
2. Admission fees by theaters, cinema houses, concert halls, circuses,
carnivals and other similar places of culture, leisure and amusement;
20. It may be on but not limited to museum, exhibit halls, fairs, parks like
theme parks.
3. Purchase of medicines in all drugstores;
21. All drug stores, hospital, pharmacies, clinics and other similar
establishments selling medicines are required to comply subject to the
guidelines issued by DOH and PHILHEALTH.
4. Medical and dental services and professional fees of attending doctors
in all government facilities and in all private hospitals and facilities,
 subject to the guidelines to be issued by the Department of Health, in
coordination with the Philippine Health Insurance Corporation;
5. Transportation fares; and
22. Discounts in fare for domestic air and sea travel are based on the
actual fare except promotional fare. If the promotional fare discount is higher
than the twenty percent (20%) discounts privilege, the persons with disability
may choose the promotional fare and should no longer be entitled to the
twenty percent (20%) discounts privilege.
23.
24. Land transportation privileges in bus fares such as ordinary, aircon
fares on public railwys such as LRT, MRT, PNR, and other similar infrastructure
that will be constructed, established and operated by public or private
entity.Toll fees of skyways and expressways are likewise subject to at least
twenty percent (20%) discounts, however, this privilege can be availed only by
a person with disability owning the vehicle.
6. Funeral and burial services.
b. Educational assistance to PWD, for them to pursue primary, secondary,
tertiary, post tertiary, as well as vocational or technical education, in both
public and private schools, through the provision of scholarships, grants,
financial aids, subsidies and other incentives to qualified PWD, including
support for books, learning materials, and uniform allowance to the extent
feasible: Provided, That PWD shall meet the minimum admission
requirements;
25. Minimum admission requirements are to be set by the Department of
Education (DEPED), Commission on Higher Education Department (CHED), Technical
Education and Skills Development Authority (TESDA) and other entities engaged in the
grant of scholarship and financial assistance for the education of persons with
disability. For the purposes of this rule, primary education shall include nursery and
kindergarten whether in private or public school. The source of funding in addition to
the Private Education Student Financial Assistance (PESFA) fund scholarship for the
implementation of the above shall be the one percent (1%) allocation for persons with
disability in DEPED, CHED, TESDA and other training and educational government
agencies as required by General Appropriation Act, subject to the guidelines issued by
the DEPED, CHED and TESDA.
c. To the extent practicable and feasible, the continuance of the same benefits
and privileges given by the Government Service Insurance System (GSIS),
Social Security System (SSS), and Pag-IBIG, as the case may be, as are
enjoyed by those in actual service;
d. To the extent possible, the government may grant special discounts in special
programs for PWD on purchase of basic commodities, subject to the
guidelines to be issued for the purpose by the Department of Trade and
Industry (DTI) and the Department of Agriculture (DA); and
e. Provision of express lanes for PWD in all commercial and government
establishments; in the absence thereof, priority shall be given to them.

26.PROHIBITION ON AVAILMENT OF DOUBLE DISCOUNTS

27.

28.The foregoing privileges granted to person with disability shall not be claimed
if the said person with disability claims a higher discount as may be granted by the
commercial establishment and/or under existing laws or in combination with other
discount programs. Thus, a person with disability who is at the same time a senior
citizen canonly claim one 20% discount on a particular sales transaction

29.PROOFS OF ENTITLEMENT TO THE PRIVILEGES BY PERSON WITH DISABILITY

30.

31.The privileges under the act and in the regulations available to persons with
disability who are Filipino citizens may only be granted upon presentation of any of
the following proof of his/her entitlement thereto:

1. An identification card issued by the city or municipal mayor or the

barangay captain of the place where the person with disability resides, or
2. The passport of the person with disability concerned or
3. Transportation discount fare identification card (ID) issued by the National
Council for the Welfare of Disabled Persons
32. However, upon the effectivity of the implementing rules and regulations jointly
promulgated by the different government agencies, NCWDP will already adopt the
Identification Card issued by the Local Government Units (LGUs) for purposes of
uniformity in the implementation.

33.

34.BASIS OF COMPUTATION OF VAT EXEMPTION AND DISCOUNT ON SALE OF

GOODS OR SERVICES TO PERSONS WITH DISABILITY
35.

36.To compute for the discount and exemption from VAT, the following manner of
computation is prescribed:

37.Amount of Sale with VAT 38.1

12.
00
39.Less: 12% VAT 40.
(12
.00
)
41.TOTAL AMOUNT 42.1
00.
00
43.Less: 20% Sales Discount (based on the selling price net of 44.
VAT) (20
.00
)
45.TOTAL AMOUNT TO BE paid by the person with disability 46.
80.
00
47.
 48.AVAILMENT BY ESTABLISHMENTS OF SALES DISCOUNTS AS DEDUCTION FROM
GROSS INCOME
49.

50.Establishments granting sales discounts to persons with disability on their

sale of goods and/or services shall be entitled to deduct the said sales discount from
their gross income subject to the following conditions:

1. The sales discounts shall be deducted from gross income after deducting the
cost of goods sold or the cost of service;
2. The cost of the sales discount shall be allowed as deduction from gross
income for the same taxable year that the discount is granted;
3. Only that portion of the gross sales exclusively used, consumed or enjoyed by
the person with disability shall be eligible for the deductible sales discount;
4. The gross selling price and the sales discount must be separately indicated in
the sales invoice or official receipt issued by the establishment for the sale of
goods or services to the person with disability;
5. Only the actual amount of the sales discount granted or a sales discount not
exceeding 20% of the gross selling price or gross receipt can be deducted
from the gross income, net of value added tax, if applicable, for income tax
purposes, and from gross sales or gross receipts of the business enterprise
concerned for VAT or other purposes; and shall be subject to proper
documentation under pertinent provisions of the Tax Code of 1997, as
amended.
6. The business establishment giving sales discount to qualified persons with
disability is required to keep separate and accurate record of sales, which
shall include the name of the person with disability, ID number, gross
sales/receipts, sales discount granted, date of transactions and invoice
number for every sale transaction to persons with disability; and
7. All establishments which granted sales discount to persons with disability on
their sale of goods and/or services may claim the said discount as deduction
from gross income.

51. INCENTIVES FOR BENEFACTORS

52.Section 33, as amended, of the Magna Carta for Persons with Disability
provides that those caring for and living with qualified PWD, up to the fourth
civil degree of consanguinity or affinity, can claim an additional tax
exemption of P25,000 against their annual income tax.

53. Such relations include the taxpayers great great grandparent, great
aunt or uncle, first cousin, great niece/nephew, or great great grandchild. Under the
RA, the PWD, regardless of age, may be considered a qualified dependent subject to
additional exemption under Section 35 (b) of the Tax Code provided that the PWD is
not gainfully employed and is chiefly dependent upon the taxpayer. The additional
exemption may be claimed for each qualified dependent up to a maximum of four
(4).
 54.INCENTIVES FOR EMPLOYERS
55.
a. Private entities that employ disabled persons who meet the required skills or
qualifications either as a regular employee, apprentice or learners shall be
entitled to an additional deduction from their gross income equivalent to
twenty-five percent (25%) of the total amount paid as salaries and wages to
disabled persons.
b. Private entities that improve or modify their physical facilities in order to
provide reasonable accommodation for disabled persons shall be entitled to
an additional deduction from their net income, equivalent to fifty percent
(50%) of the direct cost of the improvements or modifications. This Section,
however, does not apply to improvements or modifications of facilities
required under B.P. Blg. 344.
c. The DOLE Secretary shall, from time to time, identify and provide other
incentives to private entities which employ disabled persons to encourage
the active participation of the private sector in promoting the welfare of
disabled persons, and to ensure gainful employment for qualified disabled
persons.

56.REQUIREMENT FOR ENTITLEMENT TO INCENTIVES OF EMPLOYERS

57.

58.The following shall be the requirements for entitlement to the incentives:

A. For employing disabled workers:

(1) DOH Accreditation as to the type of disability/ties of the disabled workers;
(2) DOLE (NMYC) Accreditation as to the skills and qualifications of the disabled
workers;
(3) Certification of Employment of the accredited disabled workers from the
concerned DOLE Regional Director;
59. For purposes of Accreditation, DOLE and DOH shall establish a unit in each of
their regional offices to facilitate the processing of the accreditation of the disabled
persons.
B. For improving or modifying physical facilities for reasonable accommodation for
disabled employees:
(1) Certification from the building inspectors in consultation with the DSWD and
other concerned groups in the region where the facilities are located.

60.OTHER INCENTIVES FOR EMPLOYERS

61.

62. In addition to the incentives given to those caring for persons with
disability, Section 33 as amended, also provides incentives to individuals or
nongovernmental institutions establishing homes, residential communities or
retirement villages solely to suit the needs and requirements of persons with
disability. They shall be accorded the following:
 i. Realty tax holiday for the first five years of operation; and
ii. Priority in the building and/or maintenance of provincial or municipal
roads leading to the aforesaid home, residential community or
retirement village.

63.OTHER TAX INCENTIVES PROVIDED FOR IN THE CODE

64.

a. Any donation, bequest, subsidy or financial aid which may be made to

government agencies engaged in the rehabilitation of disabled persons and
organizations of disabled persons shall be exempt from the donor's tax
subject to the provisions of Section 94 of the National Internal Revenue Code
(NIRC), as amended and shall be allowed as deductions from the donor's
gross income for purposes of computing the taxable income subject to the
provisions of Section 29 (h) of the Code.
65.
b. Donations from foreign countries shall be exempt from taxes and duties on
importation subject to the provisions of Section 105 of the Tariff and Customs
Code of the Philippines, as amended, Section 103 of the NIRC, as amended
and other relevant laws and international agreements.
CASE STUDY: Exemption of donated Index
66.
Everest Braille of the Republic of Sweden to the
c. Local manufacturing or technical
aids and appliances used by
Philippine Blind Union - Pursuant to Section disabled persons shall be
109(q) of the Tax Code of 1997, transactions
considered as a preferred area of
which are exempt under international
agreements to which the Philippines is a investment subject to the
signatory or under special laws, except those provisions of Executive Order No.
under Presidential Decree Nos. 66, 529 and 226 otherwise known as the
1590, are exempt from the value-added tax. "Omnibus Investments Code of
Republic Act No. 7277, otherwise known as the
"Magna Carta for Disabled Persons" is special
1987" and, as such, shall enjoy
law which grants tax incentives to foreign the rights, privileges and
donor/s on donation, bequest, subsidy or incentives as provided in said
financial aid made to government agencies Code such as, but not limited, to
engaged in the rehabilitation of disabled persons
the following:
and organizations of disabled persons.
Accordingly, the I package stc. Index Everest
(4) freedom from
Braille Embosser donated by the Index Braille of
the Republic of Sweden to the Philippine Blind expropriations;
Union is exempt from the donor's tax imposed (5) freedom from requisition
under Section 99(A) of the Tax Code of 1997 and of investment;
from the 10% VAT on importation imposed under (6) income tax holiday;
Section 107(A) of the same Code, in accordance
(1) repatriation of (7) additional deduction for
investments; labor expense;
(2) remittance of earnings; (8) tax and duty exemption
(3) remittance of payments on imported capital
on foreign contracts; equipment;
(9) tax credit on domestic
capital equipment;
(10) exemption from
contractor's tax;
(11) simplification of
customs procedures;
(12) unrestricted use of
consigned equipment;
(13) employment of
foreign nationals;
(14) tax credit for taxes
and duties on raw
materials;
(15) access to bonded
manufacturing/traded
warehouse system;
(16) exemption from
taxes and duties on
imported spare parts; and
(17) exemption from
wharfage dues and any
export tax, duty, impost
and fee.
 (18) NIRC AND MAGNA CARTA FOR PERSONS WITH DISABILITY
(19)

(20) A notable feature under RA 10754 is that individual taxpayers

caring for and living with a PWD are granted the additional incentive of
claiming as dependent a PWD within the fourth civil degree of
consanguinity or affinity, regardless of the age of the PWD, so long as
the said PWD is not gainfully employed and chiefly dependent upon the
taxpayer.

(21) Interestingly, while this P25,000 additional exemption is also

granted to those caring for senior citizens through the Expanded
Senior Citizens Act (RA No. 9994), in Revenue Regulations No. 7-2010,
the Bureau of Internal Revenue restricted the coverage to taxpayers
with a qualified dependent child or children, as defined in the Tax Code.
Although a senior citizen who is not gainfully employed and is living
with and chiefly dependent upon his benefactor is considered a
dependent, the benefactor is only entitled to claim the basic personal
exemption, but not the additional tax exemption.

(22) SAMPLE PROBLEMS

(23)

(24) Problem 1

(25) Mr. Lito Laypi, a PWD, is employed under X company. The

companys income subject to normal tax is illustrated below.

(26) Gross Sales (27)

1,0
0
0
,
0
0
0
(28) Cost of Sales (29)

(
3
5
0
,
0
0
0
 )
(30) Gross Profit from Operations (31)

6
5
0
,
0
0
0
(32) Other Income not subject to capital gains or (33)
final tax
5
0
,
0
0
0
(34) Gross Income (35)

7
0
0
,
0
0
0
(36) Allowable Itemized Deduction (37)

(
3
0
0
,
0
0
0
)
(38) Special Allowable Itemized Deduction (PWDs (39)
Salary)
(
2
0
0
,
 0
0
0
(40) Net Taxable Income (41)

2
0
0
,
0
0
0
(42) Normal Corporate Income Tax Rate (43)

3
0
%
(44) Normal Corporate Income Tax (45)

6
0
,
0
0
0
(46) (47)

(48) (49)

(50) Problem 2

(51) Mr. Ngi Pin, a PWD, availed dental services including x-ray. The
fee was broken down below.

(52) Dental services (Gross of VAT) (53)

100,0
00
(54) Laboratory Fee : X-ray (Gross of VAT) (55)

40,
00
0

(56) Total Fees (57)

140,0
00
 (58) Less VAT exemption (12% VAT) (59)
(15,0
00
)
(60) Net retail (61)
125,0
00
(62) Less Discount (20% (63)
(25,0
00
)
(64) PWD Price to Pay (65)
100,0
00
(66)

(67) REFERENCES
(68)

(69) R.A. 7277 and IRR

(70) R.A. 9442 and IRR
(71) R.A. 10754
(72) Revenue Regulation 1-2009
(73) BIR Ruling No. 022-2000