ESTABLISHMENTS GRANTING DISCOUNTS TO NATIONAL ATHLETES AND COACHES MAY DEDUCT THE DISCOUNT FROM THE GROSS INCOME

Published — December 18, 2020

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

Any national athlete and coach shall be entitled to the benefits listed under Republic Act No. 10699 or National Athletes and Coaches Benefits and Incentives Act”.
Establishments granting sales discounts to National Athletes and Coaches on their sale of goods and/or services shall be entitled to deduct the said sales discount from their gross income.
If the name of National Athletes and Coaches, and their corresponding Philippine National Sports Team Identification Card and Booklet (PNSTM ID and Booklet) is not reflected in the records of sales, the sales discount claimed as deduction by business establishments shall be disallowed

Republic Act No. 10699 or “National Athletes and Coaches Benefits and Incentives Act” expanded the coverage of incentives granted to national athletes and coaches.

Any national athlete and coach shall be entitled to the following:

a. The grant of twenty percent (20%) discount from all establishments relative to the utilization of transportation services, hotels and other lodging establishments, restaurants and recreation centers and purchase of medicine and sports equipment anywhere in the country for the actual and exclusive use or enjoyment of the national athlete and coach;

b. Minimum of twenty percent (20%) discount on admission fees charged by theaters, cinema houses and concert halls, circuses, carnivals, and other similar places of culture, leisure and amusement for the actual and exclusive use and enjoyment of the national athlete and coach;

c. Free medical and dental consultations in government hospitals and similar establishments anywhere in the country;

d. Coverage in the National Health Insurance Program (NHIP) of the Philippine Health Insurance Corporation (PHILHEALTH) through the sponsored program of the Philippine Sports Commission (PSC);

e. A comprehensive social security program to be formulated by the Social Security System within one hundred eighty (180) days from the approval of this Act;

f. Priority in existing livelihood programs being undertaken by various government agencies subject to the guidelines and qualifications by the implementing body;

g. Priority in national housing programs, affordable “pabahay” loans and other housing opportunities subject to the guidelines and qualifications set by the National Housing Authority (NHA) or the Home Development Mutual Fund (HDMF); and

h. Use of living quarters and training centers set up and maintained by the PSC for the exclusive use of national athletes while preparing and training for international competitions.

What would be the effect of these deductions to the business establishments granting them?

Bureau of Internal Revenue (BIR) Revenue Regulations No 13-2020 provides that:

Establishments granting sales discounts to National Athletes and Coaches 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:

The deduction from the gross income is for the same taxable year that the discount is granted and the name of National Athletes and Coaches and the corresponding PNSTM ID Numbers are reflected in the required record of sales for National Athletes and Coaches.
As expressly provided by law, the total amount of the claimed deduction net of VAT, if applicable, shall be included in their gross sales receipt for tax purposes and shall be subject to proper documentation and to the provisions of National Internal Revenue Code (NIRC), as amended. Thus, if the name of National Athletes and Coaches, and their corresponding PNSTM ID Number is not reflected in the records of sales, the sales discount claimed as deduction by business establishments shall be disallowed.

For percentage taxpayer, the amount of sales discounts shall be included for purposes of computing the three percent (3%) percentage tax and shall be included as part of the gross sales/receipts for income tax purposes, but the sales discount granted shall be accounted as deduction from the gross income of the establishment for the same taxable year that the discount was granted.
Only that portion of the gross sales exclusively used, consumed or enjoyed by the National Athletes and Coaches shall be eligible as deductible sales discount;
The amount of sales discount shall be allowed as itemized deduction from gross income for the same taxable year that the discount is granted, provided that the taxpayer is not availing of the Optional Standard Deduction (OSD).
The gross selling price and the sales discount must be separately indicated in the official receipt or sales invoice issued by the establishment for the sale of goods or services to the National Athletes and Coaches;
Only the actual amount of the sales discount granted or a sales discount not exceeding 20% of the gross selling price or gross receipts can be deducted from the gross income, net of value added tax, if applicable, and shall be subject to proper documentation under pertinent provisions of the Tax Code of 1997, as amended. Provided, however that if the establishment granting the discount availed of the OSD or opted to be taxed at eight percent (8%) income tax rate, if applicable, under RA No. 10963 also known as the TRAIN Law, as implemented by RR No. 8-2018, the sales discount given cannot be claimed as allowable deduction from gross income.
The business establishment giving sales discount to qualified National Athletes and Coaches is required to keep separate and accurate records of sales, which shall include the name of the National Athletes or Coaches, PNSTM ID Number, gross sales/receipts, sales discount granted, date of transactions and invoice number for every sales transaction to National Athletes and Coaches.
The cost of discount shall be allowed as a deduction from gross income for the same taxable year that the discount is granted: Provided that the total amount of the claimed deduction net of VAT, if applicable, shall be included in their gross sales receipts 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 income tax purposes is the VAT-exclusive selling price and not the amount of sales net of the discount.

Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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Any national athlete and coach shall be entitled to the benefits listed under Republic Act No. 10699 or National Athletes and Coaches Benefits and Incentives Act”.

Establishments granting sales discounts to National Athletes and Coaches on their sale of goods and/or services shall be entitled to deduct the said sales discount from their gross income.

If the name of National Athletes and Coaches, and their corresponding Philippine National Sports Team Identification Card and Booklet (PNSTM ID and Booklet) is not reflected in the records of sales, the sales discount claimed as deduction by business establishments shall be disallowed