Nearly five years after Republic Act No. 10699 or the National Athletes and Coaches Benefits and Incentives Act (NACBIA) was passed, the Bureau of Internal Revenue released Revenue Regulations (R.R.) No. 13-2020 last 27 May 2020.
This new document finally sets into stone how athletes and coaches can avail of their 20% discount under the NACBIA — and how businesses should reflect this in their tax filings.
It's a welcome development — which ironically comes a day after the Philippine Sports Commission (PSC) announced that they would cut national athlete allowances by 50% due to the financial pressures of COVID-19.
R.R. 13-2020 gives further guidelines on how national athletes and coaches, including national athletes-with-disabilities, can take advantage of their 20% discount on certain purchases of goods and services. (For a refresher on the NACBIA, see the article below.)
A few key points.
First, the importance of athlete national IDs is stressed by R.R. 13-2020. National athletes and coaches can only avail of the 20% discount if they present their Philippine National Sports Team Identification Card (PNST ID) and Booklet. In the previous implementing rules and regulations released by the PSC, the presentation of the Booklet was only required on certain purchases.
However, R.R. 13-2020 now makes it explicit that both the PNST ID and Booklet must be presented. National athletes and coaches must get their PNST ID and Booklet from the PSC.
Second, the BIR document makes even more clear how the national discount will work in tandem with value-added tax. Purchases by national athletes and coaches are not VAT-exempt, contrary to the practices of some establishments which used to lump the discounts of senior citizens (who are VAT-exempt by express provision of law) and national athletes.
This is implied by Section 5 of the R.R. 13-2020, which states that the 12% VAT component will be reckoned from the discounted price of the goods or service.
Finally, the 20% discount cannot be claimed if the establishment already has a higher promotional discount. It cannot also be claimed in conjunction with the senior citizen’s discount or the persons-with-disability discount.
If you're a business owner, the BIR document also makes clear how to slot the national athlete discount into your tax declarations. For establishments who honor the 20% discount, R.R. 13-2020 finally clarifies that these businesses can deduct the said sales discount from its gross income, under the following conditions:
- The deduction is for the same taxable year that the discount is granted and the names of the availing national athlete and coach, along with their corresponding PNST ID numbers, are reflected in their record of sales. If these are not properly recorded, the deductions will not be allowed;
- Only the portion of the gross sales exclusively used or consumed by the national athlete or coach is eligible for the sales discount;
- The amount of sales discount will be allowed as an itemized deduction from gross income for the same taxable year the discount was granted, unless the taxpayer opted for the Optional Standard Deduction (OSD);
- The gross selling price and the sales discount must be separately indicated in the official receipt or sales invoice;
- If an establishment has availed of the OSD or the 8% income tax under TRAIN, the sales discount cannot be claimed as an allowable deduction;
- Establishments must keep separate and accurate records of sales, which will include the names of the national athletes or coaches, their PNST ID numbers, gross sales/receipts, sales discount granted, the date of the transaction, and the invoice number of every sales transaction to the national athletes and coaches; and
- Establishments must report for income tax purposes the VAT-exclusive selling price and not the amount of sales net of the discount.
Finally, the BIR repeated that any person who does not comply is punishable by a fine and/or imprisonment, the amounts and length of which depend on the frequency of the violation.
Business permits and/or franchises may also be revoked or cancelled. National athletes and coaches who abuse the privileges may also be punished with a fine and/or imprisonment.
Mickey Ingles is a sports and tax laywer from the Law Firm of Ingles, Laurel, and Calderon. He teaches both taxation law and sports law in the Ateneo Law School. He is the author of the books Tax Made Less Taxing and Laws for Sports and the Sporty.