Revenue Memorandum Circular-38-2012

Frequently Asked Questions

Ql. If a group of 5 comprised of four (4) Non-Senior Citizens and one (1) Senior Citizen dines in a restaurant, how should the group be billed?

Al. In computing the 20% discount and the exemption from VAT, the formula shall be:

[Total Billing Amount / No. of Customers] Less 12% x VAT x 20% = Senior Citizen Discount 

The formula above will apply if no “individualized” food item can be ordered or if the transaction with the Senior Citizen is not processed separately. It is to be noted that the total billing amount used in the computation of the 20% discount of the Senior Citizen is the amount exclusive of VAT.

It is recommended that food, drinks and other consumable items purchased by the Senior Citizen in hotels and similar lodging establishments, restaurants and recreation centers should be processed separately as an independent transaction from his/her non-eligible companions to ensure that it is for his/her exclusive consumption and enjoyment.

Q2. For restaurants, are condiments and side products covered by the Senior Citizen discount and VAT exemption?

A2. Yes. For restaurants, the discount shall be for the sale of food, drinks, dessert and other consumable items served by the establishments, including value meals and promotional meals, offered for the consumption of the general public. (Rule IV, Article 7, Section 3(b) of the Rules and Regulations Implementing RA No. 9994 and Section 4 (g)(g.5) of RR No. 7-2010).

Condiments and side products fall within the ambit of “other consumable items served by the establishments”.

Q3. Is there a maximum amount or cap on the discount that may be granted to Senior Citizens? For example, may a restaurant limit the grant of discount to Senior Citizens to P40 even if the computed 20% discount amount is higher than P40?

A3. No. The example above is in violation of the Rules and Regulations implementing RA No. 9994 and RR No. 7-2010, as amended by RR No. 8-2010. In no case shall the discount granted to Senior Citizens in the example be less than 20%. There should be no fixed, maximum amount or cap which will limit the discount below the rate of 20%. The 20% discount shall be given to goods purchased by Senior Citizens based on the selling price exclusive of VAT.

Q4. For set meals, what are the rules?

A4. The 20% discount and VAT exemption shall also apply to set meals purchased by Senior Citizens, provided, that the meal shall be limited to a single-serving meal with beverage for an individual senior citizen. In case the set meal is not limited to a single serving and is shared with Non-Senior Citizens, the value of the food purchase attributable to the Senior Citizen may be computed in accordance with the formula stated in Al of this Circular.

Q5. If a Senior Citizen orders various dine-in foods, then takes home the leftover, is the order subject to 20% discount?

A5. The 20% discount shall apply to dine in, take-out and take-home orders (excluding bulk orders) as long as it is the Senior Citizen himself/herself who is present and personally ordering and can show a valid Senior Citizen ID card.

In the example above, the Senior Citizen merely takes home the unfinished or unconsumed dine-in order. It should be entitled to the discount, provided, that the leftover is not part of bulk orders.

Q6. What is the rule for purchase of group meals by “group walk-ins” or group composed of all Senior Citizens?

A6.If the group of diners is composed of Senior Citizens who ordered for group meals or food items for sharing in restaurants, each Senior Citizen with a valid Senior Citizen’s ID card shall be entitled to a 20% discount and VAT exemption, hence, if all the Senior Citizens in the group have valid Senior Citizen’s ID cards, the entire food purchase shall be entitled to the 20% discount and VAT exemption. In case not all the Senior Citizens have their valid Senior Citizen’s ID cards, the value of the food purchase attributable to Senior Citizens with Senior Citizen’s ID cards may be computed in accordance with the formula set forth in Al of this Circular.

Q7. For purposes of the Rules and Regulations implementing Republic Act No. 9994 and BIR Revenue Regulations No. 7-2010, as amended by RR No. 8-2010, what areconsidered “bulk orders”?

A7.Bulk orders are within the context of pre-contracted or pre-arranged group meals or packages, and hence, not entitled to 20% discount and VAT exemption.

Q8. Are set orders primarily marketed for children (i.e., happy meal or kiddie meal) entitled to 20% discount if purchased by a Senior Citizen?

A8.No, meals primarily prepared and intentionally marketed for children and not for Senior Citizen’s personal consumption are not entitled to 20% discount. (Rule IV, Article 7, Section 3(d) of the Rules and Regulations implementing RA No. 9994; Section 6 of RR No. 7-2010).

Q9. What comprises the Most Expensive Meal Combination (MEMC)?

A9.The MEMC is an amount corresponding to the combination of the most expensive and biggest single-serving meal with beverage served in a quick service restaurant. The MEMC is deemed flexible and is adjusted accordingly by food establishments to estimate a single food purchase for an individual senior citizen. MEMC is applied only to take-out, take home, drive thru and delivery orders.(Rule IV, Article 7, Section 3(h) of the Rules and Regulations Implementing RA No. 9994; Section 6 of RR No 7-2010).

Q10. Are purchases of “pasalubong” by Senior Citizens from stores, kiosks, food carts, and stalls in food courts subject to 20% discount? Are they exempt from VAT?

A10.“Pasalubong” food items which are single-serving/solo meal for the personal and exclusive consumption of the Senior Citizen are entitled to the 20% discount, as well as the exemption from VAT. However, other “pasalubong” food items (e.g. box of biscocho, bottles or jars of ginamos, several packets of mango preserves, etc) which are not for the personal and exclusive consumption of the Senior Citizen are NOT entitled to 20% discount and VAT exemption. This limitation extends to “novelty items” or non-consumables sold in restaurants.