Manila third district Rep. Joel Chua is pushing for the restoration of the tax credit system for businesses that provide mandatory discounts to senior citizens and persons with disabilities (PWDs), saying the current system places a heavier financial burden on business owners, particularly small and medium enterprises.

In an interview on DZRH’s Dos Por Dos on Tuesday, Chua said House Bill 10497 seeks to allow businesses to deduct the full amount of discounts granted to eligible customers from their tax liabilities to the Bureau of Internal Revenue (BIR).

Chua explained that under the current tax deduction system, businesses can deduct the discounts from their taxable income, but the actual tax savings depend on their applicable tax rate.

For example, a business that grants ₱10,000 in discounts and has a 25% tax rate saves only ₱2,500 in taxes, leaving it to shoulder the remaining ₱7,500, he said.

Under the proposed tax credit system, the full ₱10,000 discount would instead be deducted from the business's tax liability, allowing it to recover the entire amount through tax credits.

Chua said the government initially promised businesses full tax credits when the senior citizen discount policy was introduced in 1992, but the system was changed in 2004.

He added that the current arrangement puts additional pressure on businesses, with some struggling to maintain their earnings or resorting to price increases to offset the cost of discounts.

Chua also cited the alleged use of counterfeit senior citizen and PWD identification cards as another concern for businesses.

The lawmaker said restoring the tax credit system would help ease the financial burden on establishments while allowing them to continue providing mandatory discounts to senior citizens and PWDs.

Watch the full exclusive interview below: