The Bureau of Internal Revenue (BIR) has mandated new regulations requiring drugstores, supermarkets, and pharmaceutical firms to distribute the cost of senior citizen discounts on medicines and essential items across the supply chain.
Under existing legislation, senior citizens receive a 20% discount on qualified purchases. However, the operational execution in the pharmaceutical industry prompted concerns regarding how the mandated financial obligation is allocated among participating businesses.
In Revenue Regulations No. 007-2026, the BIR stated that clear mechanisms needed to be established to distribute the financial burden among retailers, manufacturers, distributors, wholesalers, and other entities supplying covered goods.
Historically, the cost of the mandated discount fell primarily on the retail store directly selling products to senior citizens.
Under the updated guidelines, companies are authorized to execute formal contracts outlining how discount costs will be split among involved parties, adhering to regulations set by the Department of Health (DOH).
The regulation specifies that when the discount cost is divided through an agreement, the tax-deductible expense claimed against gross income by each party cannot exceed its designated share.
The BIR further requires companies to document these cost-sharing agreements and file copies with the DOH in compliance with its rules.
The updated framework seeks to clarify the tax treatment of senior citizen discount expenses while ensuring that financial accountability is shared across companies involved in distributing medicines and eligible products.