TAX NOTES

Tax perks of private entities that employ PWDs

REPUBLIC Act (RA) 7277, as amended by RA 10524, lays out the fundamental guarantee of rights and privileges of persons with disability (PWDs), with the main intent to foster the PWDs’ capacity to attain a more meaningful, productive and satisfying life and recognizing the role of the private sector, including partnership programs with the government, in promoting the welfare of disabled persons.

Two of these rights and privileges are equal opportunity for employment and ease of access of physical facilities.

Under the law, every PWD shall be given opportunities for suitable employment and every qualified disabled employee shall be subject to the same terms of employment, compensation, privileges and other benefits as a qualified able-bodied individual. In line with this, private entities are encouraged to hire PWDs, particularly private corporations with more than 100 employees to reserve at least one percent of all positions for PWDs, wherein the fitness of a PWD shall be initially determined by the employer on the basis of the qualification standards established for the position and in accordance with labor laws.

Private corporations are encouraged to improve existing facilities used by employees to be easily accessible to PWDs, to modify work schedules as needed, to acquire or modify equipment or devices used by PWDs, to modify examinations, training materials or company policies pertaining to hiring, and to provide auxiliary aids and assistive devices to reasonably accommodate PWDs.

The Bureau of Internal Revenue (BIR) has reiterated the incentives under the law that shall be accorded to those who employ PWDs and provide facilities for ease of access thereof through the issuance of Revenue Memorandum Circular 48-2017 last month. These incentives include additional deduction equivalent to 25 percent of the total compensation package paid to PWDs and additional deduction equivalent to 50 percent of the total direct cost of the improvements or modifications made in providing accessibility to PWDs, to the private entity’s gross income.

The following shall be the requirements for entitlement to the incentives:

1.   For employing disabled persons

  • Accreditation from the Department of Health on the type of disability(ies) of the disabled employee;
  • Accreditation from the Department of Labor and Employment (Dole) as to the skills and qualifications of the disabled employee; and,
  • Certification of Employment of the accredited disabled employee from the concerned Dole Regional Director.

2.   For improving or modifying physical facilities for reasonable accommodation for disabled employees

  • Certification from the building inspector in consultation with the Department of Social Welfare and Development and other concerned groups in the region where the facilities are located.

The BIR is keen on upholding the magna carta for persons with disability. It is worth noting that last April, the BIR issued Revenue Regulations 5-2017 and Revenue Memorandum Circular 42-2017 and 43-2017, which highlight the availment of PWDs of the 20 percent sales discount and exemption on value added tax, and the claim by benefactors for additional exemption of P25,000 for each PWD deemed as qualified dependent.

Source:  P&A Grant Thornton

 

As published in SunStar Cebu dated 25 July 2017.