Strolling through the mall one afternoon, I came across a cafe with a poster outside bearing signage that the cafe was “deaf-friendly” in large text. It felt good to be reminded that there are still some things right in this world. The incident also highlighted the strides we are making in creating an inclusive society. Like many other things, this is a product of efforts to lobby for awareness and support the needs of Persons with Disabilities (PWDs).
A key aspect of this progress is the government’s commitment to protecting the rights of PWDs. Republic Acts 9442 and 10754, known as The Magna Carta for Persons with Disability and An Act Expanding the Benefits and Privileges of Persons with Disability, respectively, provide substantial tax benefits. These laws grant PWDs a 20% discount and exemption from 12% value-added tax on certain goods and services from various establishments, including hotels, restaurants, theaters, drugstores, medical services, domestic travel, and funeral services.
To avail of the benefits, PWDs must present any of these IDs as proof of entitlement to PWD discounts and privileges: 1) ID issued by the Persons with Disability Affairs Office (PDAO) or the City or Municipal Social Welfare and Development Office (CSWDO or MSWDO) of the place where the person with disability resides; 2) passport of the person with apparent disability; or 3) ID issued by the National Council on Disability Affairs (NCDA). The same benefits and privileges are available to Filipinos who hold foreign passports but are registered as dual citizens and Filipinos who have re-acquired their Filipino citizenship through Republic Act No. 9225 or the Citizenship Retention and Re-acquisition Act of 2003.
According to the NCDA, there are 1.9 million registered PWDs as of Jan. 8, 2025. That’s approximately 1.6% of the population. Just a few, if you think about it. Unfortunately, some individuals have taken advantage of the system by distributing counterfeit PWD IDs to those looking to illegitimately access the above-mentioned benefits. In 2024, both the Bacolod City and Cebu City governments discovered and confiscated numerous fake PWD IDs. The National Government has lost significant revenue due to VAT exemptions and discounts given to unqualified individuals, estimated at P88.2 billion in 2023 according to a recent BIR statement.
The misuse of fake PWD IDs contributes to the challenges faced by businesses and requires vigilant efforts to maintain the integrity of the system. Business owners, who are legally obligated to provide discounts, are heavily affected as these affect their top line, and consequently, their profit margins. Other consumers may also eventually be affected, as businesses may increase their overall prices to improve their profits, ensure that their businesses stay afloat, and help sustain their employees’ livelihoods. In its official statement, the Restaurant Owners of the Philippines emphasized that “Every fraudulent discount comes directly out of a restaurant’s pocket, cutting into already thin margins… it’s a financial hit that can mean the difference between survival and closure.”
Most importantly, it undermines the benefits intended for legitimate PWDs, disrespecting and financial harming those who genuinely need the support.
From a tax standpoint, PWD discounts are treated by businesses as a deduction from their gross income. These discounts should also be properly reflected in the invoices issued by the establishments. It is crucial that businesses keep a record of the discounts granted, including the relevant details of customers who are PWDs, including their identification numbers. Failure to do so exposes the businesses to potential disallowance of deductions for income tax, and deficiency VAT. In such cases, the businesses are effectively taxed on the discounts which they are required to give under the law.
At worst, the current tax rules also provide that, upon filing of an appropriate complaint, and after due notice and hearing, the proper authorities may also cause the cancellation or revocation of the business permit, permit to operate, franchise and other similar privileges granted to any business entity that fails to abide by the provisions of the law and regulations.
Clearly, there is a lot at stake, and the use of fraudulent IDs has significant consequences.
On a positive note, the Department of Social Welfare and Development (DSWD) and the NCDA announced that they have begun pilot-testing the unified identification system in January and it is expected to be rolled out nationwide by July 2025. The system aims to curb the misuse of PWD IDs through a centralized database. The DSWD and NCDA, in partnership with local government units (LGUs), will manage the unified ID system for PWDs. Bona fide PWDs will be issued a physical ID (a PVC card) with RFID technology and a digital ID (accessible through a mobile app or web portal) with QR codes for easy verification. This is a welcome development which I hope will be swiftly and appropriately implemented, to prevent further victims of fake PWD IDs.
Looking at our neighboring countries, similar models are being implemented. For instance, Singapore’s Singpass system is a comprehensive digital ID system that includes PWD IDs, and appears to be stricter as it uses biometric data and cryptographic keys to ensure secure identification and prevent fraud. India’s Aadhaar system assigns a unique identification number to each citizen, including PWDs, and uses biometric data such as fingerprints and iris scans to verify identity and prevent duplication. Estonia’s e-Residency program provides digital IDs with advanced encryption and secure authentication methods, integrated with various public and private services to ensure that PWD IDs are secure and easily verifiable. Adopting these advanced security measures can help the Philippines enhance the reliability and security of its PWD ID system, ensuring that benefits reach those who truly deserve them. The creation of the unified ID system is a significant step closer to achieving a more reliable and secure system for PWDs.
As we continue to strive for an inclusive society, it is crucial that we protect these benefits from abuse. By doing so, we honor the spirit of the laws designed to uplift PWDs and reinforce our collective commitment to a fair and just society.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
Frenz Angelie B. Hechanova is a manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of the PwC network.
frenz.angelie.hechanova@pwc.com
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