Senior Citizen Discounts For Non-Filipinos

[fillipino_wannabe]

6 hours ago, scott h said:

It is my understanding that the restaurants do not take a loss at all. When they turn in the signed receipts that the senior signs, they either get a direct subsidy from the government or write it off on their taxes. They might have to wait for their money, but they get it.

I know a Greek/Canadian who runs an Italian restaurant (go figure lol), next time I see him I will ask which one.

I don't think they get a subsidy from the government. It counts as an expense ofcourse but that just means they pay less tax because they make less money, they're still taking the loss.

[hk blues]

Just now, fillipino_wannabe said:

I don't think they get a subsidy from the government. It counts as an expense ofcourse but that just means they pay less tax because they make less money, they're still taking the loss.

I think there are two different scenarios here -

One is where the discount is applied through the government issued card and the company then report this and receive a percentage back from the government in some way - how, I've no idea.

The other is where the discount is applied without the card and the company simply make less money so pay less VAT and taxes.  This would also apply where private discount cards such as mentioned previously are used.

Personally, I don't have strong feelings about companies offering a discount if they wish, I assume they feel they can afford to do so.  What does grind my gears though is the time it takes to process the discount - same applies with the PWD card and I have to say there does seem to be a disproportionate number of folk who have one! 

[fillipino_wannabe]

4 hours ago, hk blues said:

I think there are two different scenarios here -

One is where the discount is applied through the government issued card and the company then report this and receive a percentage back from the government in some way - how, I've no idea.

The other is where the discount is applied without the card and the company simply make less money so pay less VAT and taxes.  This would also apply where private discount cards such as mentioned previously are used.

Personally, I don't have strong feelings about companies offering a discount if they wish, I assume they feel they can afford to do so.  What does grind my gears though is the time it takes to process the discount - same applies with the PWD card and I have to say there does seem to be a disproportionate number of folk who have one! 

I could be wrong but I don't think the government pays any of it back.

Second scenario is correct but some people often seem to think 'tax write off' is some sort of magic when really you're just paying 30 pesos less tax because you made 100 pesos less profit for example.

[OnMyWay]

6 hours ago, fillipino_wannabe said:

I could be wrong but I don't think the government pays any of it back.

After a bit of research, I think you are right on part of it.  I was wondering, why would the gov have the bureaucracy of issuing the card and having businesses log everything if they were not reimbursing some of it?

What has not been mentioned is that the entire discount is 20%, plus NO VAT.  VAT is another 12%.  The business logging the transactions probably has to do that with the NO VAT part.  The business has to remit VAT to the gov, so they have to prove the VAT part of the discount they gave.

So you may be correct in that the 20% is not reimbursed.

6 hours ago, fillipino_wannabe said:

Second scenario is correct but some people often seem to think 'tax write off' is some sort of magic when really you're just paying 30 pesos less tax because you made 100 pesos less profit for example.

It all depends.  Some restos in the U.S. offer senior citizens a discount because they want to attract the senior citizens as a loyal customer segment who tend to return over and over.  Picture some of the places where seniors meet in the morning and hang out with other seniors.  Of course, the original profit margin has to be high enough to absorb the discount.  Look at all the "specials" restos have.

In the Philippines, the discount is mandatory so a slightly different ballgame.  Perhaps when this started in 2010, businesses, especially restos, bumped up prices a bit.  If they did that, the regular customer helps pay for the senior discount.

Edited April 28, 2023 by OnMyWay

[Mike J]

12 hours ago, fillipino_wannabe said:

I could be wrong but I don't think the government pays any of it back.

Second scenario is correct but some people often seem to think 'tax write off' is some sort of magic when really you're just paying 30 pesos less tax because you made 100 pesos less profit for example.

Card holder - The business logs the discount amount and the information from the senior citizen card.  I assume the amount of the adjustment is also made.  When the business files it's taxes, the adjustment will be listed as a business expense.  So, reduction in revenue, but at least it can be used as an expense.  Also the log show the 12 percent VAT was deducted and consequently does not have to paid from vendor to government.  

Non-citizen senior - For discount to a non-cardholder, it is simply a reduction in revenue.   In the USA, they are not used as an expense, but is tracked as line item that shows a reduction in revenue.  The benefit to the vendor is that it encourages the senior to return.  Margins are high enough in the USA to more than absorb a discount and still make a profit.  Probably not the case here in the Philippines unless it is a "high end" restaurant.  

[hk blues]

On 4/28/2023 at 4:54 PM, fillipino_wannabe said:

I could be wrong but I don't think the government pays any of it back.

Second scenario is correct but some people often seem to think 'tax write off' is some sort of magic when really you're just paying 30 pesos less tax because you made 100 pesos less profit for example.

Yep...perhaps my terminology was less clear- when I say pay back what I mean is the establishment will simply not have to pay over the VAT as it wasn't charged. In reality, the establishment is an agent for the government in terms of collecting VAT.

[JJReyes]

9 hours ago, hk blues said:

In reality, the establishment is an agent for the government in terms of collecting VAT.

Governments find ways to tax citizens and make the businesses pay the expense for collection.  "Just send us the money."