Revenue Memorandum Circular · RMCTax credits / incentives

RMC No. 25-2023

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Document type: RMC
Number: 25
Year: 2023
Text quality: ok

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REVENUE MEMORANDUM CIRCULAR NO. 25-2023 issued on February 20, 2023 circularizes Republic Act No. 11314, titled “An Act Institutionalizing the Grant of Student Fare Discount Privileges on Public Transportation and for Other Purposes”. The Act shalI cover all public transportation utilities such as, but not limited to, Public Utility Buses (PUBs), Public Utility Jeepneys (PUJs), taxis and other similar vehicles-for-hire, tricycles, passenger trains, aircrafts and marine vessels. The application of this Act does not cover school service, shuttle service, tourist service, and any similar service covered by contract or charter agreement and with valid franchise or permit from the Land Transportation Franchising and Regulatory Board (LTFRB). The fare discount granted shall be available during the entire period while the student is enrolled, including weekends and holidays: Provided, That, in a case where a promotional fare, as approved by the concerned regulatory agency, is granted by a public transportation utility operator, the student shall have the option to choose between the promotional fare and the regular fare less the discount as provided under this Act. A student shall be entitled to a grant of twenty percent (20%) discount on domestic regular fares, upon personal presentation of their duly issued school identification cards (IDs) or current validated enrollment form, supported by the prescribed government-issued identification document, subject to an appropriate verification mechanism to be provided in the Implementing Rules and Regulations (IRR): Provided, That in the case of air public transportation utilities, the discount shall only apply to the base fare or the price of the ticket before taxes and costs for ancillary services. The privileges shall not be claimed if the student claims a higher discount as may be granted by the public transportation utility, or under other existing laws, or in combination with other discount programs or incentives. The public transportation utility operator may claim as tax deduction the student fare discount herein granted based on the cost of the services rendered: Provided, That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted: Provided, further, That the total amount of the tax deduction net of Value-Added Tax, if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code, as amended.

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Issuance analysis

Structured from the available issuance text · Tax credits / incentives

RMC No. 25-2023 circularizes Republic Act No. 11314, which grants students a 20% discount on domestic regular fares on public transportation (buses, jeepneys, taxis, vehicles-for-hire, tricycles, trains, aircraft, and marine vessels) while enrolled, including weekends and holidays. Public transportation utility operators may claim the cost of the discount as a tax deduction from gross income for the same taxable year it is granted; the deduction amount, net of VAT if applicable, must be included in gross sales receipts and is subject to proper documentation and the National Internal Revenue Code.

Purpose

To circularize Republic Act No. 11314 institutionalizing student fare discount privileges on public transportation, including the coverage, entitlement conditions, and the associated tax deduction for public transportation utility operators.

In brief

Circularizes RA 11314 granting students a 20% discount on domestic regular fares on public transportation while enrolled, and allows transport operators to claim the discount as a tax deduction from gross income for the same taxable year, net of VAT and included in gross sales receipts.

Keywords

student fare discountRepublic Act No. 1131420% discountpublic transportation utility operatortax deduction from gross incomegross sales receiptsValue-Added TaxLTFRBschool identification cardpromotional fare

Key points

RA 11314 covers all public transportation utilities, including PUBs, PUJs, taxis and similar vehicles-for-hire, tricycles, passenger trains, aircraft, and marine vessels, but excludes school service, shuttle service, tourist service, and similar services under contract or charter agreement with a valid LTFRB franchise or permit.
The fare discount is available during the entire period while the student is enrolled, including weekends and holidays; where a regulatory-approved promotional fare is granted, the student may choose between the promotional fare and the regular fare less the 20% discount.
Students are entitled to a 20% discount on domestic regular fares upon personal presentation of a duly issued school ID or current validated enrollment form supported by the prescribed government-issued ID, subject to a verification mechanism to be provided in the IRR.
For air public transportation utilities, the discount applies only to the base fare, i.e., the ticket price before taxes and costs for ancillary services.
The student fare discount cannot be claimed if the student claims a higher discount granted by the operator or under other laws, or in combination with other discount programs or incentives.
Public transportation utility operators may claim the student fare discount as a tax deduction based on the cost of services rendered, deductible in the same taxable year the discount is granted.
The total amount of the tax deduction, net of VAT if applicable, must be included in the operator's gross sales receipts for tax purposes, and is subject to proper documentation and the provisions of the National Internal Revenue Code, as amended.

Tax types

Income tax — the cost of the student fare discount is allowed as a deduction from gross income of the operator for the same taxable year the discount is granted.
Value-Added Tax — the tax deduction is computed net of VAT where applicable, and the amount is included in gross sales receipts for tax purposes.

Affected taxpayers

Public transportation utility operators (e.g., PUB, PUJ, taxi, tricycle, passenger train, aircraft, and marine vessel operators), who may claim the tax deduction and must include the discounted amount in gross sales receipts.
Students enrolled in school, who are entitled to the 20% discount on domestic regular fares while enrolled.