The Philippines’ Bureau of Internal Revenue has revised its senior citizen discount tax rules for the first time since 2010, clarifying how pharmaceutical manufacturers, distributors and retailers can deduct their share of medicine discounts from gross income. The new rules require burden-sharing agreements and limit deductions to the costs each business actually covers.
The Philippines Bureau of Internal Revenue (BIR) has updated its tax rules on senior citizen discounts for the first time since 2010. The changes explain how pharmaceutical companies, distributors, and retailers can claim tax deductions when they share the cost of discounts on medicines. The amendments appear in Revenue Regulations No. 7 of 2026 issued on 17 September 2026.
Filling a gap in the old rules
The 2010 rules never said how tax deductions should be divided when more than one business paid for a discount. The law requires a 20% discount on medicines for senior citizens, and different players in the drug supply chain often share that cost. The old regulations ignored this, and the new rules address it directly.
The change follows the burden-sharing mechanism set out in Republic Act No. 9994, also known as the Expanded Senior Citizens Act of 2010. That law directed the Department of Health (DOH) to issue guidelines for dividing discount costs among retailers, manufacturers, and distributors.
Deductions match each company’s share
Under the revised rules, each company may deduct only the portion of the discount it agreed to cover. A company that pays part of the discount cannot claim the full 20%. The deduction must reflect the agreed share, not the total amount the senior citizen receives at the point of sale.
Only establishments that actually grant the discount may claim it. Participating companies must sign burden-sharing agreements that follow DOH guidelines, keep them on record, and furnish copies to the DOH.
Who qualifies
The BIR now names pharmaceutical retailers, manufacturers, and distributors as establishments covered by these arrangements. The rules also apply to transactions between wholesalers and retailers, and between wholesalers themselves. Businesses now have a clearer basis for deciding which companies may claim the discount as a deduction from gross income.
The documented agreements also give the BIR and DOH a record of each participant’s responsibility and the amount it may claim.
