(NAR) VOL.8 NO. 4 / OCTOBER - DECEMBER 1997
"(a) the grant of twenty-percent (20%) discount from all establishments relative to utilization of transportation services, hotels and similar lodging establishments, restaurants, and recreation centers and purchase of medicine anywhere in the country: Provided, That private establishments may claim the cost as tax credit;"which, according to him, clearly entitles drugstores to a "tax credit" for all discounts given to senior citizens but which the BIR refuses to recognize resulting to the drugstores shouldering the loss in the implementation of the law. Mr. Sandoval insists that the same is not the spirit of the law when it was enacted.
"(1) The discount can be recorded as a reduction from gross sales.Simply put, it can be said that "sales discount" is merely a deduction from gross income/sales/receipts to arrive at the taxable income, while a tax credit is in the nature of a tax refund, which is treated as a return for tax payments erroneously or excessively assessed against a taxpayer. In other words, in order that one can claim a tax credit, the taxes due must be paid first by a taxpayer (which payment may be erroneously or excessively paid), after which he could request for a tax refund or tax credit. Section 204(3) of the Tax Code, as amended, provides as follows:
"(2) The discount can be recorded as an expense of the period.
(3) Sales revenue can be initially recorded at the net amount after deduction of the discount. Amounts received from customers who do not take the discount would then be recorded as additional revenue." (p. 142, Accounting, Text and Cases by Anthony and Reece, 1979 Edition).
"(3) .x .x x. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty."It may be noteworthy to state that the Highest Court in the case of San Carlos Milling Co., Inc. vs. CA, G.R. No. 193379, November 23, 1993, although not squarely in point, has touched on a significant aspect directly related to the issue at hand. There it was said:
"x x x An opportunity must be given the internal revenue branch of the government to investigate and confirm the veracity of the claims of the taxpayer. The absolute freedom that petitioner seeks to automatically credit tax payments against tax liabilities for a succeeding taxable year can easily give rise to confusion and abuse, depriving the government of authority and control over the manner by which the taxpayers credit and offset their tax liabilities, not to mention the resultant loss of revenue to the government under such a scheme."It is likewise important to note that the legal provision in question (Sec. 4 of RA No. 7432) employs the word "may" in the clause,