Senior citizens will now be required to pay the 12 percent valueadded tax (VAT) on their water and electric bills.

The Bureau of Internal Revenue (BIR) came out on Monday with Revenue Regulation (RR) 8-2010 cancelling the privilege provided for in the old RR 7-2010.

BIR Commissioner Kim S. Jacinto- Henares said the new regulations will take effect 15 days after they is published in newspapers.

The BIR chief explained that the privilege was withdrawn to reduce government tax losses as a result of the implementation of the Expanded Senior Citizens Act of 2010.

Under the law, the elderly are not only granted 20 discount on purchases of wide range of goods and services, but are also exempted from paying the 12 percent VAT, thus bringing total discounts to 32 percent.

Under Section 5 of the senior citizens law, the elderly are granted special five percent discounts in their electric and water bills provided consumptions do not exceed 100 Kwh for electricity and 30 cubic meters of water per month.

The privilege is granted per household regardless of the number of senior citizens residing in the place.

As a result, senior citizens got a total discount of 17 percent on their electric and water bills.

But with the withdrawal of the 12 percent VAT exemptions these elderly will now be getting only 5 percent discount on their electric and water bills under the new regulations.

The RR was signed by Finance Secretary Cesar Purisima and recommended by Henares.

It was explained that except for electric and water bills, senior citizens will still enjoy the privileges of not paying VAT on their purchases.

To ensure the full entitlement of elderly to the discount prescribed under the law, sellers are precluded from billing any VAT to the senior citizens.

The sale to a senior citizen must follow the invoicing requirements prescribed under Revenue Regulations No. 16-2005.

If the seller uses a point-of-sale machine or a cash register in of lieu of the regular sales invoice, the machine tape must properly segregate the exempt sales from the taxable sales.