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Magna Carta of Women and Taxation

Taxwise or Otherwise

By Catherine T. Manahan, 10 September 2009 (BusinessWorld)

On Sept. 15, the recently signed Republic Act No. 9710, otherwise known as The Magna Carta of Women (TMCW), will take effect.

This law may well be the créme de la créme of the various domestic legislations protective of women that have already been passed by Congress in order to implement Article II, Section 14 of the Constitution of the Philippines which states that "The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men."
Likewise, by passing this statute, the Philippines has reaffirmed its international commitment to the United Nations Convention on the Elimination of All Forms of Discrimination against Women and the Beijing Platform for Action which it has earlier ratified.

With the passage of TMCW, our government effectively recognizes the right of women to be accorded equal rights and privileges with men in all aspects of their economic, political, social and cultural life.

However, in the realm of taxation, although the provisions of the National Internal Revenue Code of 1997(NIRC), as amended, do not appear to discriminate against women in terms of tax treatment, actual implementation of certain provisions of the law does seem to be gender-biased in favor of men.

The section of the NIRC granting individual taxpayers allowance for personal and additional exemption is a classic example. Under Section 35 of the NIRC, individual taxpayers, regardless of status (e.g. single, head of family, married) or gender (i.e., male or female), are each entitled to a basic personal exemption allowance of P50,000 which they can deduct from their gross income. Thus, in respect to the personal exemption, both men and women are equally favored.
With regard to the additional exemption for each qualified dependent of P25,000 granted to married individuals, the law states that only one of the spouses can claim the additional exemption allowance without qualification as to gender, i.e., whether the husband or wife. Thus, although this provision limits the grant of allowance to only one of the spouses, it effectively gives the spouses the liberty to decide which of them, i.e., either husband or wife, should avail of the deduction.

The same holds true for the deduction of premium payments for health and/or hospital insurances for each family. The NIRC provision merely states that the spouse claiming the additional exemption for qualified dependent children shall be the same spouse entitled to claim the deductions of premium payments from the gross income.

However, the whole scenario radically changes under the implementing revenue regulations of the NIRC, namely, Revenue Regulations No. 10-08 (RR), when it designates the husband as the proper party entitled to claim the additional exemption allowance for each qualified dependent child.

SECTION 3 (l) of the RR provides that the husband of the family shall be the proper claimant of the additional exemption allowance for qualified dependent children, unless he explicitly waives his right in favor of his wife. This process of waiver can be administratively cumbersome since it entails the submission of a number of supporting documents such as the Application for Registration update (BIR Form No. 1902), the Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305) which requires numerous attachments like birth certificate of each qualified dependent child, Certificate of Employment, Sworn Declaration and Waiver of Right to Claim Exemptions of qualified dependent child, medical certificate, court decision of legal adoption, death certificate and other documentary evidence.

Under RR 10-08, the wife can claim the additional exemption allowance only when the husband is unemployed, a non-resident citizen deriving income from foreign sources or in a sworn statement, waives his right to claim the additional exemption.

Complying with these detailed requirements can pose a real problem to women taxpayers who are, de facto, separated from or abandoned by their husbands and have lost all kinds of contact with them. If they will not submit the documentary requirements under the RR that will allow them to claim the additional exemption, then, those women who actually support their children will be deprived of the right to claim such tax benefit which will help reduce their income tax liabilities.

The law contemplated only a legal separation scenario by stating that in case of legally separated spouses, additional exemptions may be claimed only by the spouse who has custody of the children.

In the same manner, the RR, following the NIRC provision, prescribed that the spouse claiming the additional exemption for qualified dependent children, shall be the same spouse to claim the deductions for premium payments. Thus, if the wife is not rightfully designated to claim the additional exemption allowance, then, she will not be able to claim this additional deduction from her gross income.

The foregoing discriminatory features of the RR openly violate the very core of TMCW — i.e. equality of men and women before the law. More specifically, it goes against the provisions of SEC. 12 thereof which states: "SEC. 12. Equal Treatment Before the Law — The State shall take steps to review and, when necessary, amend and/or repeal existing laws that are discriminatory to women within three (3) years from the effectivity of this Act."

In this modern age and time, women are known to take more active role and participation in the labor sector, both locally and internationally. Profile of overseas Filipino workers show that there are more women than men. They have become the breadwinners of the family, and husbands have taken over the traditional role of wives and have become "housebands."

Following the aforequoted provision of TMCW, the earlier patently discriminatory features of the implementing regulations of the NIRC must be reviewed and possibly amended to provide equal opportunity to the husband as well as the wife when it comes to claiming their children for additional exemption allowances as well as deducting the premium payments for health/hospitalizat ion insurance.

It is high time to remove the long ingrained default principle even in our civil laws that the father is the head of the family and that a more balanced and equitable partnership type of arrangement must be observed. This is something TMCW’s key implementor, the Philippine Council of Women, should keep in mind when it holds public consultations on its implementing rules and regulations.