REVENUE REGULATIONS NO. 13-2020 issued on May 27, 2020 prescribes the rules and regulations to implement the tax privileges granted to privately-owned establishments granting sales discounts and incentives to National Athletes and Coaches pursuant to the provision of Section 4 of Republic Act No. 10699, titled “An Act Expanding the Coverage of Incentives Granted to National Athletes and Coaches, Appropriating Funds Therefor, Repealing for the Purpose Republic Act No. 9064, also known as the “National Athletes, Coaches and Trainers Benefits and Incentives Act of 2001” or “Sports Benefits and Incentives Act of 2001”. The Chairman of the Philippine Sports Commission (PSC) shall issue a Philippine National Sports Team Identification Card and Booklet (PNSTM ID and Booklet) to the National Athletes and Coaches, which they will present toprivatelyowned establishments for their availment of sales discounts and incentives. Qualified National Athletes and Coaches shall be entitled to twenty percent (20%) sales discount on sales amount exclusive of Value-Added Tax (VAT) relative to the sale of goods and services for their actual and exclusive use or enjoyment. VAT on sale of goods or services with sales discounts granted by business establishments enumerated under Section 4of the Regulations shall be computed in accordance with the formula specified in the Regulations. Privately-owned establishments granting sales discounts and incentives shall enjoy tax deductions equivalent to the discounts extended to qualified National Athletes and Coaches, pursuant to Section 6 of the Regulations. They shall be entitled to deduct the said sales discount from their gross income, subject to the following conditions: a. The deduction from the gross income is for the same taxable year that the discount is granted and the name of National Athletes and Coaches and the corresponding PNSTM ID Numbers are reflected in the required record of sales for National Athletes and Coaches. As expressly provided by law, the total amount of the claimed deduction net of VAT, if applicable, shall be included in their gross sales receipt for tax purposes and shall be subject to proper documentation and to the provisions of the Tax Code, as amended. Thus if the name ofNational Athletes and Coaches, and their corresponding PNSTM ID Number is not reflected in the records of sales, the sales discount claimed as deduction by business establishments shall be disallowed. For Percentage taxpayer, the amount of sales discounts shall be included for purposes of computing the three percent (3%) Percentage Tax and shall be included as part of the gross sales/receipts for Income Tax purposes, but the sales discount granted shall be accounted as deduction from the gross income of the establishment for the same taxable year that the discount was granted. b. Only that portion of the gross sales exclusively used, consumed or enjoyed by the National Athletes and Coaches shall be eligible as deductible sales discount; c. The amount of sales discount shall be allowed as itemized deduction from gross income for the same taxable year that the discount is granted, provided that the taxpayer is not availing of the Optional Standard Deduction (OSD); d. The gross selling price and the sales discount must be separately indicated in the official receipt or sales invoice issued by the establishment for the sale of goods or services to the National Athletes and Coaches; e. Only the actual amount of the sales discount granted or a sales discount not exceeding 20% of the gross selling price or gross receipts can be deducted from the gross income, net of VAT, if applicable, and shall be subject to proper documentation under pertinent provisions of the Tax Code of 1997, as amended. Provided, however that if the establishment granting the discount availed of the OSD or opted to be taxed at Eight Percent (8%) Income Tax rate, if applicable, under RA No. 10963 (TRAIN Law), as implemented by RR No. 8-2018, the sales discount given cannot be claimed as allowable deduction from gross income. f. The business establishment giving sales discount to qualified National Athletes and Coaches is required to keep separate and accurate records of sales, which shall include the name of the National Athletes or Coaches, PNSTM ID Number, gross safes/receipts, sales discount granted, date of transactions and invoice number for every sales transaction to National Athletes and Coaches. g. The cost of discount shall be allowed as a deduction from gross income for the same taxable year that the discount is granted: Provided that the total amount of the claimed deduction net of VAT, if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation in accordance with the provisions of the Tax Code. This means that for the establishment to be allowed to claim the discount as a deduction, the amount of sales that must be reported for Income Tax purposes is the VAT-exclusive selling price and not the amount of sales net of the discount. Any violation of the Regulations shall be subject to the corresponding penalties under pertinent provisions ofthe Tax Code of 1997, as amended, and other applicable regulations issued by the BIR.Further, any person who violates any provision of the Regulations shall suffer the following penalties: a. For the first violation, a fine of not less than Fifty Thousand Pesos (P50,000) butnotexceeding One HundredThousandPesos (P 100,000) or imprisonment of not less than six (6) months but not more than two (2) years, or both at the discretion of the court; b. For any subsequent violation, a fine of not less than One hundred thousand pesos (P100,000) but not exceeding Two hundred thousand pesos (P 200,000) or imprisonment of not less than two (2) years but not more than six (6) years, or both at the discretion of the court. i. Any national athlete or coach who abuses the privileges granted shall he punished with imprisonment of not lessthan six (6) months or a fine of not less than FiveThousand Pesos (P5,000), but not more than Fifty Thousand Pesos (P50,000), or both, at the discretion of the court. ii. If the violator is a corporation, partnership or any juridical person, the penalty shall be imposed upon the president, owner or any responsible officer. iii. If the violator is an alien or a foreigner, the person shall be deported immediately after service of sentence without further deportation proceedings. Upon filing of an appropriate complaint, and after due notice and hearing, the proper authorities may also cause the cancellation or revocation of the business permit, permit to operate, franchise and other similar privileges granted to any business entity that fails to abide by the provisions of the law and this Regulations.