Diabetes, hypertension drugs to be VAT-exempt starting 2019

MANILA, Philippines — The new year may bring more cheer to Filipinos after a food bonanza during the yuletide season, with the government now all set to implement the value-added tax (VAT) exemption on sale of medicines for diabetes, high cholesterol and hypertension.

The removal of 12 percent VAT on medicines for diabetes, high cholesterol and hypertension was mandated by the Tax Reform for Acceleration and Inclusion Act, or TRAIN law.

READ: Explainer: How Duterte's new tax law or TRAIN can affect you

The Bureau of Internal Revenue on Thursday released Revenue Regulations 25-2018 implementing the VAT exemption for prescription drugs used to treat cardiovascular diseases and diabetes starting Jan. 1, 2019.

But the BIR clarified that “importation of the above-described drugs and medicines shall be subject to VAT.”

The VAT exemption will apply to the “sale by manufacturers, distributors, wholesalers and retailers” of the medicines, which will be identified by the Food and Drug Authority.

The FDA’s list of VAT-exempt drugs will be posted on the BIR website thru a memorandum circular.

“Any update, such as registration of new and/or additional drugs and medicines, as well as de-registration of those previously published by the FDA, shall likewise be posted in the BIR Website,” the bureau said.

To make the VAT system “fairer” and plug sources of “massive leakages,” TRAIN repealed 54 out of 61 special laws with “non-essential” VAT exemptions, and limited the relief to agriculture, education and health.

Meanwhile, purchases of senior citizens and persons with disability continue to be VAT-free.

Since its enactment, TRAIN has received public backlash amid perceptions that higher excise levies on fuel and other goods slapped by the law contributed to this year’s spike in inflation. — Ian Nicolas Cigaral