Government forgoes over P23 billion in taxes

MANILA, Philippines — The Department of Finance (DOF) has waived more than P23 billion in taxes for the shipment of medical supplies, mostly vaccine imports needed in scaling up the pandemic response.

Finance Assistant Secretary Dakila Napao reported that the DOF approved a total of 254 applications for duty exemptions worth P8.7 billion of vaccine purchases last year.

Vaccine importers filed at least 276 requests to free up their orders from taxes to speed up their release to local governments and private firms.

The tax exemptions awarded to vaccine importers accounted for over 37 percent of the P23.4 billion in total relief granted by the government in 2021. The amount flirted with the P23.9 billion in forgone revenue from duty exemptions recorded prior to the pandemic in 2019.

“The estimated foregone revenue is returning to its pre-pandemic figure of P23.9 billion in 2019. However, this is primarily due to the foregone revenue attributable to importations of COVID-19 vaccines, as well as importations of items related to COVID-19 response,” Napao said.

Further, Napao said the DOF allowed 823 applications for value-added tax exemptions on the importation of COVID-19 medicines, as well as hospital devices, resulting in lost revenues worth P382.1 million.

Also, Napao said that the Financial Analytics and Intelligence Unit, the data analysis arm of the DOF, approved P211 million in tax refunds referred by the Bureau of Customs.

Instituted in 2017 through Executive Order 46, the office assesses how certain decisions made by the government impact its fiscal position and then submits recommendations to the Secretary of Finance on what to do next.

Finance Secretary Carlos Dominguez III approved the inclusion of shipments of vaccine orders in the express lane. In turn, duty exemptions for vaccine shipments can be processed within 24 hours, making sure that they can be delivered to their respective recipients as fast as possible.

Similarly, Dominguez waived the filing fees for vaccine applications in the express lane. He also authorized the use of the tax exemption system online filing module to open a digital window for vaccine importers in submitting requirements.

According to the Philippine Statistics Authority, vaccine imports grew by 10-fold to $1.91 billion in 2021 from $191.26 million in 2020 for the procurement of COVID-19 vaccines from multiple sources like China, Europe and US.