Drugs for diabetes, hypertension cheaper by January 2019

MANILA, Philippines — Medicine prescribed for diabetes, high cholesterol and hypertension will be exempt from value-added tax (VAT) starting Jan. 1, the Department of Finance (DOF) announced yesterday.

This is in compliance with Section 109 (AA) of the National Internal Revenue Code, as amended by Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law.

Finance assistant secretary Antonio Lambino said the VAT-free status of these drugs will also be implemented as prescribed under Joint Administrative Order No. 2-2018 of the DOF, Bureau of Internal Revenue and Food and Drug Administration (FDA) and BIR Revenue Regulations (RR) No. 25-2018, both dated Dec. 21, 2018.

The Department of Health (DOH) gave assurance it will provide support for the implementation of the exemptions to bring relief to millions of Filipinos afflicted with these three ailments.

The DOH said Filipinos need affordable medicine “especially when they are taken daily to prevent serious and even deadly complications.”

The DOH added the TRAIN law “is a health measure bringing affordable medicine to our patients while raising prices of sugary beverages, alcohol and cigarettes which bring harm to the general populace.”

According to BIR RR No. 25, the VAT exemption shall apply to the manufacturers, distributors, wholesalers and retailers of drugs and medicine prescribed for the treatment and/or prevention of diabetes, high cholesterol and hypertension.

However, RR 25 clarified that “the importation of the above-prescribed drugs and medicine shall be subject to VAT under Section 107 of the Tax Code, as amended.”

For this purpose, the BIR said a list of VAT-exempt diabetes, high-cholesterol and hypertension drugs as identified and published by the FDA will be posted in the BIR website through a revenue memorandum circular.

Any update, such as registration of new or additional drugs, as well as de-registration of those previously published by the FDA, will also be posted.

“The sale of drugs not included in the list of VAT-exempt diabetes, high-cholesterol and hypertension drugs published by the FDA shall be subject to VAT,”  RR 25 said.

The BIR said the validated revenue data on the sale of these VAT-exempt medicine will be submitted to the DOF.

According to the bureau, any person who violates any provision of the RR will be punished upon conviction of each act or omission – in addition to the tax required to be paid, if any – with a fine of not more than P1,000 or suffer imprisonment of not more than six months, or both. – With Sheila Crisostomo