BIR to refund VAT on imported meds for diabetes, cholesterol, hypertension
Medicines for diabetes, high cholesterol and hypertension are exempt from value-added tax (VAT), so importations slapped with the 12-percent levy at the start of the year will be refunded, the Bureau of Internal Revenue (BIR) said on Thursday (July 9).
The BIR published Revenue Regulations (RR) No. 18-2020, which amended earlier VAT-exemption guidelines to apply the exemption on the sale or importation of prescription drugs and medicines for diabetes, high cholesterol and hypertension effective on Jan. 1.
It was mandated by Republic Act No. 11467 signed by President Rodrigo Duterte in the same month.
RA No. 11467 jacked up excise on e-cigarettes and alcoholic products to raise additional revenues for the government, which, in turn, will compensate for the VAT exemption of select medicines.
RR No. 18-2020 signed by Finance Secretary Carlos G. Dominguez III and Internal Revenue Commissioner Caesar R. Dulay also exempted from VAT the sale and importation of prescription drugs and medicines for cancer, mental illness, TB and kidney diseases starting on Jan. 1, 2023.
The directive said VAT exemption should apply only to the sale or importation of drugs and medicines on the list approved by the Department of Health (DOH).
It said the refunds would follow procedures set for VAT exemption but provided that the tax refunds have not yet been claimed as “input tax credit” in monthly or quarterly VAT returns, the BIR said.
The medicines’ VAT exemption would also not be allowed as input tax credit for “purposes of computing the VAT payable” of companies or groups importing or selling the VAT-exempt merchandise.
Estimates made by the Department of Finance (DOF) last February showed the government would forgo P5.2 billion in revenue from the VAT-exempt goods and a total of P35.1 billion in uncollected taxes by end of 2024.
The business headlines in under one minute
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.