As the Philippine economy is gradually recovering from the effects of the COVID-19 pandemic, the Revenue Memorandum Circular (RMC) No. 7-2024, issued on January 11, reverses the VAT exemption of the following transactions specified under Section 109 (BB) of the CREATE Law:
Sale or importation of the following:
i. Capital equipment, its spare parts and raw materials, necessary to produce personal protective equipment components such as coveralls, gown, surgical cap, surgical mask, N-95 mask, scrub suits, goggles and face shield, double or surgical gloves, dedicated shoes, and shoe covers, for COVID- 19 prevention;
ii. All drugs, vaccines, and medical devices specifically prescribed and directly used for the treatment of COVID-19; and
iii. Drugs for the treatment of COVID-19 approved by the Food and Drug Administration (FDA) for use in clinical trials, including raw materials directly necessary for the production of such drugs.
The above transactions are no longer VAT-exempt and shall now be subject to 12% VAT effective January 1, 2024.
Ultimately, this exemption may have ceased for the taking, but one can only take this as a good sign that everyone is now recovering from the pandemic.
Please be guided accordingly.
P&A Grant Thornton
Certified Public Accountants
P&A Grant Thornton is the Philippine member firm of Grant Thornton International Ltd
As published in SunStar Cebu, dated 23 January 2024