VAT-exempt sales/ importations of drugs and medicines prescribed for certain diseases

(Revenue Regulations No. 18-2020 issued on June 26, 2020)

This Tax Alert is issued to inform all concerned on the implementing rules and regulations on the VAT-exemption of sale or importation of drugs and medicines pursuant to RA 11467.

Sale or importation by the manufacturers, distributors, wholesalers and retailers of prescription drugs and medicines included on the list of approved drugs and medicines by the Department of Health (DOH) for diabetes, high cholesterol, and hypertension shall be VAT-exempt beginning January 27, 2020.

VAT paid on importations of qualified prescription drugs and medicines for diabetes, high cholesterol, and hypertension from effectivity of RA No. 11467 on January 27, 2020 until effectivity of these Regulations (July 09, 2020) may be applied for refund, provided that the VAT was not yet claimed as input tax credit in the VAT returns. Existing procedures for VAT refund shall be followed.

The list of VAT exempt drugs and medicines for diabetes, high-cholesterol and hypertension as published by DOH can be accessed in the below link:

https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2020%20RMCs/RMC%20No.%2062-2020%20FDA%20List.pdf

Moreover, effective January 01, 2023, sale and importation of prescription drugs for cancer, mental illness, tuberculosis and kidney diseases shall also be VAT-exempt.