Comply with law on VAT-exempt medicine, drugstores warned

MANILA, Philippines — The Bureau of Internal Revenue (BIR) yesterday warned drugstores to comply with the law exempting medicine for diabetes, hypertension and high cholesterol from value added tax (VAT) or face charges. 

BIR deputy commissioner Marissa Cabreros noted that under the Tax Reform for Acceleration and Inclusion (TRAIN) law, medicines for the three health problems are no longer subject to VAT this year. 

“What is important is they should respect the fact that the medicines should be VAT exempt. It started on Jan. 1, 2019. There was no deferment,” Cabreros said at a press briefing in Malacañang. 

“If they issue a VAT invoice, the BIR can run after them because of the wrong issuance of invoice. The qualified medicines should be properly (labeled) as VAT exempt,” she added. 

Cabreros said it has been a year since drug retailers were advised about the VAT exemption. She said non-compliance with the tax law’s provisions on invoicing requirements is punishable by penalties and imprisonment of at least six months. 

“We were told that the small retailers, the small drugstores, are the ones who cannot comply and their reason is they have not changed their system. We are reminding the retailers it’s not a matter of changing the functionality of the system, they should extend the exemption already as early as Jan. 1, 2019,” the tax official said. 

Cabreros  said those who have yet to change the system are supposed to issue manual receipts recognizing the VAT exemption. She also urged the public to request for an official receipt and to check if the phrase “VAT exempt” is prominently indicated in the invoice of the sale of the medicine. 

Health Undersecretary Eric Domingo said there is a strong clamor to extend the VAT exemption to medicines for cancer patients. 

“We are discussing with an interagency working group the medicines for cancer. We have very strong patient groups and NGOs (non-government organizations) that are working with us. We are looking at ways to include cancer medicines,” Domingo said.  

Domingo also warned the public that e-cigarettes are not health alternatives to tobacco. He noted that vapes contain nicotine that is addicting. 

“It will be up to the Department of Finance to decide on how they (e-cigarettes) will be taxed. We at the Department of Health... do not advocate the use of vaping and we want to strictly regulate it,” the health official said.  

Meanwhile, Ilocos Norte governor and senatorial aspirant Imee Marcos yesterday pushed for inclusion of all medicines among products that are exempt from VAT.

According to Marcos, the list should be expanded to make sure that all Filipinos have adequate access to affordable medicines. – Sheila Crisostomo