Drugs for mental illness in list of VAT exemption

SEVERAL medicines for cancer, diabetes, hypertension, kidney disease, mental illness and tuberculosis are now exempted from value-added tax (VAT), according to the Bureau of Internal Revenue (BIR).

The Bureau issued on Wednesday the Revenue Memorandum Circular 17-2024 adding 16 medicines for various diseases to the list of medications exempted from the 12 percent VAT.

“Updating the list of Vat-exempt medicines is part of Taxpayer Service. We will update taxpayers as soon as possible of exemptions given to them by existing laws,” said Commissioner Romeo D. Lumagui, Jr. in a statement.

Republic Act (RA) 11534 or the “Corporate Recovery and Tax Incentives for Enterprises (Create) Act” provides VAT exemption to certain health products and medical devices where the Food and Drug Administration is directed to identify the products and transmit the list to the BIR. The circular is also pursuant to R A 10963 or the “Tax Reform for Acceleration and Inclusion” law.

According to the circular, medications for cancer such as Panitumumab and Fulvestrant were added to the Vat-exempt list.

Diabetes medicines that were also Vat-exempt are Teneligliptin (as hydrobromide hydrate), Sitagliptin (as phosphate monohydrate) + Metformin Hydrochloride, Sitagliptin, and Metformin Hydrochloride.

Meanwhile, high cholesterol medications Atorvastatin Calcium and Atorvastatin + Fenofibrate were also included in the list.

Hypertension drugs such as Clonidine hydrochloride and Lisinopril (as dehydrate) were also added.

Medications for kidney diseases include Mannitol, Tolvaptan, and Alpha Ketoanalogues + Essential Amino Acids to the Vat-exempt list.

Desvenlafaxine (as succinate monohydrate), a medication for mental illness, and tuberculosis drugs such as Bedaquiline (as Fumarate) and Isoniazid + Pyridoxine Hydrochloride were also exempted from VAT.

Macitentan film-coated tablets, a drug used to treat pulmonary arterial hypertension, were removed by the BIR from the list of Vat-exempt medications as per the recommendation of the Department of Health.

The circular applies to the sale or importation of drugs prescribed for cancer, mental illness, tuberculosis, and kidney diseases by manufacturers, distributors, wholesalers and retailers.

The drugs shall be exempt from VAT pursuant to RA 8424 or the “National Internal Revenue Code” as amended by the Create law, since January 2019.