Gov’t eyeing cancer medicines to be exempted also from 12 percent VAT

January 16, 2019

The government is eyeing to include "cancer medicines" to be exempted also from the imposition of 12 percent value-added tax.

This as the Bureau of Internal Revenue warned on Wednesday drugstores, which would still collect 12 percent VAT from the maintenance medicines, which have been exempted already starting January this year as provided under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

Health Undersecretary Eric Domingo, in a press briefing in Malacanang, said that under the TRAIN Law, maintenance medicines for hypertension, diabetes, and cholesterol are the only ones exempted from the 12 percent VAT.

"But there is a strong clamor now, which we are discussing with the interagency working group, the medicine for cancer. So we have very strong patient groups and NGOs (non-government organizations) that are working with us. What we are looking at is how to include the cancer medicines," he said.

BIR Deputy Commissioner Marissa Cabreros, in the same press briefing, warned the non-compliant drugstores or retailers on the 12 percent VAT exemption on the prices of the maintenance medicines under the TRAIN Law and on their failure to issue the proper receipts.

"Reminder to all the retailers, drugstores, not because they did not pass the VAT in the selling of the qualified medicines, it doesn't mean that we're not going to assess their taxes. Let's say, you bought VAT-exempt medicine, so I did not impose you the VAT because you are VAT-exempt, but I made a mistake and I issued VAT invoice, I'm still liable. The BIR could still go after you to pay for the VAT component because of the wrong issuance of invoice. It should be properly indicated that the qualified medicines are VAT-exempt," she explained.

She said those who would be found guilty for not issuing the correct invoice could be meted with minimum of six months of imprisonment.

She said those drugstores, which have been saying their Point of Sale Cash Register Machines have not yet been adjusted to include VAT-exempt medicines, are not excused from implementing the law.

"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 January 1, 2019. If their system cannot do so, they are supposed to issue a manual receipt to recognize the VAT exemption and clearly indicate in face of the receipt ‘VAT exempt'," she explained, noting that these stores were given one year to make an adjustment of their machines.

She urged the public that if they have any complaint, they could send it via the ecomplaints@bir.gov.ph so that the BIR could visit the erring stores. Celerina Monte/DMS