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RMC No. 2-2019: Publishes the full text of Joint Administrative Order No. 2-2018 entitled “Implementing Guidelines on the Value-Added Tax (VAT) Exemption of the Sale of Drugs Prescribed for Diabetes, High-Cholesterol and Hypertension under Republic Act No. 8424 Otherwise Known as the National Internal Revenue Code of 1997, as Amended by Republic Act No. 10963”

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Summary

RMC No. 2-2019 publishes the full text of Joint Administrative Order No. 2-2018, the guidelines on the VAT exemption for sale of drugs prescribed for diabetes, high cholesterol and hypertension.

Key points

  1. Scope. The guidelines apply to sales by manufacturers, distributors, wholesalers and retailers. The sale is exempt from VAT under Section 106 of the NIRC, and importation is subject to VAT under Section 107. Drugs not on the FDA’s List of VAT-Exempt Diabetes, High Cholesterol and Hypertension Drugs are not exempt.
  2. Senior citizens and PWDs. The VAT exemptions under RA No. 7432 (Senior Citizens Act of 1992) and RA No. 7277 (Magna Carta for Persons with Disability), as amended, on sales to senior citizens and persons with disabilities are covered.
  3. Reporting duties. Manufacturers, distributors and retailers report all listed drugs in the Electronic Drug Price Monitoring Systems (EDPMS). They also submit to the DOH, within 60 days upon effectivity of the guidelines, a Sworn Statement of the wholesale price, suggested retail price and actual retail price before and after effectivity.
  4. FDA list. The FDA gives the DOH and BIR the List and updates thirty (30) days before every quarter. The BIR publishes them through a Revenue Memorandum Circular.
  5. Roles. The guidelines set out the roles of the DOF, DOH, BIR and FDA.

Who is affected

  • Manufacturers
  • Distributors
  • Wholesalers
  • Retailers

Deadlines and effectivity

  • Sworn Statement to DOH within 60 days upon effectivity of the guidelines
  • FDA list and updates 30 days before every quarter

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.

Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.