RMC No. 34-2019: Clarifies the treatment and reporting requirements of Input Tax as of December 31, 2018 relative to VAT-exempt medicines pursuant to the TRAIN Law

Summary

RMC No. 34-2019 clarifies the treatment and reporting of Input Tax as of December 31, 2018 on drugs for diabetes, high cholesterol and hypertension that became VAT-exempt under the TRAIN Law.

Key points

1. Inventory List. Manufacturers, wholesalers, distributors and retailers must file an Inventory List of such drugs and medicines on hand as of December 31, 2018, whether or not there is an existing excess Input Tax. These drugs became VAT-exempt beginning January 1, 2019 under Section 34 of RA No. 10963.
2. What the list covers. It includes all imported and locally-manufactured drugs on hand, in the format of Annex A of the Circular.
3. Where and when to file. The list is filed with the Large Taxpayer Service or Revenue District Office where registered, on or before April 25, 2019, as an attachment to BIR Form 2550Q for the first quarter of 2019.
4. Input Tax treatment. When filing BIR Form 2550M/2550Q, the Input Tax matching the sale is deducted from allowable Input Tax. As VAT-exempt drugs are sold, the corresponding Input Tax is closed to cost or expense.

Who is affected

• Manufacturers
• Wholesalers
• Distributors
• Retailers of the covered drugs

Deadlines and effectivity

• Inventory as of December 31, 2018
• File on or before April 25, 2019 with the 1st quarter 2019 Form 2550Q

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