Drugstores told: Give VAT exemptions
Some pharmacies are not complying with the law requiring all drugstores starting Jan. 1 to exempt from the 12-percent value-added tax (VAT) the sale of medicines for diabetes, hypertension and high cholesterol to people aged below 60 years old.
Seniors are already enjoying the VAT exemption.
The drugstores are unable to comply with the law because they have not reconfigured their cash register system to reflect the reduced prices, Deputy Commissioner Marissa Cabreros of the Bureau of Internal Revenue (BIR) said on Wednesday.
“We are reminding the retailers it’s not a matter of changing the functionality of your system. They should extend the VAT exemption already [in effect] as early as Jan. 1,” Cabreros said at a briefing in Malacañang.
She said the Tax Reform for Acceleration and Inclusion (TRAIN) Act, which called for the VAT exemption for diabetes, hypertension and high cholesterol medicines, had been enforced for a year now and all retailers and manufacturers were notified about it.
Cabreros said if the cash registers of these small drugstores could not print the proper receipts, they should issue “manual” receipts that clearly indicate on its face the phrase “VAT-exempt.”
“So the reason that our cash register could not come up with VAT-exempt receipts should not be accepted,” the BIR official said. “They should provide manual receipts.”
She said these small drugstores violating the law faced a fine of P1,000, or a jail term of up to six months or both.
Cabreros said consumers who were not given VAT exemptions for the medicines should report the violation via firstname.lastname@example.org.
She said the BIR received general questions from the public about the new VAT exemptions but no one had given the names of the drugstores violating the law.
Cabreros encouraged consumers to get a refund from the drugstores.
Under the BIR’s Revenue Regulation 25-2018, the VAT exemption applies only to the sale by manufacturers, distributors, wholesalers and retailers of drugs prescribed for the treatment or prevention of diabetes, high cholesterol and hypertension, but not to their importation.
The Food and Drug Administration (FDA) came up on Jan. 9 with a list of VAT-exempt drugs that the Department of Health had posted on its website.
Other drugs not on the FDA list are still subject to VAT.
Health Undersecretary Eric Domingo said government wanted more people to gain access to medicines to cut the number of cases of noncommunicable diseases (NCDs) and reduce deaths from diabetes, hypertension and high cholesterol.
Diabetes and hypertension each accounted for 5.7 percent of deaths in 2016 in the country, or 33,295 and 33,452, respectively, according to the Philippine Statistics Authority.
Domingo joined Cabreros and FDA Director General Charade Puno in reminding the public to demand an official receipt from drugstores whenever they buy the medicines.
Puno said FDA inspectors could check with drugstores and retailers if they were implementing the new VAT exemptions.
Domingo said the new VAT exemptions would benefit the “increasing number of people who are hypertensive, diabetic and have high cholesterol who are not senior citizens yet.”
He said the prevalence of diabetes, hypertension and high cholesterol was now hitting people aged 30 to 40 years old.
Domingo said 7 million Filipinos were suffering from diabetes and the same number from hypertension. He noted that less than half of the people suffering from these ailments were not seniors.
The health undersecretary said there was a strong clamor to also exempt from VAT medicines for cancer, which he noted would need a new tax law.
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