VAT exemption expires for drugs, equipment used to treat COVID-19
THE Bureau of Internal Revenue (BIR) said capital equipment, drugs, and vaccines for coronavirus disease 2019 (COVID-19) are no longer exempt from value-added taxes (VAT).
In a Revenue Memorandum Circular, the BIR said that the sale or import of all drugs, vaccines, and medical devices specifically prescribed and directly used for the treatment of COVID-19 are now subject to VAT, effective Jan. 1, 2024.
Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises Act authorized the VAT exemption on imports and sales of medicine and devices used to treat COVID-19.
The period for exemption ran between Jan. 1, 2021 and Dec. 31, 2023.
The list of items that will now be subject to VAT includes spare parts for capital equipment and raw materials needed in the production of personal protective equipment such as coveralls, gown, surgical caps, surgical masks, N-95 masks, scrub suits, goggles and face shields, surgical gloves, dedicated shoes, and shoe covers for COVID-19 prevention.
Also no longer exempt from VAT are drugs for the treatment of COVID-19 approved by the Food and Drug Administration for use in clinical trials, including raw materials directly necessary for the production of such drugs. — Luisa Maria Jacinta C. Jocson