REVENUE MEMORANDUM CIRCULAR NO. 2-2019 issued on January 10, 2019 publishes the full text of Joint Administrative Order No. 2-2018, which established the general guidelines in the implementation of the Value Added Tax (VAT) exemption of the sale of drugs prescribed for Diabetes, High-Cholesterol and Hypertension (under Republic Act (RA) No. 8424, as amended by RA No. 10963), and delineates the roles of the Department of Finance (DOF), Department of Health (DOH), BIR and Food and Drug Administration (FDA) in its proper implementation.

Said implementing guidelines shall apply to the sale by manufacturers, distributors, wholesalers and retailers of drugs prescribed for the treatment of said illnesses in its final form. The said sale of drugs shall be exempt from VAT imposed under Section 106 of the National Internal Revenue Code of 1997, as amended, while the importation of the same shall be subject to VAT under Section 107 of the same Code, as amended. The sale of drugs not included in the “List of VAT-Exempt Diabetes, High Cholesterol and Hypertension Drugs” published by the FDA shall not be exempt from VAT.

The VAT-exemption granted to persons under Republic Act (RA) No. 7432 (Senior Citizens Act of 1992), as amended, and RA No. 7277 (Magna Carta for Persons with Disability), as amended, on the VAT-exempt sales of drugs to senior citizens and persons with disabilities, respectively, are covered by the issuance. All manufacturers, distributors and retailers shall report all drugs included in the VAT exemption list in the Electronic Drug Price Monitoring Systems (EDPMS), in addition to the current list of drugs that the DOH is monitoring through the EDPMS. They shall also submit to the DOH, within 60 days upon effectivity of these guidelines, a Sworn Statement containing the wholesale price, suggested retail price and actual retail price prior to and after the effectivity of these guidelines.

The FDA shall provide the DOH and the BIR the “List of VAT-Exempt Diabetes, High-Cholesterol and Hypertension Drugs” and any update thereto thirty (30) days prior to the beginning of every quarter. Said list and any updates thereto shall be published by the BIR through the issuance of a Revenue Memorandum Circular.

The roles and responsibilities of the DOH, DOF, FDA and the BIR are specified in the
guidelines.