#AskTheTaxWhiz: Documentary requirements for VAT-exempt medicines

We bought our supply of medicines for high cholesterol just before December 31, 2018. Since we paid value-added tax (VAT) for them, do we also have to sell them with VAT?

No, they should already be VAT-exempt.

According to Revenue Memorandum Circular (RMC) No. 34-2019, there are even additional requirements for such cases. Concerned taxpayers should submit an inventory list of all the drugs and medicines which became VAT-exempt. This is regardless of whether or not there is an existing excess input tax.

The input tax corresponding to the sale of VAT-exempt medicines will be closed to cost or expense.

To review the full list of VAT-exempt medicines for high cholesterol, hypertension, and diabetes, you can check RMC No. 4-2019.

When is the deadline for submission of this documentary requirement? Should VAT-exempt medicines also be reflected in future returns?

This Inventory List was supposed to be submitted as an attachment to the Quarterly VAT Declaration (BIR Form No. 2550Q). As such, this Inventory List was due on April 25, 2019.

The form can be found as an attachment to RMC 34-2019. Under the Inventory List, the taxpayer needs to indicate their name, TIN, and the full list of relevant medicines.

These medicines should also be reflected in future returns. When filing either the Monthly VAT Return or the Quarterly VAT Declaration, the input tax allocable to exempt sales shall be deducted from the taxpayer’s allowable input tax.

These deadlines and requirements can be easy to miss if you do not stay updated. The Tax Whiz Academy of the Asian Consulting Group can help taxpayers stay updated through its tax seminars, exclusive tax coaching, or its monthly Tax Hub Talks. For inquiries, you can reach us at consult@acg.ph or (02) 622-7720. – Rappler.com

Mon Abrea, popularly known as the Philippine Tax Whiz, is one of the 2017 Outstanding Persons of the World, a Move Awards 2016 Digital Mover, one of the 2015 The Outstanding Young Men of the Philippines (TOYM), an Asia CEO Young Leader of the Year, and founding president of the Asian Consulting Group (ACG) as well as the Center for Strategic Reforms of the Philippines (CSR Philippines). Assisting him in his column is JM Miñano, communications associate of ACG. He graduated with a bachelor’s degree in Communication Arts from the University of the Philippines Los Baños.

For inquiries, you may email consult@acg.ph or visit www.acg.ph for tax-related concerns.