RR No. 18-2020 — Implement Section 1 of Republic Act (RA) No. 11467, further amending Section 109 (AA) of the NIRC of 1997, a amended by RA No. 10963 (TRAIN Law), providing for VAT Exemption on the ale and importation of drug and medicine pre cribed for diabete , high chole terol, hyperten ion, cancer, mental illne , tubercolo i and kidney di ea e . (Publi hed in Malaya Bu ine In ight on

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REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City.

Date: JUN 2 6 2020

REVENUE REGULATIONS NO. 18- 2020

SUBJECT : Regulations to Implement Section 1 of Republic Act (R.A.) No. 11467, Further

S Amending Section 109(AA) of the National Internal Revenue Code (Tax Code)

of 1997, as Amended by Republic Act (R.A.) No. 10963 or the "TRAIN Law Providing for Value-Added Tax (VAT) Exemption on the Sales and Importation of Drugs and Medicines Prescribed for Diabetes, High Cholesterol, Hypertension, Cancer, Mental Hllness, Tuberculosis, and Kidney Diseases

TO : All Internal Revenue Officers and Others Concerned

SECTION 1. SCOPE. Pursuant to Sections 244 and 245 of the Tax Code of 1997, as

amended, these Regulations are hereby promulgated to implement the provisions of Section 1 of

R.A. No. 11467, amending Section 109(AA) of the Tax Code, as amended, and to further amend

Revenue Regulations (RR) No. 16-2005, as amended by RR No. 13-2018.

S SECTION 2. AMENDMENT. Section 4.109-1 of RR No. 16-2005, as amended by

RR No. 13-2018, is hereby further amended to read as follows:

"SEC. 4.109-1. VAT-Exempt Transactions. -

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(B) Exempt transactions. -

(1) Subject to the provisions of Section 4.109-2 hereof, the following transactions shall be exempt from VAT:

(a) XXX XXX XXX

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(aa) Sale or importation of prescription drugs and medicines for:

. (i) Diabetes. high. cholesterol. and hypertension beginning

January 1. 2020; and

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C JUL"O 8 2020 a:S0 pmV

RECORDS MGT DIVIS CN

(ii) Cancer. mental illness, tuberculosis, and kidney diseases beginning January 1,2023.

The exemption from VAT under this subsection shall only apply to the sale _or importation by...the manufacturers. distributors. wholesalers and retailer of drugs and medicines included in the "list of approved drugs and medicines" issued by the Department of Health (DOH) for this purpose.

XXX XXX XXX

drugs and medicines for diabetes, high cholesterol and hypertension included in the Department of Health-Food and Drug Administration (DOH-FDA) approved list from the SECTION 3. TRANSITORY PROVISIONS. - VAT on importation of prescription

effectivity of R.A. No. 11467 on January 27, 2020 until the effectivity of these Regulations, shall

the existing procedures for refund of VAT on importation, provided that the input tax on the be refunded pursuant to Section 204(C) of the Tax Code of 1997, as amended, in accordance with

imported items have not been reported and claimed as input tax credit in the monthly and/or quarterly VAT returns. The same shall not be allowed as input tax credit pursuant to Section 110 of the Tax Code of 1997, as amended, for purposes of computing the VAT payable of the concerned taxpayer/s for the said period.

SECTION 4. REPEALING CLAUSE. All rules and regulations and other revenue issuances or parts thereof which are inconsistent with these Regulations are hereby modified or repealed accordingly.

is subsequently declared unconstitutional, the validity of the remaining provisions hereof shall SECTION 5. SEPARABILITY CLAUSE. If any of the provisions of these Regulations

remain in full force and effect.

SECTION 6. EFFECTIVITY. These Regulations shall take effect immediately following publication in leading newspapers of general circulation.

CARLOS G. DOMINGUEZ Secretary of Finance

JUN 3 8 2020 Recommending Approval:

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Commissioner of Internal Revenue CAESAR R.DULAY 035508 BUREAU OF RTERNALREVENJE RECORDS MGT.DIVIS:ON AM JUL. 0 8 2020 2:S0 pM W