RR No. 28-2020 — Implements the tax exemption provisions under Section 4 (cc) and Section 18 of RA No. 11494 (Bayanihan to Recover as One Act) on the incentives for the manufacture or importation of certain equipment, supplies or goods (Published in Philippine Star on October 17, 2020) Digest | Full Text

REPUBLIC OF THE PHILIPPINES #o DEPARIMENT OF FINA}{CE BUREAT.] OF INTERI{AL REVENUE Quezon City SUBJECT * REvENUE REGUTATToNS hro. g ^ 2 OeD TO Implementing the Tax Exemption Provisions under section 4 (cc) and section 18 of Republic Act (RA) No. 11494, othewise known as the "Bayanihan to Recover as one Act" on the Incentives for the Manufacture or Importation of Certain Equipment, Supplies or Goods All Internal Revenue Officers and Others Concerned - SECTION 1. Scope and Objective. Pursuant to the provisions of Sections 244 and 245 of the National Intemal Revenue Code of 1997, as amended (Ta,x Code), these Regulations aretrereby promulgated to implement Sections 4 (cc) and 18 of RA No. I rud4, othen,,rse known as the "Bayanihan to Recover as One Act", to wit: "(cc) Liberalization of the grant of incentives for the manufacture or importation of critical ot needed equipment or supplies or essential goods for the r*" carrying-out of the policy declared herein, including health supplies: Provided, rq:uipment and Tan4cturq or importation of critical equipmeni@G R.*n* detennined by the Bureau of Customs (gOC) and the Bureau of inte*al (BIR). rqspectively: Provided, fi;rther, ftut ti*i distribution, ffid hade of the foregoing goods, equipment or supplies may be imposed to prevent shortage of giving priority and supply and to t"hne.n*e"edthsuat nthdesparfiecteys.otifrewreoorfkerresmaanind reaso-nable, preference to frontliners, violations of which shall be punishable under Section 16 of Republic Act No' 7581 or the "Price Act", as amended. For this purpose, critical proiucts, equipment or supplies or essential goods shall include-the following: (i) goods referred to in Section 4(u)(l) hereof covlD-lg; (2) equipment for waste related to the containment or mitigatiin of including, but not liirited management, to, waste segregation, storage, collection, sorting, treatnent and disposal services: Provided, furthermore, That these said equipment and technologies ind services are approved by the Deparhrent of Environment and Natural Resources (DENR), DoH or other concerned regulatory agencies; (3) inputs, raw materials and equipment necessary for the manufacture or production of essential goods refened-to in lection a(u)(l) hereof related to the containment or mitig;tion of COVID-l9: qualifiing -suppi), ffi Provided, firthermore, That for the of for im,port duties., taxes. and other fees pumose exemption from and ensuring prices. DTI shall certiff that the equipment and iupplies beine i*port d are not locally available or of insufficient qualitv and prefeiencer prouiaia, foAty-fnut W

preference is given to products, materials and supplies produced, made or manufactured in the Philippines; xxx xxx SECTION 18. Effectivity. - Except as otherwise specihcally provided herein, this Act shall be in full force and effect until the next adjoumment of the Eighteenth Congress on December 19,2020. This Act shall take effect immediately upon its publication in a newspaper of general circulation or in the Official Gazette: Provided, That Section of this Act shall be deemed to be in effect since Reoublic Act No. 11469 exoired." (underscoring supplied) sEcrroN 2. coverage - Based on the law, it is hereby declared that: A. The importation from June 25,2020 to December 19,2020 of the goods enumerated below and identified as critical products, essential goods, equipment or supplies needed to contain and mitigate COVID-l9, subject to the ti-itutionr and restrictions hereunder, shall be exempt from value-added ta:c, excise tan and other fees: l. Goods which may include personal protective equipment (PPE) such as gloves, g9u|s, masks, goggles, and face shields;-surgical iquipment and supplies; laboratory equipment and its reagents; -edicul equiiment and devices; support and mainteftmce for laboritory and medical iquipment, surgical equipment and supplies; medical supplies, tools, and consumables such as alcohol, sanitizers, tissue, therulometr.r, h*a soap, detergent, sodium $'pochlorite, tcalbelaentinagndmastuesrpiaelnss, ipoonv, idmoenfeenioadminice,accoidr,l,mvoitnarmniendsictianbelset1ea.ng.d, paracetamol suspension, hyoscine tablet and suspension, oral rehydration solution, and cetirizine tablet and suspension); testing kits, and such other supplies or equipment as_determined by the Departurent of Health (DOH) and Depanment of Trade and Indusrry (DTI). 2. Equipment for waste management, including, but not limited to, waste segregation, storage, collection, sorting, treatnent and disposal services as approved by the Department of Environment and Natural Reiources (DENR), DOH or other concerned regulatory agencies. 3. lnputs, raw materials and equipment necessary for the manufacture or productioa of essential goods related to the containment or mitigation of covlD-Ig enumerated in section 2 (AXl) of these Regulations B. For the purpose of qualifying for exemption from import duties, taxes, and other fees and ensuring supply of PPE at competitive prices, the taxpayer availing of the exemption must present a certtfication from the Deparfinent of-Trade and-Industry (DT?_that.the equipment and supplies being imported are not locally available or of 6insuffi cient quallty and preference. HUHEA uJ: #fi RECOfr-DS MGi DYIISIo

C. The importation hereof shall not be subject to the issuance of Authority to Release Irnported Goods (ATRIG) under Revenue Memorandum Order (RMO) No. 35- 2002, as amelitled;-and'lniay-bdiel6esed-bttlie Bure-au-of Cnstoms'@OC)-withoufneAal-of ATRIG. The BIR may, however, conduct post investigation/audit on ttre importations released by the BOC without ATRIG pursuant to these Regulations. D. Donations of these imported articles to or for the use of the National Govemment or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the Government are exempt from donor's tax and subject to the ordinary rules of deductibility under existing rules and issuances. E. The grant of exemption for the importation of goods enumerated above is deemed to be in ef,fect beginning June 25, 2020, following the lapse of RA No. 11469. The value-added tan on all covered and qualified shipments/importations that may have been paid from June 25,2020 up to September 14,2020 slrall be refunded pursuant to Section 204(C) of the Ta,x Code in accordance with the existing procedures for refund of value-added tax on importation, provided that the input tar on the imported items have not been reported and claimed as input ta:r credit in the monthly and/or quarterly value-added tax retums. The same shall not be allowed as input tax credit pursuant to Section 110 of the Talr Code for purposes of computing the value-added tax payable of the concerned tar<payer/s for the said period. F. lnputs, raw materials and equipment necessary for the manufacture of essential goods of medical grade related to containment and mitigation of COVID-l9 referred to in Section 2 (A) (1) of these Regulations, as determined by Food and Drug - Administration Department of Health (FDA-DOH), whether locally sourced or imported by the registered manufacturer, shall be exempt from value-added ta,x. For the pu{pose of availing the exemption, supplier/s of inputs, raw materials and equipment shall submit the following: - i. Certified true copy of "License to Operate", issued to the manufacturer- buyer by the FDA-DOH, authorizing the manufacture of essential goods of medical grade related to containment and mitigation of COVID'l9; and ii. "Swom Declaration" from the manufacturer-buyer that the itenr/s shall be used for the manufacture of essential goods of medical gade related to containment and mitigation of COVID-l9. SECTION 3. Sale subject to Value-Added Tax. - The sale of finished goods / products under Section 2 (A) (1) of these Regulations, whether locally manufactured or imported, is subject to value-added tax. The sale of inputs, raw materials and equipment referred to in Section 2 F) of these Regulations to a non-holder of "License to Operate" issued by the is likewise subjectto value-added tax. WH grrH A 6 IN TE RT,IAL REVE HUE W ,D rfi

SECTION 4. Repeating Clause. - All existing rules and regulations, issuances or parts thereof, which are inconsistent with the provisions of these Regulations are hereby amended or modified accordingly. - SECTION 5. Separability Clause. If any clause, sentence, provision or sections of these-Regulations shall be held invalid or unconstitutional, the remaining parts thereof shall not be affected thereby. :h_. SECTION 6. Effectivrty. - These Regulations shall take effect immediately and shall be in full force and effect until December 19,202A. . t' Recommending Approval : CARLOS G. DOMING Secretary of Finance truft CAESARRDULAY [[I C B ?$?O Commissioner of Internal Revenue tu fll ItJTEFN AL R EV EHUE 0 36I0 I f,It(: 5 J,,:r?u661YP.ntt,i, rilID 15t tIcTr 151mU 1,, zWK-gfrL^ L- Lzl \\\.". RE COR t) S MGT. DI vitst OH