Senator Pia S. Cayetano brought a bit of good news to the public over the weekend: the exemption of several life-saving medicines and maintenance drugs from the 12 percent value-added tax (VAT) under the Corporate Recovery and Tax Incentives for Enterprises, or CREATE Law (Republic Act No. 11534).
Cayetano shared the positive development with local government executives and members of the media during her visit to the city of San Fernando, Pampanga, on Friday, July 7.
Under the CREATE Law, Section 109 of the National Internal Revenue Code (NIRC) was amended to exempt from VAT the sale or importation of prescription drugs and medicines for the following ailments: cancer, hypertension, high cholesterol, diabetes, mental illness, tuberculosis, and kidney disease.
The VAT exemptions were recently affirmed by the Bureau of Internal Revenue (BIR) through its Revenue Memorandum Circular No. 72-2023 issued on June 20, 2023.
“I am very happy kasi under the CREATE Law, isa sa pangunahing pakay nun is babaan ang tax ng mga korporasyon,” shared the senator, who sponsored the landmark law that substantially lowered corporate income tax rates, and modernized the country’s fiscal and tax incentives system. (I am very happy because under the CREATE Law, one of its primary objectives is to lower the income taxes paid by corporations.)
“So yung mga mag-iinvest dito, whether it’s a Filipino or foreign group, mas mababa na ang tax nila. So may incentive ang companies para mag-invest, right?” she added. (Companies that will invest in the Philippines, whether it’s a Filipino or foreign group, will now pay lower income taxes. So there is an incentive to invest here, right?)
“But minsan, hindi rin kaagad yan nararamdaman ng tao, dahil siguro, company ang unang nakikinabang. Pero syempre ang desire natin is yung company magbibigay din sa employees n’ya ng benefits,” she continued. (People may not immediately feel it, because the benefits will go to the corporations first. But of course, our desire is for the companies to share the benefits of lower income taxes with their employees.)
“But in that same law, mayroon tayong provision doon na tinanggal natin ang VAT sa mga gamot para sa madalas na sakit ng tao. And that one, directly yan na mararamdaman ng tao. Dahil kapag bumili ka ng gamot, gaya sa cancer, hypertension, high cholesterol, diabetes, mental illness, tuberculosis, and kidney disease…makikita mo doon na less VAT ang presyo, which is 12 percent. Less na yung babayaran,” she explained. (But in the same law, we included a provision exempting from VAT medicines for the most common ailments. This one will be immediately felt by our people. Because when you buy the said medicines, like for cancer, hypertension, high cholesterol, diabetes, mental illness, tuberculosis, and kidney disease…you will pay less because these will be VAT exempt.)
“So I am happy na makita na na-iimplement ang batas na inisponsor ko,” remarked Cayetano, who defended the measure from 2019 through 2020 as chairperson of the Senate Ways and Means Committee in the 18th Congress. (I’m happy to see that the law I sponsored is being implemented.)#