Let's Get on the TRAIN
Department of Finance
The Department of Finance (DoF) issued the following:
Revenue Regulations (RR) No. 25-2018, 21 December 2018, which implements Section 34 of the TRAIN law providing for VAT exemption on the sale of drugs and medicines prescribed for diabetes, high cholesterol, and hypertension.
Pursuant to RR No. 25-2018, the exemption from VAT shall apply to the sale by manufacturers, distributors, wholesalers and retailers of the above mentioned medicines. However, the importation of the above-described drugs and medicines shall be subject to VAT under Section 107 of the Tax Code. The list of VAT-exempt diabetes, high cholesterol, and hypertension drugs as identified by the Food and Drug Authority (FDA), shall be posted in the Bureau of Internal Revenue (BIR) website thru a Revenue Memorandum Circular along with updates such as registration of new and/or additional drugs and medicines, as well as de-registration of those previously issued by the FDA. Those that are not included in the list provided by the FDA shall be subject to VAT. The word “VAT-EXEMPT” shall be indicated in the invoice for the sale of said drugs.
These regulations shall take effect beginning January 1, 2019.
RR No. 26-2018, 21 December 2018, which amends certain provisions of RR 13-2018 to implement the 90-day processing of claim for VAT refund under the TRAIN law.
It was clarified in this regulation that the 90-day period to process and decide shall start from the application/claim for refund up to the release of the payment of the VAT refund. The claim/application shall be considered to have been filed only upon submission of the official receipts or invoices and other documents in support of the application as prescribed under pertinent revenue issuances. The 90-day period to process and decide shall apply to claim for VAT refund for certain zero-rated (0%) sale of goods and services.
In the event that the 90-day period has lapsed without having the refund released to the taxpayer-claimant, the VAT refund claim may still continue to be processed administratively.
If any official, agent, or employee of the BIR failed to act on the application for VAT refund within the 90-day period, and if said BIR official, agent, or employee is found to have deliberately caused the delay, they shall be subjected to the penalties imposed under Section 269 of the Tax Code.
These regulations shall take effect immediately following publication in leading newspapers of general circulation.
Attached are the full text of issuances.
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