After reading Tax Incentives and Fee Priveleges for the Procurement and Administration of Coronavirus Disease 2019 (COVID-19) Vaccines, read also Separation Pay of a Retrenched Or Laid Off Employee Due To Covid-19, Not Subject To Tax
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The procurement, importation, donation, storage, and administration of Covid-19 Vaccines may be exempted from tax
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The tax incentives for Covid-19 vaccines shall only be applicable if the vaccines are not intended for resale or other commercial use
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There must be a “Sworn Declaration” from the taxpayer-buyer/importer/donee that the Covid-19 vaccines shall not be intended for resale or other commercial use
B eginning January 1, 2021, and during the period of the state of calamity as declared under Proclamation No. 1021 dated September 16, 2020 issued by the President of the Philippines, the (i) procurement, (ii) importation, (iii) donation, (iv) storage, (v) transport, (vi) deployment, and (vii) administration of Covid-19 vaccines through the Covid-19 Vaccination Program by:
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the National Government, through the Department of Health (DOH) and the National Task Force Against Covid-19 (NTF);
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any of the political subdivisions of the State; and
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private entities, and international humanitarian organizations, such as the Philippine Red Cross (PRC), shall be exempt from value-added tax (VAT), excise tax and donor’s tax and other fees, subject to the guidelines, procedures and requirements provided for.
What are the guidelines and procedures to be observed?
Bureau of Internal Revenue Regulations No. 1-2021, says:
The following guidelines and procedures shall be followed and observed:
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No VAT shall be imposed on the procurement of Covid-19 Vaccines by the entities mentioned in numbers 1, 2, and 3 above. Thus, VAT shall not be part of the contract price for the procurement of the Covid-19 by said entities.
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No VAT and excise tax shall be imposed on the importation of Covid-19 Vaccines by the entities mentioned in numbers 1, 2, and 3 above.
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The importation of Covid-19 Vaccines as allowed shall not be subject to the issuance of an Authority to Release Imported Goods (ATRIG) under Revenue Memorandum Order (RMO) No. 35-2002, as amended; and may be released-by the Bureau of Customs (BOC) without the need of an ATRIG. However, the BIR may conduct a post investigation/audit on the importations released by the BOC without ATRIG.
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No VAT shall be imposed by the service providers on the services to be rendered to the entities mentioned in numbers 1, 2, and 3 above for the storage, transport, deployment and administration of the Covid-19 Vaccines. Thus, VAT shall not be a part of the contract price for the engagement/procurement of such services by said entities.
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No donor’s tax shall be imposed on the donation of the Covid-19 Vaccines to the entities mentioned in numbers 1, 2, and 3 above, subject to the ordinary rules of deductibility as provided for in the National Internal Revenue Code of 1997, as amended.
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The tax incentives mentioned above shall only be applicable if the vaccines are not intended for resale or other commercial use and shall be distributed without any consideration from persons to be vaccinated.
For the purpose of qualifying for exemption from VAT, excise tax, and donor’s tax, what are the requirements?
Bureau of Internal Revenue Regulations No. 1-2021, says:
For the purpose of qualifying for exemption from VAT, excise tax, and donor’s tax, the entities mentioned in numbers 1, 2, and 3 above must present the following:
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Certified true copy of the Covid-19 vaccine procurement agreement/multiparty agreement, as may be applicable. The multi-party agreement on the procurement by the Local Government Units (LGUs) and private entities shall include the DOH and the relevant supplier of the Covid-19 vaccine;
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Certified true copy of the Covid-19 vaccine’s Certificate of Product Registration or Emergency Use Authorization (EUA) issued by the Food and Drug Administration (FDA;
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“Sworn Declaration” from the taxpayer-buyer/importer/done that the Covid-19 vaccines shall not be intended for resale or other commercial use and shall be distributed without consideration from persons to be vaccinated, in accordance with Covid-19 Vaccination Program of the National Government. For private entities, a statement shall be included that any such vaccines shall be for the sole and exclusive use of such entities and their related parties, if any;
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For Covid-19 vaccines donated to the entities mentioned in numbers 1,2, and 3 above, in addition to the above-mentioned requirements, the following shall be presented:
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for the National Government and LGUs, a certified true copy of the duly accepted Deed of Donation; and
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for private entities and international humanitarian organizations, a certified true copy of the duly accepted Deed of Donation and/or BIR Form 2322 (Certificate of Donation)
To repeat, the grant of exemption for the importation of Covid-19 vaccines, engagement of services for the storage, transport, deployment and administration, as well as donation of the Covid-19 vaccines is deemed to be in effect beginning January 1, 2021.
What happens now if the VAT on all covered and qualified shipments/importations/services have already been paid?
Bureau of Internal Revenue Regulations No. 1-2021, says:
The VAT on all covered and qualified shipments/importations/services that may have been paid from January 1, 2021 until the effectivity of Bureau of Internal Revenue Regulations No. 1-2021 shall be refunded provided that the input tax on the imported items/services have not been reported and claimed as input tax credit in the monthly and/or quarterly value-added tax returns. The same shall not be allowed as input tax credit for purposes of computing the value-added tax payable on the concerned taxpayer/s for the said period.
Similarly, Excise Tax and Donor’s Tax on all covered and qualified transactions that may have been paid from January 1, 2021 until the effectivity of the said Bureau of Internal Revenue Regulations No. 1-2021.
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