BIR issues rules on tax-free COVID-19 vaccine imports

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Latest shipment of COVID-19 vaccines procured by the national government from China's Sinovac Biotech Ltd that arrived on April 11. Photo from the Bureau of Customs.
  • BIR Revenue Regulations (RR) No. 1-2021 implements guidelines on tax incentives and fee privileges for COVID-19 vaccine procurement, importation, donation, storage, transport, deployment, and administration
  • RR 1-2021 implements Section 11 of Republic Act (RA) No. 11525, or the COVID-19 Vaccination Program Act of 2021
  • Beginning January 1, 2021 the procurement, importation, donation, storage, transport, deployment, and administration of COVID-19 vaccines will be exempt from the value-added tax, excise tax, donor’s tax, and other fees
  • Issuance of an Authority to Release Imported Goods (ATRIG) will not be required for the importation and release of COVID-19 vaccines
  • Tax incentives are only applicable if the vaccines are not intended for resale or other commercial use

The Bureau of Internal Revenue (BIR) has issued implementing guidelines on tax incentives and fee privileges for the procurement, importation, donation, storage, transport, deployment, and administration of COVID-19 vaccines.

BIR Revenue Regulations (RR) No. 1-2021, issued on April 8, implements Section 11 of Republic Act (RA) No. 11525, or the COVID-19 Vaccination Program Act of 2021.

Under RR 1-2021, beginning January 1, 2021 and during the period of the state of calamity as declared under Proclamation No. 1021 dated September 2020, the procurement, importation, donation, storage, transport, deployment, and administration of COVID-19 vaccines through the COVID-19 Vaccination Program will be exempt from value-added tax (VAT), excise tax, donor’s tax, and other fees.

These activities include those carried out by the national government through the Department of Health (DOH) and the National Task Force Against COVID-19; any of the political subdivisions of the state; and private entities and international humanitarian organizations such as the Philippine Red Cross.

The tax incentives will only be applicable if the vaccines are not intended for resale or other commercial use, according to RR 1-2021.

The importation of COVID-19 vaccines will not need the issuance of an Authority to Release Imported Goods (ATRIG) under BIR Revenue Memorandum Order No. 35-2002, as amended, and may be released by the Bureau of Customs (BOC) without the need of an ATRIG.

BIR, however, may conduct a post-investigation/audit on the importations released by BOC without ATRIG.

No VAT will be imposed by the service providers on the covered entities for the storage, transport, deployment and administration of the COVID-19 vaccines. Hence, VAT will not be part of the contract price for the engagement/procurement of such services by the said entities.

Moreover, no donor’s tax will also be imposed on the donation of the COVID-19 vaccines.

To qualify for exemption from VAT, excise tax and donor’s tax, applicants must present the following:

  • Certified true copy of the COVID-19 vaccine procurement agreement or multi-party agreement. The multi-party agreement on the procurement by the local government units (LGUs) and private entities should include the DOH and the relevant supplier of the COVID-19 vaccine.
  • 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).
  • Sworn Declaration from the taxpayer-buyer/importer/donee that the COVID-19 vaccines will not be intended for resale or other commercial use and shall be distributed without consideration from persons to be vaccinated. For private entities, a statement should be included that any such vaccines will be for the sole and exclusive use of such entities and their related parties.

In addition, the following should be presented for COVID-19 vaccines donated to the covered entities:

  • For the national government and LGUs – a certified true copy of the duly accepted Deed of Donations
  • For private entities and international humanitarian organizations – a certified true copy of the duly accepted Deed of Donation and/or BIR Form No. 2322 (Certificate of Donation)

The grant of exemption for the importation of COVID-19 vaccines, engagement of services for the storage, transport, deployment and administration, as well as the donation of the COVID-19 vaccines takes effect from January 1, 2021.

The VAT on all covered and qualified shipments/importations/services that may have been paid from January 1, 2021 until the effectivity of RR 1-2021 will be refunded pursuant to Section 204(C) of the NIRC in accordance with existing rules and procedures for refund of VAT on importation/services. The same will not be allowed as input tax credit in computing the VAT payable of 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 RR 1-2021 will be refunded. – Roumina Pablo