EIGH I i L NTH CONGRESS OF THE 
republic of THE PHILIPPINES 
First Regular Session
)
SENATE
S.B. No. _  218
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BY:
BILLS
Introduced by SENATOR IMEE R. MARCOS
AN ACT RATIONALIZING VALUE-ADDED TAXATION TO ADDRESS INTER- 
GENERA-nONAL POVERTY, AMENDING FOR THE PURPOSE SECTION 109 
OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR
OTHER PURPOSES
EXPLANATORY NOTE
This measure seeks to rationalize and further streamline the Value Added Tax 
(VAT) and simultaneously meet the critical social welfare goal of making 
healthcare more affordable and thus increase the productivity and quality of life of 
the Filipino people.
Studies show that the price of medicines and drugs in the private sector can reach 
almost sixteen times that on the international index, and for public sector 
acquired medicines and drugs prices can reach as high as eighteen times that of 
the international index.1 Even the cheapest generics in the Philippines still sell at a 
high multiple of international reference prices.2 The case is even worse for 
originator drugs. Thus, affordability of drugs remains a serious problem.3 Indeed, 
medicine and drug importers have decried the imposition of the VAT as another 
baiiier to the sale of their products.4
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$s.
Households spend a significant percentage of medical care on drugs and poorer 
households tend to spend a larger share of their medical care costs on drugs than 
richer households do.5 During the year, the poorest households spend on average 
more than half (59 percent) of their medical care costs on drugs, in contrast, richer 
households only spend 41 percent.6 Ultimately, the poor bear a heavier burden due 
to drug costs.
Section 11 of the 1987 Constitution mandates the State to "make essential 
goods, health and other social services available to all the people at affordable cost." 
In furtherance of this, both importation of medicines and the sale of medicines and 
drugs shall be exempted from the Value Added Tax. This will help to lower the cost 
of medicines and make them more affordable for every Filipino. This ultimately 
raises the quality of life for all Filipinos, and helps to sustain a healthy and 
productive work force.
In view of the foregoing, it is imperative that this measure be passed.
IMEE R. MARCOS
5 Note 2.
6 Note 2.


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
SENATE
S. B. No. 
218
DATE:
if) TIME:
BILLS 
INDEX
Introduced by SENATOR IMEE R. MARCOS
AN ACT
RATIONALIZING VALUE-ADDED TAXATION TO ADDRESS INTER- 
GENERATIONAL POVERTY, AMENDING FOR THE PURPOSE SECTION 109 
OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR
OTHER PURPOSES
Be It enacted by the Senate and the House o f Representatives o f the Philippines 
Congress assembled:
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Section. 1. Declaration o f Policy. -  It is hereby declared the policy of the
Stale;
1. To promote the health of the citizenry, particularly the poor, by making health 
care and medicines available at a more affordable cost;
2. To exempt all sales of medicines and drugs from Value Added Tax (VAT) 
Coverage, including importation of the same, thus making medicine more 
affordable in both the private and public sector; and
3. To ensure that the poor have access to cheaper medicines and drugs in both 
the private and public sector.
Sec. 2. Section 109 of the National Internal Revenue Code (NIRC) of 1997, 
amended, is hereby further amended to read as follows:
as


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"SEC. 109. Exempt Transactions. -  (1) Subject to the provisions of
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Subsections (2) hereof, the following transactions shall be exempt from the value-
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added tax:
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"(A)" XXX
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"(B)" XXX
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"(C)" XXX
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"(D )" XXX
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"(E)" XXX
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"(F)" XXX
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"(G)" XXX
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"(H )" XXX
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" ( I ) " x x x
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" ( J ) " x x x
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"(K)" XXX
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"(L)" XXX
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" ( M ) " x x x
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" ( N ) " x x x
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"(0 )" XXX
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"(P)" XXX
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"(Q)" XXX
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"(R)" XXX
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"(S)" XXX
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"(T )" XXX
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"(U )" XXX
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"(V )" XXX
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"(W )" XXX
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"(X)" XXX
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"(Y)" XXX
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"(Z)" XXX
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"(AA)" sale OR IMPORTATION of drugs and medicines [ pfescfibcd for
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diabetes, high cholesterol, and hypcrtcnsien-beginrHng Jonuory ^  ZOIO]; [and]


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"(BB)" XXX
Sec. 3. Separability Clause. — If any part or provision of this Act is held 
unconstitutional or invalid, the remaining parts or provisions not affected shall 
remain in full force and effect.
Sec. 4. Repealing Clause. — Any law, presidential decree or issuance, 
executive order, letter of instruction, administrative order, rule or regulation 
contrary to or inconsistent with the provisions of this Act is hereby repealed, 
modified, or amended accordingly.
Sec. 5. Effectivity Clause. -  This Act shall take effect on January 1, 2020 
following its complete publication in the Official Gazette or in at least one (1) 
newspaper of general circulation.
Approved,