BIR expands VAT-exempt medicines list

The Bureau of Internal Revenue has expanded the list of value-added tax-exempt medicines to 2,277 products following the issuance of Revenue Memorandum Circular No. 87-2026, a move aimed at lowering healthcare costs for Filipinos managing chronic and life-threatening illnesses.

The updated list, endorsed by the Food and Drug Administration under Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, and Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, adds 14 medicines to the roster of VAT-exempt products.

The latest issuance supports President Ferdinand R. Marcos Jr.’s directive during his 2026 State of the Nation Address to improve access to quality healthcare by reducing the cost of essential medicines.

For patients and their families, the expanded VAT exemption means lower out-of-pocket spending on maintenance medicines, making long-term treatment more affordable and helping reduce the financial burden of chronic diseases.

The measure also reinforces government efforts to improve treatment adherence, which health experts have identified as a key factor in preventing complications and reducing healthcare costs over time.

Expanded coverage

With the latest update, the number of VAT-exempt medicines has increased to 2,277, including 14 newly added medicines.

The updated list now includes 708 medicines for cancer. It also covers 537 medicines for hypertension.

A total of 331 medicines for diabetes are included in the VAT exemption. The list also contains 300 medicines for mental illness.

Another 172 medicines for high cholesterol are exempt from VAT.

The updated roster includes 152 medicines for kidney disease. It also covers 77 medicines used in the treatment of tuberculosis.

The BIR said the expanded coverage is expected to reduce out-of-pocket medical expenses, particularly for Filipinos undergoing long-term treatment for chronic and life-threatening illnesses.

Commissioner cites public benefit

BIR Commissioner Charlito Martin R. Mendoza said the expanded list reflects the agency’s commitment to implementing tax measures that directly benefit the public.

“The Bureau remains steadfast in implementing tax policies that directly benefit our people. By expanding the list of VAT-exempt medicines, we are helping make essential healthcare more affordable while supporting the President’s vision of a healthier and more resilient Philippines,” Commissioner Mendoza said.

The BIR noted that every peso saved through the VAT exemption could help families continue treatment, purchase essential medicines and better manage their daily household expenses.

The agency added that lowering medicine costs also supports better treatment outcomes and improves the quality of life of millions of Filipinos.

Tax relief for essential medicines

The VAT exemption for prescription medicines is authorized under the TRAIN Law and was expanded through the CREATE Act, with the FDA responsible for identifying eligible medicines and endorsing updates to the BIR for publication through revenue memorandum circulars.

Revenue Memorandum Circular No. 87-2026 supersedes the previous list and serves as the latest reference for pharmacies, healthcare providers and taxpayers in implementing the VAT exemption on covered medicines.

The BIR said the latest update demonstrates that while the agency continues to fulfill its mandate of raising revenues for national development, it also seeks to ensure that the tax system delivers meaningful and tangible benefits to the Filipino people.

Updated Full List of VAT-Exempt Medicines:

https://bir-cdn.bir.gov.ph/BIR/pdf/RMC%2087-2026%20Annex%20A%20(6).pdf