Publishing the Full Text of the Letter from FDA of DOH with the Subject "Response to Query on the List of VAT-Exempt Products"

December 16, 2021 REVENUE MEMORANDUM CIRCULAR NO. 127-2021 SUBJECT : Publishing the Full Text of the Letter from the Food and Drug Administration (FDA) of the Department of Health (DOH) with the Subject "Response to Query on the List of VAT-Exempt Products" TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all internal revenue officers, employees and others concerned, attached is the letter dated November 15, 2021 from Dr. Rolando Enrique D. Domingo, Director General for the FDA, clarifying that 'Liraglutide 6mg/mL Solution for Injection (SC)' is only considered to be VAT-exempt if its use falls under the management of diabetes. Moreover, 'Liraglitude 6mg/mL Solution for Injection (SC)' under the brand name 'Saxenda,' i.e. , management of overweight and obesity, does not fall under the identified diseases included in both the TRAIN Law and the CREATE Act. All concerned are hereby enjoined to be guided accordingly and give this Circular as wide a publicity as possible. (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue ATTACHMENT DEPARTMENT OF HEALTH FOOD AND DRUG ADMINISTRATION November 15, 2021 HONOREE E. IBARRA Regulatory Affairs Manager Novo Nordisk SUBJECT : Response to Query on the List of VAT-Exempt Products Dear Mr. Ibarra: Greetings! This is in reference to your letter dated 30 September 2021 requesting for a clarificatory statement or an addendum regarding the entry on 'Liraglutide 6mg/mL Solution for Injection (SC)' in the List of Medicines for Diabetes. We wish to clarify that the list issued by the Food and Drug Administration (FDA) intends to identify the drugs indicated for the prevention and management of disease ( i.e. , diabetes, hypertension, cancer, high cholesterol, mental illnesses, tuberculosis, and kidney diseases) specified under Republic Act (RA) 10963, otherwise known as the "Tax Reform for Acceleration and Inclusion or TRAIN Law," and RA 11534, otherwise known as the "Corporate Recovery and Tax Incentives for Enterprises Act or CREATE Act." The list is designed to reflect the drugs which are registered with the FDA for the purposes of preventing and treating the identified diseases in the afore-cited laws. We also acknowledge that drug products containing the same active pharmaceutical ingredients and bearing the same dosage strength and form may remain to be indicated for multiple diseases, just as in the case of the products cited in your query. However, in such cases, a distinction can be made when such drugs are used for the management of a disease other than those identified in the afore-cited laws. Please be also informed that the FDA is currently undertaking a review of the drug registry database to address this in the long-term, with the aim of improving the accuracy of reflected products in the published list of Value-Added Tax (VAT)-Exempt Products. In view of the above, please be advised that it is construed that 'Liraglutide 6mg/mL Solution for Injection (SC)' is only considered to be VAT-exempt if its use falls under the management of diabetes. Corollary to this, your cited indication for 'Liraglutide 6mg/mL Solution for Injection (SC)' under the brand name 'Saxenda,' i.e. , management of overweight and obesity, does not fall under the identified afore-cited diseases included in both the TRAIN Law and the CREATE Act. Should you have any further questions or clarifications, you may send an e-mail to [emailprotected] . For your guidance. Yours truly, (SGD.) ROLANDO ENRIQUE D. DOMINGO, MD Director General