BIR expands VAT-exempt medicine list to 2,277, aiming to reduce Filipinos’ out-of-pocket healthcare expenses.
MANILA — The Philippines has added 14 more medicines for serious and chronic illnesses to its list of value-added tax-exempt drugs, expanding a program intended to make essential healthcare more affordable as household medical expenses continue to rise.
The Bureau of Internal Revenue, or BIR, said under Revenue Memorandum Circular No. 87-2026 that the number of VAT-exempt medicines had reached 2,277 as of Aug. 4, up from 2,263 in April.
The expansion covers additional medicines for cancer, diabetes, hypertension, tuberculosis and high cholesterol.
The update follows President Marcos’ announcement in his fifth State of the Nation Address that the number of VAT-exempt medicines had already surpassed 2,000. He highlighted the exemptions as part of his administration’s effort to expand access to healthcare, alongside programs being implemented by the Department of Health and the Philippine Health Insurance Corp.
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Cancer and Diabetes Medicines Lead Expansion
The number of VAT-exempt medicines for cancer increased to 708 from 702, while medicines for diabetes rose to 331 from 327.
The number of VAT-free medicines for hypertension increased to 537 from 535, while tuberculosis medicines rose to 77 from 76.
Medicines for high cholesterol increased to 172 from 171.
The number of VAT-exempt medicines for kidney disease and mental illness remained unchanged, at 152 and 300, respectively.
The additions bring the overall list to 2,277 medicines, 14 more than were included in April.
BIR Says Tax Policy Is Intended to Make Healthcare More Affordable
BIR Commissioner Charlito Mendoza said the expanded exemption was intended to directly benefit Filipinos by lowering the cost of essential medicines.
“The bureau remains steadfast in implementing tax policies that directly benefit our people,” Mendoza said in a statement on Wednesday.
“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.”
The BIR said the expanded list is expected to help reduce Filipinos’ out-of-pocket medical expenses.
Updated VAT-Free Medicine List Replaces Earlier Issuances
Under the circular, the newly updated list supersedes previous issuances.
It will remain in effect until the Food and Drug Administration releases further revisions.
The VAT exemption is implemented under Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act, as amended by Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises Act.
The measures provide the legal basis for removing VAT from medicines covered by the exemption.
Household Health Spending Continues to Climb
The expansion comes as Filipino households continue to shoulder a substantial portion of the country’s healthcare costs.
The latest data from the Philippine Statistics Authority showed that household out-of-pocket health spending continued to increase in 2025.
Expenses paid directly by households accounted for 41.2 per cent of the country’s current health expenditure.
Those expenses increased by 7.3 per cent, reaching P714.6 billion in 2025, compared with P666.2 billion a year earlier.
Against that backdrop, expanding the VAT-exempt medicine list gives consumers more economical options for medicines used to treat serious and chronic conditions.
With 2,277 medicines now covered, the latest BIR circular broadens the range of drugs that can be purchased without VAT while household healthcare spending continues to rise across the Philippines.
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