The Bureau of Internal Revenue (BIR) said the number of value-added tax (VAT)-exempt medicines has increased to 2,277 following the inclusion of 14 additional drugs for cancer, diabetes, tuberculosis, hypertension, high cholesterol and mental illness.

Speaking in a radio interview, BIR Commissioner Israelito Mendoza shared that the newly added medicines are part of the government's continuing effort to make essential treatments more affordable.

"At present, there are already 2,277 VAT-free medicines, and these include medications for hypertension, high cholesterol, cancer, diabetes, tuberculosis, and even mental illness," Mendoza revealed.

He explained that the Food and Drug Administration (FDA) identifies and recommends medicines that qualify for VAT exemption, while the BIR implements the exemption through the issuance of a Revenue Memorandum Circular.

According to Mendoza, the tax agency does not determine which medicines will be exempt.

"The FDA is the agency that recommends to us which medicines should be exempt from VAT. The BIR's role, on the other hand, is to implement this exemption," he said.

Mendoza also clarified that the VAT exemption on medicines is based on existing law enacted by Congress, noting that the BIR has no authority to remove VAT from other goods or services, including electricity, through administrative action alone.

"The imposition of VAT is provided by law, and therefore the removal of VAT must also be provided by law. There are many other VAT-exempt goods and services, so whether additional exemptions are granted depends on Congress," added Mendoza.

While the BIR head did not provide an estimate of the government's revenue loss from the addition of the 14 medicines, Mendoza said the policy is intended to reduce medicine prices and ease the financial burden on patients.

He likewise reiterated President Ferdinand Marcos Jr.'s proposal to increase the annual income tax exemption threshold from ₱250,000 to ₱350,000.

"Under our current tax code, individuals who earn up to ₱250,000 a year are exempt from paying income tax. The President has asked Congress to raise this tax-exempt threshold from ₱250,000 to ₱350,000," said commissioner.

Based on the BIR's estimates, the increase would translate to an additional ₱15,000 in annual take-home pay for workers who would no longer pay income tax. Meanwhile, those earning more than ₱350,000 annually could receive around ₱17,500 in additional annual take-home pay due to corresponding adjustments in the tax brackets.

Mendoza said around 5.1 million Filipino workers are currently exempt from income tax. Raising the exemption threshold to ₱350,000 is expected to benefit an additional 1.2 million workers, bringing the total number of income tax-exempt workers to about 6.3 million.

He added that the proposal would also have a ripple effect on higher income brackets, allowing more than 3 million additional workers to benefit from lower income tax rates if the measure is enacted into law.