The COVID-19 pandemic has greatly affected the supply chain of many nations worldwide and has made countries, including the Philippines, realize the value in exploring other sources of vital products due to the impact of imposed quarantine controls and lockdowns. The drastic changes brought about by this pandemic has pushed the National Government to take responses  to temper the disruptions in the supply chain and address the economic, health, and social impacts.

So far, among these drastic responses is the temporary suspension of several “Build, Build, Build” projects of the government. According to Finance Secretary Carlos G. Dominguez III, as of 28 April 2020, the Philippine government has spent Php 258 billion out of its Php 352 billion budget. Moreover, a loan for USD 200 million has been signed by the Government with the Asian Development Bank (ADB) last 28 April 2020. The proceeds of this loan will be used as additional funding for the Country’s response against COVID-19.

In brief, under Section 2 of Republic Act No. 11469 otherwise known as “Bayanihan to Heal as One Act”, a state of national emergency  was declared in view of the continuing rise of confirmed COVID-19 cases; paragraph 4(o) of the same authorized President Rodrigo Duterte to liberalize the grant of incentives for the manufacture and importation of equipment and supplies critical  to the Country’s fight against the deadly disease.

In order to implement this, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (‘RR’) No. 06-2020 last 27 March which exempts from Value Added Tax (VAT), excise tax and other fees imposed by the Bureau of Customs (BOC) all importations of health equipment and supplies needed, as well as the raw materials for use in the manufacture of such equipment and supplies, provided that the importing manufacturer is included in the master list of the Department of Trade and Industry (DTI).

Additionally, to support immediate response to the pandemic, the BIR also issued Revenue Memorandum Order (RMO) No. 10-2020, dated 30 March exempting certain goods listed in RR No. 06-2020 from the ATRIG requirements of the BOC pursuant to the implementation of the Enhanced Community Quarantine (ECQ) since mid-March and reinforced by RA No. 11469 to speed up the process of release and to prevent any delay in the distribution of the covered goods. It should be remembered that under RMO No. 35-2002 dated 28 October 2002, the Authority to Release Imported Goods or “ATRIG,” for brevity, serves as the authority issued by the BIR which is addressed to the Commissioner of Customs allowing the release of imported goods from custom’s custody upon payment of applicable taxes, or proof of exemption from payment thereof, whichever is applicable.

Normally, an ATRIG shall be processed, approved, and issued within one (1) day from the time of the actual application given that there is a receipt of complete supporting documents and there is no legal issue on the taxability of the said imported goods. ATRIG is applicable for all importation of articles subject to excise tax whether taxable or exempt, imported wheat regardless of its intended use, as well as those articles exempt from VAT except those articles specifically identified and enumerated in BIR-BOC Joint Memorandum Circular No. 01-2002. Should imported goods be released without the requisite ATRIG, the BOC presupposes that the taxes due thereon were not properly paid by the importer. Consequently, this exposes the latter to the risk of post investigation or audit by the BIR.

RMO No. 10-2020 covers importations of the following:

• personal protective equipment such as gloves, gowns, masks, goggles, and face shields;
•  laboratory equipment and reagents;
• medical equipment and devices;
• support and maintenance for laboratory and medical equipment;
• surgical equipment and supplies;
• medical supplies, tools, and consumables such as alcohol, sanitizers,tissue, thermometers, hand soap, detergent, sodium hydrochloride, cleaning materials, povidone iodine, as well as common medicines such as paracetamol tablets and suspension, mefenamic acid, vitamins and hyoscine tablets, oral rehydration solution and cetirizine tablets and suspension;
• COVID-19 testing kits; and
• medicines identified as critical by the Department of Health

It likewise covers the raw materials used for the assembly or production of the abovementioned health products. Please note, however, that only imports which arrived and were cleared by the BOC for three (3) months from the effectivity of RA No. 11469, unless extended by the Congress, are covered by the said issuance.

In view thereof, importers of such products listed under RMO No. 10-2020 shall not be subject to the processing and issuance of ATRIG provided for under the provisions of RMO No. 14-2014 for excisable articles and RMO No. 35-2002 for VAT-exempt transactions.

In the toughest battle of our time, many still cannot believe that a health crisis such as this could cause serious damages within just a short span of time. Thus, the twenty-four hour-processing time saved by RMO No. 10-2020 may prove crucial to ensure the timely delivery of resources for our healthcare front liners and to protect the collective interests of all Filipinos in these challenging times.

_{Ma. Theresa M. Marcos is an Associate from the Tax Group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.}

_{This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.}

_{The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or KPMG RGM&Co. For comments or inquiries, please email ph-inquiry@kpmg.com or rgmanabat@kpmg.com}