The sale
of pharmacy drugs or medicines to in-patients is not subject to value-added tax
(VAT). The sale of drugs to a hospital’s in-patients is considered part of the
term “hospital services” covered by the exemption from VAT under Section 109(G)
of the Tax Code.
The Court
of Tax Appeals (CTA) held that the maintenance and operation of a pharmacy or
drugstore by a hospital is a necessary and essential service or facility rendered
by any hospital for its patients. Thus, unlike the sale of retailing drugs or medicines
by drugstores — which involves the buying of goods — the procurement of
medicines and pharmaceutical items from the hospital drugstore or pharmacy for
in-patients amounts to the availment of services of the hospital by the
in-patients.
[Hermano (San)
Miguel Febres Cordero Medical (De La Salle Health Services Institute), Inc. v.
Commissioner of Internal Revenue, CTA Case No. 8194, May 15, 2012]
Tax Brief – June
2012
Punongbayan and
Araullo
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This article is also published at:
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