Incentives and Operations of Enterprises engaged in Medical and Essential Goods

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The Department of Finance (DOF) and Department of Trade and Industry (DTI) issued Joint Memorandum Circular No. 20-20, providing guidelines on the operations and incentives of covered enterprises engaged in healthcare equipment and supplies and essential goods and medicines, pursuant to Republic Act No. 11469 Bayanihan to Heal as One Act passed amid the Covid-19 pandemic.

To ensure availability and adequate supply, covered enterprises are mandated to continue their operations in full capacity, to partner with government agencies for the manufacture of covered products, to prioritize and accept procurement contracts under fair and reasonable terms for the supply and delivery of the covered products, and to comply with all relevant health and safety protocols issued by relevant agencies.

Covered Products

    1. Medicines identified as critical and necessity by the Department of Health (DOH);
    2. Medical equipment and devices such as test kits, thermometers, thermal scanners, ventilators;
    3. Personal Protective Equipments (PPEs) such as helmet, masks, goggles, gloves, foot cover, face shields, gowns, as well as other garments or equipment designed to protect the user against health or safety risks;
    4. Surgical equipment and supplies;
    5. Laboratory equipment and supplies;
    6. Support and maintenance for laboratory and medical equipment;
    7. Medical supplies, tools and consumables such as alcohol, sanitizers, tissue, hand soap, detergent, sodium hypochlorite, cleaning materials, povidone iodine, and common medicines (e.g. paracetamol tablet and suspension, oral rehydration solutions, etc.)
    8. Such other supplies or equipment as may be determined by the DOH and other relevant government agencies.

Raw materials and packaging materials exclusively used for the production of the above products shall be likewise covered.

Covered Enterprises

    1. Manufacturer or producer
    2. Suppliers of raw materials
    3. Manufacturer of packaging materials
    4. Suppliers of raw materials for the packaging

Exemption from Import duties, Taxes and Fees

Regardless of the country of origin,  any articles needed in the supply chain of the covered products such as capital, spare parts and accessories shall be exempt from import duties, taxes and fees such as those imposed by the Bureau of Customs, Food and Drug Administration (FDA) and other government agencies.

The exemption shall apply to the following:

    1. Importation of covered products by covered enterprises;
    2. Importations for use in manufacturing activities in partnership with government agencies for the production of covered products which are necessary to address the Covid-19 emergency;
    3. Importations by hospitals and other private health institutions of the covered products; and
    4. Local sales of covered enterprises in compliance with the export suspension.

Conditions for Exemption

    1. Such importations are reasonably needed and will be used exclusively by the covered enterprises in the manufacture of the covered products.
    2. Said importations are ordered, loaded or are in transit during the effectivity of the Executive Order.

Suspension of Export Requirement

The export requirement imposed under the laws administered by relevant Investment Promotion Agencies is hereby suspended.

Export enterprises manufacturing the covered products shall supply eighty percent (80%) of their daily production to the procuring entities determined by R.A. 11469, government institutions, hospitals, and private establishments in the country for local and domestic use.

The local sales of such export enterprises shall be deemed and treated as “export sales” in compliance with their export requirement. The corresponding treatment, exemption on duties, taxes and fees, and other incentives under the law shall continue to apply. Export enterprises located in special economic zones shall likewise be exempt from import duties, taxes and fees.

Accreditation and Customs Procedures

The DTI, through the Board of Investments (BOI), is hereby authorized to issue accreditation certificates to covered enterprises and an authority to import for covered products.

The covered enterprise shall submit to the DOF Revenue Office the documentary requirements in support of the tax exemption including the completed DOF Form 91, import documents, commercial invoice, affidavit of end-use, and the BOI Certificate of Authority, after April 12, 2020 or upon lifting of the Enhanced Community Quarantine (ECQ), for the issuance of the Tax Exemption Indorsement (TEI).

The covered enterprise shall also file a provisional import entry declaration with the Bureau of Customs supported by the commercial invoice, bill of lading, certificate of authority, as well as other applicable documents required by Bureau of Customs, for purposes of release of shipment. The TEI shall also be submitted to the Bureau of Customs within forty-five days from lodgment of entry.

The BOC shall accord Super Green Lane (SGL) Courtesy to the covered products under 6.2 hereof and the final assessment of the goods within twenty-four (24) hours from online filing of goods declarations.

Source: Department of Finance and Department of Trade and Industry Joint Memorandum Circular No. 2020-02: Guidelines on the Operations and Incentives of the Covered Enterprises Engaged in the Manufacture, Importation, and Distribution of Certain Products, and for Other Purposes, Pursuant to Republic Act No. 11469, Otherwise Known as “Bayanihan To Heal As One Act”