Tax Benefits for Diabetic Individuals in the Philippines

(A 2025 legal-practice briefing)

1. Two separate legal tracks

Track	Governing statute	Who qualifies?	Core tax effect
A. “Diabetic-medicine track” (general)	§109 (AA) NIRC, introduced by RA 10963 (TRAIN) and refined by RA 11467 and RA 11534 (CREATE)	Anyone buying prescription drugs/medicines for diabetes (no PWD ID required)	Sale/importation is VAT-exempt
B. “PWD track”	RA 7277 as amended by RA 9442 & RA 10754	Diabetes that already causes a registered disability → holder of PWD ID	20 % discount + VAT-exemption on specific goods/services; cascading tax deductions for businesses and carers

2. VAT-exemption for anti-diabetic medicines (Track A)

Statutory basis – §109 (AA) of the Tax Code, as amended, exempts from the 12 % VAT the sale or importation of “prescription drugs and medicines for diabetes, high cholesterol and hypertension” starting 1 January 2020. ([ REPUBLIC ACT NO. 11467, January 22, 2020 ] - The Lawphil Project)
Coverage list – The Bureau of Internal Revenue (BIR) updates the brand/generic list at least twice a year via Revenue Memorandum Circulars (RMCs). Recent additions include RMC 72-2023 (59 items) and RMC 131-2024 (+16 items, 5 of which are for diabetes). (Lumagui: BIR exempts 59 drugs for Cancer, Hypertension, High ..., Lumagui: BIR continues to support affordable medicine, exempts from ...)
Practical impact – Retailers must print “VAT-EXEMPT SALE” on the official receipt; VAT shaves 12 % off shelf price before any further PWD discount if the buyer also holds a PWD ID.

3. How diabetes can qualify as a disability (gateway to Track B)

Step	Key rule
Medical basis	Under DOH & NCDA guidelines, chronic illnesses that impair a major bodily function (e.g., insulin-dependent diabetes causing vision loss, neuropathy, etc.) are classifiable as disabilities. (Who Are Qualified For PWD ID? Here’s A Guide on Coverage of Issuance…)
Paper trail	Medical certificate + filled-out PWD Registration Form at the city/municipal PDAO/MSWDO; first ID is free and valid for 5 years (renewable). ([How To Apply for PWD ID in the Philippines
Risk of abuse	BIR warned in Dec 2024 that use of fake PWD IDs constitutes tax evasion; establishments must keep detailed sales logs or lose the deduction. (Lumagui: Sale and Use of Fake PWD IDs is Tax Evasion; BIR will launch a ...)

4. Tax privileges once the diabetic individual holds a PWD ID

Benefit for the PWD	Statutory hook	Mechanics
20 % discount & VAT exemption on medicines, medical services, transport fares, restaurants, hotels, recreation & funeral services	§32 (a) RA 10754	Discount is computed on net price after VAT removal; establishments may claim the foregone amount as a deduction from gross income. (Republic Act No. 10754)
Additional programs (scholarships, basic-commodity discount, express lanes)	§32 (b-e) RA 10754	Non-tax but often bundled at LGU level
PhilHealth Z-Benefit & primary care packages	PhilHealth Circulars (latest: 2024-0017)	Not strictly a tax incentive but reduces out-of-pocket costs

5. Income-tax consequences for families and employers

Stakeholder	Incentive	Conditions
Parent/guardian caring for a diabetic-PWD dependent	PWD within 4th civil degree is treated as a qualified dependent under §35 (b) NIRC. (RA 10754 §33)	In theory this confers an extra ₱25 000 additional exemption. However, TRAIN Law suspended personal/additional exemptions from 2018; practitioners await a BIR clarificatory RR. Until issued, software (e.g., eBIR Forms 1701) still allows encoding of PWD dependents but the amount is carried-over only for those still using old regimes (estate, trust, fiscal-year filers). (Republic Act No. 10754, 1701 Guidelines and Instructions - eFPS)
Private employer of diabetic-PWD	Extra deduction equal to 25 % of salaries/wages of each PWD employee from gross income	§34 RA 7277; employee must be duly accredited by DOLE & DOH. ([ REPUBLIC ACT NO. 7277, March 24, 1992 ] - The Lawphil Project)
Employer investment in work-accessibility & skills-training for PWDs	50 % of direct costs deductible (RA 7277 §36, still in force)	Proof of actual expenditure & PWD utilization required

6. Business-side deductions linked to PWD sales

Establishments granting the 20 % PWD discount may deduct the net cost of the discount from gross income in the same taxable year, provided the sale was properly documented (official receipt, photocopy of PWD ID, and entry in the BIR-prescribed sales book). (Republic Act No. 10754)

7. Interaction with the TRAIN/CREATE era rules

Ease of Paying Taxes Act (RA 11976, 2024) – new Sec. 110(D) allows output-VAT credit on uncollected receivables, but only if the invoice properly labels VAT-exempt items; non-compliance can retroactively negate VAT-exemption on diabetic drugs. ([ REPUBLIC ACT NO. 11976, January 05, 2024 ] - The Lawphil Project)
CREATE – shifted corporate income-tax rates but did not touch the PWD wage-deduction nor the VAT-exempt status of diabetic medicines. (Republic Act No. 11534 - The Lawphil Project)

8. Compliance checklist (quick-reference)

	For the Diabetic-PWD	For the establishment
Documents to present/keep	PWD ID + doctor’s prescription (medicines)	Photocopy/scanned PWD ID; Serialised OR showing: (a) 20 % discount, (b) “VAT-exempt sale”
BIR form impact	None (as buyer)	Claim deduction in Annex A-3 of Annual ITR / Schedule 11 of 1702-RT
Audit red flags	Using expired/borrowed PWD ID	High ratio of PWD sales w/out corresponding ID copies

9. Strategic tips for practitioners

Bundle the tracks – A diabetic who also qualifies as PWD enjoys both a 12 % VAT break under §109 (AA) and a further 20 % statutory discount—effectively a ~29 % price cut.
Time drug purchases – Because BIR publishes updated VAT-exempt lists mid-year, advise clients to schedule bulk refills after a new RMC takes effect.
Employer incentives – SMEs often overlook the 25 % wage deduction; securing DOLE/DOH accreditation early in the year maximises the benefit at year-end.
Watch for TRAIN-PWD clash – Until BIR or Congress harmonises RA 10754 with TRAIN, factor in possible disallowance of the ₱25 000 dependent exemption during assessments.

10. Key take-aways

Every diabetic Filipino already benefits from zero-VAT on prescribed medicines.
When diabetes meets the legal definition of a disability, a PWD ID unlocks deeper price cuts and a cascade of income-tax incentives that also reward employers and caregivers.
Meticulous documentation is the lynch-pin; BIR is actively auditing abuse in the PWD space.

Updated 25 April 2025, Manila