THE Bureau of Internal Revenue (BIR) said it imposed a burden-sharing rule on companies in the drug supply chain, allowing these firms to claim tax deductions only on their share of the foregone revenue.
Revenue Regulations (RR) No. 7-2026 amends the 2010 implementing rules on the sharing of discount costs among pharmaceutical retailers, manufacturers, distributors and wholesalers.
“RR No. 07-10 was issued to prescribe the tax treatment of senior citizen discounts, particularly the treatment of such discounts as deductible expenses from gross income,” the BIR said.
“However, subsequent implementation developments — especially in the pharmaceutical sector — revealed the need to clarify and institutionalize mechanisms for sharing the financial burden of the mandated discount,” it added.
Burden-sharing was provided for in Republic Act No. 9994, or the Expanded Senior Citizens Act of 2010, which directed the Department of Health (DoH) to establish compulsory rebates for sharing the discount burden.
“The total deductible expense from gross income shall not exceed the portion corresponding to the claimant’s share under said agreement,” according to the regulation.
The 20% senior citizen discount and applicable value-added tax exemption remain unchanged.
The rules now explicitly include pharmaceutical retailers, manufacturers and distributors among establishments subject to DoH burden-sharing arrangements.
Retailers, manufacturers and distributors, wholesalers-retailers, and wholesalers may enter into sharing agreements following DoH guidelines.
The cost of the discount remains deductible from gross income under itemized deductions. Sellers using the optional standard deduction cannot separately claim them.
The regulation takes effect 15 days after publication in the Official Gazette or on the BIR’s official website, whichever comes first. — Justine Irish D. Tabile