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South African Gov't Pressured To Zero Rate Medicines

by Lorys Charalambous, Tax-News.com, Cyprus

28 July 2014


The National Association of Pharmaceutical Manufacturers (NAPM) in South Africa has begun lobbying the Government in hope of securing the introduction of a zero rate of value-added tax (VAT) on medicines.

The NAPM said that tax adds about 20 to 30 percent to the price of medicines, limiting access to drugs for less affluent patients.

The Association believes that patients will benefit from a full 14 percent reduction in the cost of medicine – in line with the headline rate of value-added tax of 14 percent. "These passed on savings on healthcare expenses could in turn be used towards education, savings, house bonds, etc., and those with private medical aids would also benefit as their medical aid expenses for medicines would allow for greater funding towards other medical aid benefits," the Association said.

The introduction of a zero rate for medicines is being considered by the Davis Tax Committee. The NAPM hopes that the Government will support a zero rate for all medicines. Nonetheless, the Association aims to at least secure a zero rate for Schedule 3 to Schedule 6 drugs, which are prescribed for serious illnesses.

The Association noted calls for a zero rate on basic foodstuff. It said that the Government should consider the two matters of equal importance, stating that access to medicines should be seen as a "necessity, and not a discretionary purchase."

TAGS: South Africa | VAT rates | tax | value added tax (VAT) | public health | private healthcare | food | tax rates | tax breaks | Africa | Tax

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