This PowerPoint gives a detail comparison of the situation that obtained under the 1996 harmonized System and the 2007 harmonized system which includes the newly implemented VAT act. This document clearly articulates the gravity of VAT on medication contrary to the notion that VAT has not affected medication.

1. THE TRUTH ABOUT
VAT ON MEDCATION
U.W.P RESEARCH TEAM

2. VAT ON MEDICATON
HS 1996 C-TAX (OLD)
IDuty
CTax
Scharge
IDuty
VAT
Scharge
3003101000 AMPICILLIN (CAPSULES OR ORAL S USPENSION)
10.00
5.00
5.00
3003101000 AMPICILLIN (CAPSULES OR ORAL S USPENSION)
15.00
15.00
5.00
3003102000 AMOXICILLIN (CAPSULES OR ORAL SUSPENSION)
10.00
5.00
5.00
3003102000 AMOXICILLIN (CAPSULES OR ORAL SUSPENSION)
15.00
15.00
5.00
3003109000 OTHER PENICILLINS OR DERIVATIV ES THEREOF
0.00
10.00
5.00
3003109000 OTHER PENICILLINS OR DERIVATIV ES THEREOF
0.00
15.00
5.00
3003201000 TETRACYCLINE (CAPSULES OR SKIN OINTMENT)
10.00
10.00
5.00
3003201000 TETRACYCLINE (CAPSULES OR SKIN OINTMENT)
15.00
15.00
5.00
3003202000 CHLORAMPHENICOL (CAPSULES, ORA L SUSPENSION OR OPTIC DROPS)
10.00
10.00
5.00
3003202000 CHLORAMPHENICOL (CAPSULES, ORA L SUSPENSION OR OPTIC DROPS)
15.00
15.00
5.00
3003203000 GRISEOFULVIN (TABLETS OF A STR ENGTH OF 125 MG OR 500 MG)
10.00
10.00
5.00
3003203000 GRISEOFULVIN (TABLETS OF A STR ENGTH OF 125 MG OR 500 MG)
15.00
15.00
5.00
3003204000 NYSTATIN (SKIN CREAM OR SKIN O INTMENT)
10.00
10.00
5.00
3003204000 NYSTATIN (SKIN CREAM OR SKIN O INTMENT)
15.00
15.00
5.00
3003209000 OTHER ANTIBIOTICS
0.00
15.00
5.00
3003209000 OTHER ANTIBIOTICS
0.00
15.00
5.00
3003310000 HORMONES CONTAINING INSULIN
0.00
15.00
5.00
3003310000 HORMONES CONTAINING INSULIN
0.00
15.00
5.00
3003390000 OTHER HORMONES OR OTHER PRODUC TS OF HEADING MNNO2937 BUT NOT CONT. ANTIBIO
0.00
15.00
5.00
3003390000 OTHER HORMONES OR OTHER PRODUC TS OF HEADING MNNO2937 BUT NOT CONT. ANTIBIO
0.00
15.00
5.00
3003401000 QUININE SULPHATE QUININE HYDRO CHLORIDE AND QUININE DIHYDROCHLORIDE
0.00
5.00
5.00
3003401000 QUININE SULPHATE QUININE HYDRO CHLORIDE AND QUININE DIHYDROCHLORIDE
0.00
15.00
5.00
3003409000 OTHER ALKALOIDS OR DERIVATIVES THEREOF BUT NOT CONTAINING HORMONES
0.00
15.00
5.00
3003409000 OTHER ALKALOIDS OR DERIVATIVES THEREOF BUT NOT CONTAINING HORMONES
0.00
15.00
5.00
3003901000 PALUDRIN (OR 1-(P-CHLOROPHENYL )
0.00
15.00
5.00
3003901000 PALUDRIN (OR 1-(P-CHLOROPHENYL )
0.00
15.00
5.00
3003902000 PRESCRIPTION DRUGS CONTAINING VITAMINS A,D1,D2.D3 AND INJECTIBLES
10.00
0.00
5.00
3003902000 PRESCRIPTION DRUGS CONTAINING VITAMINS A,D1,D2.D3 AND INJECTIBLES
15.00
15.00
5.00
3003903000 OTHER VITAMINS
10.00
10.00
5.00
3003903000 OTHER VITAMINS
15.00
15.00
5.00
3003904000 PARACETAMOL ASPIRIN CAFFEINE C ODEINE IBUPROFEN AND INDOMETHACIN
10.00
10.00
5.00
3003904000 PARACETAMOL ASPIRIN CAFFEINE C ODEINE IBUPROFEN AND INDOMETHACIN
15.00
15.00
5.00
3003905000 OTHER ANALGESICS
10.00
10.00
5.00
3003905000 OTHER ANALGESICS
15.00
15.00
5.00
3003906000 SULPHA DRUGS
10.00
10.00
5.00
3003906000 SULPHA DRUGS
15.00
15.00
5.00
3003907000 COUGH AND COLD PREPARATIONS AN TACIDS
10.00
10.00
5.00
3003907000 COUGH AND COLD PREPARATIONS AN TACIDS
15.00
15.00
5.00
3003908000 SALBUTAMOL EPHEDRINE THEOPHYLL INE EPHEDRINE HCL PHENOBARBITONE
10.00
10.00
5.00
3003908000 SALBUTAMOL EPHEDRINE THEOPHYLL INE EPHEDRINE HCL PHENOBARBITONE
15.00
15.00
5.00
3003909000 OTHER MEDICAMENTS (EXCL. GOODS OF HEADING NO.30.02,309.05 OR 30.06)
10.00
10.00
5.00
3003909000 OTHER MEDICAMENTS (EXCL. GOODS OF HEADING NO.30.02,309.05 OR 30.06)
15.00
15.00
5.00
3004101000 AMPICILLIN (CAPSULES OR ORAL S USPENSION)
10.00
5.00
5.00
3004101000 AMPICILLIN (CAPSULES OR ORAL S USPENSION)
15.00
15.00
5.00
3004102000 AMOXICILLIN (CAPSULES OR ORAL SUSPENSION)
10.00
5.00
5.00
3004102000 AMOXICILLIN (CAPSULES OR ORAL SUSPENSION)
15.00
15.00
5.00
3004109000 OTHER PENICILLINS OR DERIVATIV ES THEREOF WITH A PENICILLINANIC ACID
0.00
15.00
5.00
3004109000 OTHER PENICILLINS OR DERIVATIV ES THEREOF WITH A PENICILLINANIC ACID
0.00
15.00
5.00
3004201000 TETRACYCLINE (CAPSULES OR SKIN OINTMENT)
10.00
5.00
5.00
3004201000 TETRACYCLINE (CAPSULES OR SKIN OINTMENT)
15.00
15.00
5.00
3004202000 CHLORAMPHENICOL (CAPSULES , OR AL SUSPENSION OR OPTIC DROPS)
10.00
10.00
5.00
3004202000 CHLORAMPHENICOL (CAPSULES , OR AL SUSPENSION OR OPTIC DROPS)
15.00
15.00
5.00
3004203000 GRISEOFULVIN (TABLETS OF A STR ENGTH OF 125 MG OR 500 MG)
10.00
10.00
5.00
3004203000 GRISEOFULVIN (TABLETS OF A STR ENGTH OF 125 MG OR 500 MG)
15.00
15.00
5.00
3004204000 NYSTATIN (SKIN CREAM OR SKIN O INTMENT)
10.00
5.00
5.00
3004204000 NYSTATIN (SKIN CREAM OR SKIN O INTMENT)
15.00
15.00
5.00
3004209000 OTHER ANTIBIOTICS
0.00
15.00
5.00
3004209000 OTHER ANTIBIOTICS
0.00
15.00
5.00
Tarif_Code
Description
HS 2007 VAT (NEW)
• Comparison of medication
using the two HS systems
Tarif_Code
Description
• Note the two I-Duties and (CTax/Vat) side by side.
U.W.P RESEARCH TEAM

3. HS 1996 (OLD)
FORMULA FOR CALCULATING TOTAL C-TAX AND TOTAL
PERCENTAGE DUTIES
EXAMPLE WHERE: Where $100.00 represents C.I.F
IMPORT DUTY = 20% CONSUMPTON TAX = 15% SERVICE CHARGE = 5%
TO GET THE : TOTAL % CONSUMPTION TAX
TOTAL % C-TAX = (C.I.F + IMPORT DUTY) X C-TAX
($100.00 + $20.00) x 15%
$120 x 15% = 18%
NB// C-Tax is
only
compounded
on import
duty
TOTAL % C-TAX = 18%
TOTAL PERCENTAGE DUTIES = IMPORT DUTY + TOTAL C-TAX + S/CHARGE = 43%
20%
18%
5%
U.W.P RESEARCH TEAM

4. HS 2007 (NEW)
FORMULA FOR CALCULATING TOTAL “VAT” AND TOTAL
PERCENTAGE DUTIES
EXAMPLE WHERE: Where $100.00 Represents C.I.F
IMPORT DUTY = 20% VAT = 15% S/CHARGE = 5%
TO GET THE: TOTAL % “VAT”
TOTAL % VAT = ( C.I.F + IMPORT DUTY + S/CHARGE ) X VAT
VAT is
compounded
on import
duty and
s/charge
( $100.00 + $20.00 + $5.00) X 15%
$125.00 X 15% = 18.75%
TOTAL VAT = 18.75%
TOTAL PERCENTAGE DUTIES = IMPORT DUTIES + TOTAL VAT + S/CHARGE = 43.75%
20%
18.75%
5%
U.W.P RESEARCH TEAM

5. Comparison of Ampicillin Capsule or Oral Suspension
(widely used antibiotic)
HS 1996
Tariff Code: 3003101
HS 2007 (VAT)
Tariff Code: 3003101
Calculation under Old Rates:
Import Duty= 10% C-Tax= 5% S/Charge= 5%
Where the C.I.F is = $100.00
Total % C-tax = (C.I.F + Import Duty) x C-Tax
($100.00 + $10.00) x 5%
$110.00 x 5% = 5.5%
Total % Duty = I-Duty + Total C-tax + S/charge
10% + 5.5% + 5% = 20.5%
Pharmacy A would have paid $31.50 on this
consignment
Calculations under new rate:
Import Duty = 15% VAT= 15% S/Charge= 5%
Where the C.I.F = $100.00
Total % VAT = (CIF + I-Duty + S/Charge) x VAT
($100.00 + $15.00 + $5.00) x 15%
$120.00 x 15% = 18%
Total % Duty = I-Duty + Total VAT + S/Charge
15% + 18% + 5% = 38%
Pharmacy A would have paid $38.00 on this
Consignment an increase by $17.50 or 17.5%
U.W.P RESEARCH TEAM

6. AMOXICILLIN CAPSULES OR ORAL SUSPENSION
HS 1996
TARIFF Code: 3003102
HS 2007
Tariff Code: 3003102
Calculation under Old Rates:
Import Duty= 10% C-Tax= 5% S/Charge= 5%
Where the C.I.F is = $100.00
Total C-tax = (C.I.F + Import Duty) x C-Tax
($100.00 + $10.00) x 5%
$110.00 x 5% = 5.5%
Total % Duty = I-Duty + Total C-tax + S/charge
10% + 5.5% + 5% = 20.5%
Pharmacy A would have paid $20.50 on this
consignment
Calculations under new rate:
Import Duty = 15% VAT= 15% S/Charge= 5%
Where the C.I.F = $100.00
Total % VAT = (CIF + I-Duty + S/Charge) x VAT
($100.00 + $15.00 + $5.00) x15%
$120.00 x 15% = 18%
Total % Duty = I-Duty + Total VAT + S/Charge
15% + 18% + 5% = 38%
Pharmacy A would have paid $38.00 on this
Consignment an increase by $17.50 or 17.5%
U.W.P RESEARCH TEAM

7. TETRACYCLINE CAPSULE OR SKIN OINTMENT
HS 1996
Tariff Code: 3003201
HS 1997
Tariff Code: 3003201
Calculation under Old Rates:
Import Duty= 10% C-Tax= 10% S/Charge= 5%
Where the C.I.F is = $100.00
Total % C-tax = (C.I.F + Import Duty) x C-Tax
($100.00 + $10.00) x 10%
$110.00 x 10% = 11%
Total % Duty = I-Duty + Total C-tax + S/charge
10% + 11% + 5% = 26%
Pharmacy A would have paid $26.00 on every
$100.00 for this consignment
Calculation under New Rates:
Import Duty= 15 VAT= 15% S/Charge= 5%
Where the C.I.F is = $100.00
Total % VAT = (C.I.F + Import Duty + S/Charge) x VAT
($100.00 + $15.00 + $5.00) x 15%
$120.00 x 15% = 18%
Total % Duty = I-Duty + Total VAT + S/charge
15% + 18% + 5% = 38%
Pharmacy A would have paid $38.00 on this
consignment an increase by $12.00 or 12.00%
U.W.P RESEARCH TEAM

8. HORMONES CONTAINING INSULIN
HS 1996
Tariff Code: 3003301
Calculation under Old Rates:
Import Duty= 0 C-Tax= 15% S/Charge= 5%
Where the C.I.F is = $100.00
Total % C-tax = (C.I.F + Import Duty) x C-Tax
($100.00 + $0) x 15%
$100.00 x 15% = 15%
Total % Duty = I-Duty + Total C-tax + S/charge
0% + 15% + 5% = 20%
Pharmacy A would have paid $20.00 on this
consignment
HS 2007
Tariff Code: 3003301
Calculation under New Rates:
Import Duty= 0 VAT= 15% S/Charge= 5%
Where the C.I.F is = $100.00
Total % VAT = (C.I.F + Import Duty + S/Charge) x VAT
($100.00 + $0 + $5.00) x 15%
$100.00 x 15% = 15%
Total % Duty = I-Duty + Total VAT + S/charge
0% + 15% + 5% = 20%
Pharmacy A would have paid $20.00 on this
consignment an increase by $0.00 or 0.00%
U.W.P RESEARCH TEAM

9. PARACETAMOL, ASPRIN,CAFFEINE, CODEINE, IBOPRO
FEN, INDOMETHALIN
HS 1996
Tariff Code:3003904
Calculation under Old Rates:
Import Duty= 10 C-Tax= 10% S/Charge= 5%
Where the C.I.F is = $100.00
Total C-tax = (C.I.F + Import Duty) x C-Tax
($100.00 + $10.00) x 10%
$110.00 x 10% = 11%
Total % Duty = I-Duty + Total C-tax + S/charge
10% + 11% + 5% = 26%
Pharmacy A would have paid $26.00 on this
consignment
HS 2007
Tariff Code: 3003904
Calculation under New Rates:
Import Duty= 15 VAT= 15% S/Charge= 5%
Where the C.I.F is = $100.00
Total % VAT = (C.I.F + Import Duty + S/Charge) x VAT
($100.00 + $15.00 + $5.00) x 15%
$120.00 x 15% = 18%
Total % Duty = I-Duty + Total VAT + S/charge
15% + 18% + 5% = 38%
Pharmacy A would have paid $38.00 on this
consignment an increase by $12.00 or 12%
U.W.P RESEARCH TEAM

10. COUGH AND COLD PREPARATIONS, ANTACIDS
HS 1997
Tariff Code: 3003907
HS 2007
Tariff Code: 3003907
Calculation under Old Rates:
Import Duty= 10 C-Tax= 10% S/Charge= 5%
Where the C.I.F is = $100.00
Total C-tax = (C.I.F + Import Duty) x C-Tax
($100.00 + $10.00) x 10%
$110.00 x 10% = 11%
Total % Duty = I-Duty + Total C-tax + S/charge
10% + 11% + 5% = 26%
Pharmacy A would have paid $26.00 on this
consignment
Calculation under New Rates:
Import Duty= 15 VAT= 15% S/Charge= 5%
Where the C.I.F is = $100.00
Total % VAT = (C.I.F + Import Duty + S/Charge) x VAT
($100.00 + $15.00 + $5.00) x 15%
$120.00 x 15% = 18%
Total % Duty = I-Duty + Total VAT + S/charge
15% + 18% + 5% = 38%
Pharmacy A would have paid $38.00 on this
consignment an increase by $12.00 or 12%
U.W.P RESEARCH TEAM

11. ALTERNATE (HS 1996) AND (HS 2007)
FORMULA
• THE ARE ALTERNATE METHODS USED IN ARRIVING AT THE TOTAL PERCENTAGE
CONSTUMPTION TAX AS WELL AS TOTAL PERCENTAGE VAT. THIS METHOD IS
LENGTHY BUT GIVES CREDENCE TO THE $100 DOLLAR BASE CIF THEORY.
• FORMULA 1 OLD HS 1996:
– TOTAL % C-TAX = (C.I.F + IMPORT DUTY ) X C-TAX
C.I.F X 100
TOTAL % DUTIES = ( IMPORT DUTY + TOTAL % C-TAX + SERVICE CHARGE)
•
FORMULA 2 CURRENT HS 2007:
– TOTAL % VAT = (C.I.F + IMPORT DUTY + SERVICE CHARGE) X VAT
C.I.F X 100
TOTAL % DUTIES = (IMPORT DUTY + TOTAL % VAT + SERVICE CHARGE)
U.W.P RESEARCH TEAM

12. ALTERNATE HS 2007 FORMULA
• Assuming: Consignment of Antacids
– Cost:
– INS:
– Freight
– C.I.F
–
–
–
–
–
–
$5000.00
$ 100.00
$ 900.00
$6000.00
Import Duty: 15%
VAT
: 15%
SC
: 5%
Total % VAT - (C.I.F + I-Duty + SC) X VAT/C.I.F
($6000.00 + $900.00 + $300.00) X 15%
$7200.00 X 15% = $1080.00/$6000.00
Total % VAT = 18%
Total Duties = $900.00 + $300.00 + $1080.00 = $2280.00
Total % Duties = 15% + 18% + 5% = 38%
• In essence, the importer will pay $38.00 on every $100.00 spent
on this consignment.
U.W.P RESEARCH TEAM

13. SUMMARY
• The issue of VAT on medication has been
misrepresented by the government. The figures
quoted in this presentation gives a true reflection
of how taxes are computed and could be verified
with officials at the Customs Department.
• It is quite clear that the introduction of the new
harmonized system together with the
implementation of VAT has seen a vast increase in
the Tariff rates of medication with about 10%
remaining unchanged. Further, there seem to be
no evidence to suggest that there is any reduction
in tariffs for medication
U.W.P RESEARCH TEAM

14. THE END
U.W.P RESEARCH TEAM