BIR to hospitals, HMOs: Withhold 10% of doctors’ fees

MANILA, Philippines – The tax bureau is keen on going after and increasing collections from self-employed medical professionals due to high incidence of tax evasion.

READ: BIR targets self-employed tax evaders in new campaign

After filing tax evasion cases against some doctors and several moral-suasion approach to industry groups, the Bureau of Internal Revenue (BIR) is going for another kill: It has issued an order directed to hospitals, clinics and health maintenance organizations (HMO) to deduct 10% to 15% from the medical fees paid to doctors and dentists.

The BIR said hospitals, clinics and HMOs must withhold 15% from doctors and other medical professionals if the income of the medical practitioner for the current year exceeds P720,000, and 10% if it falls below the amount.

“It shall be the duty and responsibility of the hospitals, clinics, HMOs (health maintenance organizations) and similar establishments to withhold and remit taxes due on the professional fees of their respective accredited medical practitioners, paid by patients who were admitted and confined to such hospitals and clinics. Hospitals, clinics, HMOs and similar establishments must ensure that correct taxes due on the professional fees of their medical practitioners have been withheld and timely remitted to the Bureau of Internal Revenue,” the agency said in Revenue Regulation 14-2013.

The withholding tax will not apply whenever there is proof that no professional fee has been charged by the medical practitioner, the BIR added.

“Provided, however, that this fact is shown in a sworn declaration jointly executed by the medical practitioner and the patient or his duly authorized representative, in case the patient is a minor or otherwise incapacitated,” the BIR said.

The BIR also required hospitals and clinics to submit the names and addresses of medical practitioners every 15th day after the end of every quarter to the collection division of the Revenue Region for non-large taxpayers and at the Large Taxpayers Document Processing and Quality Assurance Division in the National Officer or Large Taxpayers District Office in the region for large taxpayers, where such hospital or clinic is registered.

The Aquino government has an ongoing name-and-shame campaign against tax evaders and smugglers as part of efforts to improve tax collections. – Rappler.com