Frequently Asked Questions and Answers

REVENUE REGULATIONS No. 12-98 and 3-99

WITHHOLDING TAX ON MEDICAL PRACTITIONERS

Q: Are payments to medical practitioners subject to withholding tax?

A: Yes. Any amount collected for and paid to medical practitioners by hospitals and clinics or paid directly to the medical practitioners by patients who are admitted and confined to hospitals or clinics are subject to expanded withholding tax of 10%.

The rate of withholding tax shall be 5% will apply to payments made to a duly registered professional partnership which have been created by medical practitioners for the practice of the medical profession.

No withholding tax shall apply whenever no professional fees has been charged by the medical practitioner and paid by his patient.

Q; Who is liable to withhold such tax?

A: It shall be the duty and responsibility of the hospital or clinic to withhold the 10% withholding on the professional fees paid directly to hospitals or clinics by patients. The hospital or clinic shall be responsible for the accurate computation of professional fees paid directly to it.

With respect to professional fees paid by patients directly to medical practitioners, the 10% expanded withholding tax will be withheld by such practitioner, who must, in turn, remit such taxes directly to the Accounting Office of the hospital or clinic.

The hospital or clinic must then remit the (1) expanded withholding taxes it has directly withheld and (2) those forwarded by the practitioners to its Accounting Office on or before the 10^th day of the following month for taxes withheld from January to November. For those withheld for the month of December, the deadline is January 25 of the following year.

Q: In connection with this requirement, what filing requirements must the hospital or clinic comply with?

A: The hospital or clinic must file with the BIR the following returns/documents:

Monthly Remittance return of Income Taxes Withheld (BIR Form 1601), which would include withholding taxes from medical practitioners

List containing the names of practitioners will be grouped based on the following classification:

Medical practitioners whose professional fee was paid by patients directly to the hospital or clinic.

Medical practitioners whose professional fee was paid to them directly by the patients and the 10% withholding tax was given by such practitioner to the Accounting Office of the hospital or clinic.

Medical practitioners whose professional fee was paid to them directly by the patients but the 10% withholding tax was not given by such practitioners to the Accounting Office of the hospital or clinic.

Medical practitioners who did not charge any professional fee from their patients.

The list must be submitted to the Collection Division of the Revenue Region where such hospital or clinic is located the names and addresses of medical practitioners every 15^th day after the end of each calendar quarter.

The Certificate Creditable Tax Withheld at Source (BIR Form No. 2307) must be issued by the hospital or clinic to each medical practitioner who were subjected to withholding, every 20^th day following the close of the taxable year. The names of medical practitioners shall be included in the Alphabetical List of Income Recipients attached to the Annual Information Return (BIR Form No. 1604).

(Further amending Rev. Reg. No. 12-98, implementing Sec. 57 (B) of the 1997 Tax Code, as amended; Date of Issue: January 22, 1999; Effective fifteen days after publication in newspaper of general circulation.)