Tax rules on withholding for medical fees

Section 1 anchors the Regulations on Section 244 (in relation to Section 57(B)) of the NIRC of 1997.
Section 1 states that the Regulations further amend Section 2 of Revenue Regulations No. 12-98.
Section 2 provides that Section 2 of Revenue Regulations No. 12-98 is further amended by substituting the amended rules on creditable withholding tax for income payments to medical practitioners.
Section 3 provides that inconsistent rules and regulations, or parts thereof, are amended or repealed accordingly.

Section 1 declares that the amendments are intended to streamline and make more efficient the collection of the creditable withholding tax on income payments to medical practitioners.

Section 2 amends “SECTION 2. Amendment” and establishes that, except as otherwise provided, a creditable income tax shall be withheld at the specified rates for each class of payee from covered income payment items.
Section 2 covers income payments to persons residing in the Philippines.
Section 2 includes as a covered class: “Professional fees paid to medical practitioners.”
Section 2 provides that professional fees are included when hospitals and clinics:
- collect and pay professional fees to medical practitioners; or
- receive payment from patients who were admitted and confined to such hospitals or clinics and then pay the medical practitioners.

Section 2(a) places on the hospital or clinic the duty and responsibility to remit the taxes withheld for professional fees in the listed situations.
Section 2(a)(1) requires remittance when professional fees are paid directly to hospitals or clinics by patients.
Section 2(a)(2) requires remittance when professional fees are paid by patients directly to medical practitioners, with the 10% expanded withholding tax later given by the medical practitioners to the Accounting Office of the Hospitals or Clinics.

Section 2(b) provides an exception: withholding does not apply whenever no professional fee has been charged by the medical practitioner and paid by his patient.

Section 2(c) requires hospitals and clinics to submit the names and addresses of medical practitioners in the listed classifications to the Collection Division of the Revenue Region where the hospital or clinic is located.
Section 2(c) requires submission every 15th day after the end of each calendar quarter, using “Annex A.”
Section 2(c)(i) requires inclusion of medical practitioners whose professional fee was paid by patients directly to the hospital or clinic.
Section 2(c)(ii) requires inclusion of medical practitioners whose professional fee was paid directly by patients and where the 10% withholding tax was given by such practitioner to the Accounting Office of the Hospital or Clinic.
Section 2(c)(iii) requires inclusion of medical practitioners whose professional fee was paid directly by patients but where the 10% withholding tax was not given by such practitioners to the Accounting Office of the Hospital or Clinic.
Section 2(c)(iv) requires inclusion of medical practitioners who did not charge any professional fee from their patients.

Section 2(d) provides that the rules apply to medical services rendered by medical practitioners through a duly registered professional partnership for the practice of the medical profession.
Section 2(d) provides a rate rule for this partnership context: the withholding tax rate imposed is five percent (5%).

Section 2(e) requires hospitals or clinics to be responsible for accurate computation of professional fees paid directly to hospitals and clinics and for timely remittance of the 10% expanded withholding taxes.
Section 2(e) sets the remittance deadline for withholding collected:
- on or before the 10th day of the following month for January to November; and
- on or before January 25th for the month of December.
Section 2(e) requires remittance to the accredited agent bank (AAB) of the Bureau of Internal Revenue.
Section 2(e) provides that failure to remit on the prescribed dates subjects hospitals or clinics to the penalties prescribed by the NIRC.

Section 2(e) requires hospitals or clinics to issue a Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) to medical practitioners subjected to withholding.
Section 2(e) requires issuance every 20th day following the close of the taxable quarter.
Section 2(e) requires that the names of medical practitioners be included in the Alphabetical List of Income Recipients attached to Annual Information Return (BIR Form No. 1604).

Section 3 provides that all rules and regulations, or parts thereof, inconsistent with the Regulations are amended or repealed accordingly.