BIR asks hospitals, HMOs to withhold taxes from doctors

Internal Revenue Commissioner Kim Henares

MANILA, Philippines—The Bureau of Internal Revenue (BIR) has issued a regulation requiring hospitals and health maintenance organizations (HMOs) to withhold taxes from doctors and other medical practitioners and remit them to the government.

Under Revenue Regulation 14-2103, the BIR said hospitals and HMOs should withhold a creditable withholding tax of 15 percent from the annual income earned by doctors or other medical practitioners who attended to their clients if said income exceeds P720,000.

For lower amounts of income, the tax to be withheld is set at 10 percent.

In the regulation, signed by Internal Revenue Commissioner Kim Henares and Finance Secretary Cesar Purisima, the BIR stressed that hospitals and HMOs have the responsibility to withhold the taxes and remit them to the BIR.

“It shall be the duty and responsibility of hospitals, clinics, HMOs, and similar establishments to withhold and remit taxes,” the BIR said in the regulation, which was made public yesterday through the tax bureau’s website.

Where tax evasion is rampant

The BIR also said that hospitals, clinics, and HMOs should not allow its clients to directly and separately pay the doctors and medical practitioners of their fees. Instead, payments covering their fees should be part of the total medical bills of patients.

This is to ensure accuracy of the amount of tax to be withheld.

The latest regulation is one of the measures by the BIR to boost tax collection and curb tax evasion.

Earlier, tax officials said the sector of professionals, including doctors, is one where tax evasion is most rampant.

The World Bank has estimated that the Philippines loses P450 billion in potential revenue a year due to tax evasion.

For this year, the BIR is tasked to collect P1.253 trillion in taxes, higher by 18 percent than its collection last year.

Henares said attaining the collection target for this year would not be easy, but she said the BIR was not giving up on reaching it.

Originally posted: 8:04 pm | Tuesday, September 24th, 2013