BIR to rely on doctors’ honesty in tax drive

To collect the new excise taxes slapped on cosmetic procedures under the first tax reform package, the Bureau of Internal Revenue is looking at tapping the doctors themselves and their honesty in paying their dues, officials said.

Internal Revenue Deputy Commissioner Arnel Guballa said that under the BIR’s proposed revenue regulations covering the 5-percent excise tax on invasive cosmetic procedures done for aesthetic purposes, they would ask doctors or clinics to collect the levy from their patients, which would be later on remitted by the doctors in what is called reverse withholding.

Guballa admitted that it would be difficult for the BIR itself to monitor all persons or patients who had cosmetic procedures such as rhinoplasty or liposuction, among others, so in the meantime, it would be up to the doctors to do so.

Under Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Act signed by President Duterte in December, “there shall be levied, assessed, and collected a tax equivalent to 5 percent based on the gross receipts derived from the performance of services, net of excise tax and value-added tax, on invasive cosmetic procedures, surgeries and body enhancements directed solely towards improving, altering or enhancing the patient’s appearance and do not meaningfully promote the proper function of the body or prevent or treat illness or disease.”

The excise tax on cosmetic procedures under the TRAIN Law, which took effect on Jan. 1, however, “shall not apply to procedures necessary to ameliorate a deformity arising from, or directly related to, a congenital or developmental defect or abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease, tumor, virus or infection.”

Euvimil Nina Asuncion, revenue lawyer at the BIR, said confidentiality agreements between doctors and patients going under the knife would be respected as the country’s biggest revenue agency would never ask clinics to reveal the identities of their clients.

As such, Asuncion said they would rely on the honesty of doctors and clinics to declare how much taxes were collected from such procedures.

Internal Revenue Assistant Commissioner Marissa O. Cabreros said doctors and lawyers as well as other professionals remained a “hard-to-tax area.”

During the watch of former BIR chief Kim S. Jacinto-Henares, medical professionals had been subjected to a name-and-shame campaign for supposedly earning a lot of money but not paying the correct amount of taxes.

But Cabreros said she was optimistic that more doctors would be tax-compliant under the simplified structure for the self-employed. —BEN O. DE VERA