Self-employed professionals exempted from paying business permit fees for clinics, offices

The government has harmonized the taxes and other fees that self-employed professionals such as doctors, accountants and lawyers pay to local government units to cut red tape.

In a statement, the Department of Finance said Local Finance Circular (LFC) 1-2019 signed by Finance Secretary Carlos G. Dominguez III on June 12 was aimed at “ensuring a fair, uniform and proper implementation of tax laws and in line with ongoing efforts to streamline government transactions to further improve the ease of doing business.”

In particular, it exempted self-employed professionals from payment of business permit fees for clinics and offices.

“While professionals still need to secure business permits from LGUs, such should be at no cost at all during the registration or renewal of the operation of their clinics or offices, given that such permits cannot regulate the practice of their profession. This is because regulations over the practice of professions are within the exclusive domain of the respective agencies or regulatory boards empowered by law to supervise and regulate professions,” the DOF said.

“LGUs, however, may impose a local business tax on professionals if they are verified to be engaged in selling, trading or distributing goods of whatever kind or involved in trade and other business activities that do not constitute the practice of their professions. In this case, the LGU can impose a business permit fee during the registration and renewal of the operation of the office or clinic of the concerned professional,” it added, citing LFC 1-2019.

Finance Undersecretary Antonette C. Tionko said LFC 1-2019 was issued following complaints lodged by self-employed professionals citing “improper imposition of local taxes, fees and other charges by LGUs.”

Also, while LFC 1-2019 covered the professional tax imposed by LGUs on both private and government professionals, Tionko said “professionals exclusively employed in the government shall be exempt from the payment of the professional tax, unless he or she has been duly authorized to practice the profession outside of one’s official functions.”

As for the private sector, “an individual or corporation employing a person subject to the professional tax shall require payment by that person of the tax on his/her profession.