Transcript Doctors are Subject to Withholding Tax

1
Dialogue with Medical
Practitioners
BIR, Bonifacio St.,Davao City
December 7, 2011
2:00 – 4:00 pm
Presented by:
SUSAN A. DAJAO-TUSOY, CPA, MPS
Asst. Chief, Assessment Division
Revenue Region 19-Davao City
2
Check your compliance
1.
2.
3.
4.
On registration w/ the BIR.
On issuance of authorized ORs/INVOICES
On keeping and maintaining of Books of Accounts.
On withholding & remittance of w/holding taxes, if
applicable.
5. On filing of required tax returns and payment of
taxes due thereon.
6. On submission of required information & returns to
the BIR.
3
REGISTRATION
REQUIREMENTS
4
When to register
 On or before the commencement of
business
 Before payment of any tax due
 Upon filing of a return, statement or
declaration as required by the NIRC.
 Employee: within 10 days from date of
employment
5
BIR Registration Procedures
PRIMARY
REGISTRATION
STAGE 1
Application &
Issuance of TIN
SECONDARY
REGISTRATION
STAGE 2
Registration of
Business/Practice of
Profession/Employment
Registration of books,
Issuance of ATP, CAS
and Loose-leaf
6
Your Unique Identifier: TIN
• Only one TIN for life
• Multiple TIN is
punishable by law.
• Professionals may
electronically secure
TIN through e-REG
system
7
REGISTRATION OF BRANCH
Medical practitioners are also required
to register and pay the corresponding
Registration Fee for each separate or
distinct establishment.
8
Practitioner’s Usual Tax Types
• Registration Fee (RF)
• Income Tax
• Business Tax
– VAT – 12% if gross annual fees exceed 1.5M or
if opted to register as VAT Taxpayer
– Percentage tax – 3% on the gross, if gross
annual income is below 1.5M
9
Practitioner’s Usual Tax Types
• Withholding Taxes
- withholding tax on compensation income paid
- expanded withholding tax on income
payments made
10
INVOICING
REQUIREMENTS
11
Invoicing Requirements
• Issue sequentially Official Receipt (OR) for
fees received
• Sales Invoice for sale of goods (medicines).
• Each OR issued shall indicate the name and
address of the client, date of transaction,
nature of service rendered and the amount.
12
Invoicing Requirements
• The OR shall be accomplished at least in
duplicate
• The duplicate retained & preserved in place
of business for 3 years from close of taxable
year.
Sample of Commercial Invoice – A Non-VAT Official Receipt
SAMPLE ONLY
14
Proper Invoicing and Receipting of Output Tax
Revenue Regulations 18-2011
• Reiterates Sec. 237 of the Tax Code that VAT-registered
taxpayers should separately bill the VAT.
• The amount shall be shown as a separate item in the
invoice or receipt
14
15
Proper Invoicing and Receipting of Output Tax
Ex: If the amount charged is P560.00, it shall be
presented in the following manner:
Professional Fee (P560.00/112%)
Add12% VAT (12% of P500.00)
Total Amount charged
P 500.00
60.00
P 560.00
15
16
Proper Invoicing and Receipting of Output Tax
SAMPLE ONLY
16
17
Proper Invoicing and Receipting of Output Tax
SAMPLE ONLY
Particulars
Service Fee
12% VAT
Total
P1,124.10
134.90
P1,259.00
VAT should be
billed separately
17
18
Proper Invoicing and Receipting of Output Tax
Penalty
• for each act or omission, be punished by a fine of not less than
P1,000.00 but not more than P50,000.00 and
• suffer imprisonment of not less than two (2) years but not more
than four (4) years.
18
19
The importance of Asking for Receipts
• To support input tax claims
• Will facilitate audit trail
• To ascertain that sales transactions are properly
recorded
• Corresponding taxes are paid
• To support business purchases/expenses
19
BOOKKEEPING
REQUIREMENTS
20
21
BOOKKEEPING REQUIREMENTS
• Cash or accrual
• Preserved within the
prescriptive period of
3yrs
• Gross receipts
exceeding P150,000 in
any given quarter must
be audited by a CPA
22
BOOKKEEPING REQUIREMENTS
• Transactions for the day must be entered in
books on or before 12nn the following day.
Balances transferred to Ledger day following
end of month
• It’s not required to register new set of books
every year; only before the pages of current
book is almost used up.
23
PATIENTS’ LOG BOOK (A subsidiary book)
• Daily list of clients w/ the corresponding fees
including those free of charge, per branch
• Name and address
• Date
• Official receipt no.
• Amount charge
• Must be registered with the BIR
24
Tax Compliance Verification Drive
(Tax mapping)
Original Certificate of Registration, Registration Fee and the
Ask for Receipt Notice must be conspicuously displayed in
the physician’s place of business and/or clinic
25
C. UPDATE REGISTRATION DATA
Accomplish Form 1905 and submit
to your home RDO for:
• Change of registered address
• Change of registered activity
• Change of tax types (cancellation or addition)
• Additional personal exemption
26
Compliance
Requirements
27
Doctors as Withholding Agent (as payor)
Required to Withhold Taxes
 Expanded Withholding Tax
• Rentals – 5%
• Contractors – 2%
• Professional fees -10% - 15%
• etc. (see BIR Form 1601E)
 Salary of employees, if paying more than the
Minimum Wage (Region XI – Non-agri. sector is
286.00 minimum wage per day) – RMC 11-2011
28
Doctors as Withholding Agent (as payor)
Example: Dr. A is renting a clinic space at P30,000/mo.*
Expanded Withholding Tax is P 30,000 x 5% = P1,500.00
Due date: Every 10th day of the following month except
for the month of Dec., which shall be due on
Jan. 15
*net of VAT
29
Doctors as Withholding Agent (as payor)
Consequence if not remitted on time:
Computation:
Basic Tax (P30,000 x 5%)
Add: 25% surcharge
20% interest per annum*
comp. pen for late payment
Total Payable
P
375.00
24.65
700.00
P 1,500.00
1,099.65
P 2,599.65
*assuming payment was delayed for 30 days (P1,500 x 20% x 30/365 days)
30
Doctors are Subject to Withholding Tax (as payee) on
their Professional Fees
Expanded Withholding Tax (EWT)
 creditable against Income Tax
15% if exceeding P720T, 10% for less than
 Disclosure Requirement (RR 12-01)
• Using the Notarized Sworn Declaration (Annex A of RR 12-01)
• Submit to the Collection Division
• Due on June 30 each year or within 15 days when the income
reaches P720,000 whichever comes first
31
Doctors are Subject to Withholding Tax (as payee)
on their Professional Fees
It shall be the duty and responsibility of the
hospital, clinic, PHIC, HMO to remit taxes
withheld from the ff:
1.
2.
3.
PF paid by PHIC/HMOs to medical practitioners
PF paid by patients to medical practitioners thru
hospitals or clinics
PF paid by patients directly to medical practitioners
• The applicable 10% of 15% EWT, shall in turn be given by the
medical practitioners directly to the acctg. office of the hospitals
or clinics
• The hospital shall issue BIR Form 2307
32
Doctors are Subject to Withholding Tax (as payee)
on their Professional Fees
Except:
• When there is proof that no PF has in fact been
charged and paid by his patient
• The patient/representative to execute Sworn
Declaration (Annex A of RR 12-98)
• Shall form part of the records of the hospital/clinic
• Must be readily available for tax audit purposes
33
Doctors are Subject to Withholding Tax (as payee)
on their Professional Fees
On Government Money Payments
(Ex: Payments of PHIC to medical doctors)
5% of Gross Income if VAT Registered Taxpayer
(creditable against VAT liability)
3% of Gross Receipts for Non-VAT Taxpayer
(creditable against Percentage Tax liability)
RMC 38-2011 / RMC 49-2011
On the obligation of PHIC to withhold taxes from medical
practitioners
10% or 15% Expanded Withholding Tax
5% Withholding Tax on VAT or 3% for Non-VAT practitioner
Illustration 1 – for payment of fees not covered by the
CASE RATE PROGRAM
• Assume that PHIC paid P4,000 to a VAT registered doctor
representing professional fees
• Income Tax Withholding (EWT)
• P4000* /112% = P3,571.43 x 15%** = P 535.71
• VAT Withholding
• P4000* /112% = P3,571.43 x 5%
= P 178.57
assumptions
*Inclusive of VAT
** No sworn declaration of income was submitted
Illustration 2 – for payment of fees not covered by the
CASE RATE PROGRAM
• Assume that PHIC paid P4,000 to a NON-VAT registered
doctor representing professional fees
• Income Tax Withholding (EWT)
• P4000 x 15%* = P 600.00`
• PercentageTax Withholding
• P4000 x 3% = P120.00
assumption
* No sworn declaration of income was submitted
Illustration 2: covered by the CASE RATE PROGRAM
• The entire case rate shall be paid to the concerned facility provider
• The hospital will pay the professional fee
• Shall withhold 10% or 15% EWT
• No 5% VAT withholding for non-government hospital
• Government hospital is required to withhold 5% for VAT
38
HOW TO COMPUTE Income Tax
Formula:
Aggregate professional income
Less: Allowable deductions or 40% OSD (of Gross Fees)
Personal & Add’l Exemptions
Taxable income
Tax due (see tax table on Form 1701)
Less Creditable withholding tax (Form 2307) *
Tax Payable (Overpayment)
xxx
(xxx)
(xxx)
xxx
xxx
xxx
xxx
*should be supported with valid BIR Form 2307
38
39
HOW TO COMPUTE Income Tax
• Exemptions
are comprised of Personal
Exemption of P50,000 & Additional Exemption
of P25,000 for each qualified dependent child
not exceeding 4.
• Valid claimant for additional exemption is the
husband but wife can claim if the husband
executes waiver.
39
40
HOW TO COMPUTE Percentage Tax
Formula:
Gross Professional Fees Received
Multiply by tax rate
PercentageTax Due
P xxxx
3%
P xxxx
40
41
HOW TO COMPUTE VAT-regular transaction
Formula:
Output Tax (Gross receipts x 12%)
Less: Input Tax (VAT taxable purchases x 12%)
VAT Payable
P xxx
xxx
P xxx
41
42
HOW TO COMPUTE VAT-gov’t transaction
Formula:
Output Tax (12% of Gross receipts )
Less Standard Input Tax (7% of gross receipts)
VAT Payable
Less 5% withholding tax
VAT Payable
P xxx
xxx
P xxx
xxx
P xxx
42
43
The importance of Withholding Tax Certificates
(Form 2306/2307)
• To support tax credit claims per return
• No certificate, no tax credit allowed
• Serve as proof of transaction
Note: Be conscientious in gathering the
withholding tax certificates on time
43
44
Stop filer Cases
• Can be detected in our system
• Such stop-filer case shall remain open until the
corresponding return is duly filed and paid including
penalties.
45
VIOLATIONS CHECKLIST
On Registration Requirements
If located in the
Failure to Register
Cities
P20,000
1st Class
Municipality
10,000
2nd Class
Municipality
5,000
3rd Class
Municipality
2,000
Penalties provided are
inclusive of all other violations
Failure to Pay Annual Registration Fee
P1,000
Failure to Display Annual Registration Fee
No Original Certificate of Registration Displayed
P1,000
Failure to display the poster “Ask for Receipt”
P1,000
45
46
VIOLATIONS CHECKLIST
On Invoicing Requirements
1st Offense
2nd Offense
Failure to issue receipts/invoices
P10,000
P20,000
Refusal to issue receipts/invoices
25,000
50,000
Duplicate Copy of the receipts/invoices is blank but
the accomplished original is detached
20,000
50,000
Use of unregistered receipts/invoices
20,000
50,000
Incomplete information in the receipts/invoices
5,000
10,000
If the information missing is the correct amount of the
transaction
20,000
50,000
Possession or use of multiple or double receipts or
invoices
Not qualified for
compromise
46
47
VIOLATIONS CHECKLIST
If the gross annual sales, earnings or receipts
But Does Not
Exceeds
Exceed
Compromise
On Bookkeeping
Requirements
P
Failure to register Books of
Accounts/Cash Register
Machine's Sales books
Failure to keep Books of
Accounts at the place of
business
Failure to make entries in the
registered Books of Accounts
P
10,000
20,000
30,000
50,000
75,000
100,000
250,000
500,000
1,000,000
5,000,000
10,000,000
20,000,000
50,000,000
10,000 P
20,000
30,000
50,000
75,000
100,000
250,000
500,000
1,000,000
5,000,000
10,000,000
20,000,000
50,000,000
xxx
200
400
600
1,000
1,600
2,000
3,000
5,000
7,500
10,000
15,000
20,000
30,000
50,000
47
www.them
egallery.c
om
Thank you!