Transcript Slide 1

Tax Update Seminar/Dialogue
with Medical and Dental
Practitioners
Revenue Region 19-Davao City
April 5, 2014
1:00 – 5:00 pm
Presented by:
SUSAN D. TUSOY, CPA, MPS
Asst. Chief, Assessment Division
1
TOPIC OUTLINE
Registration, Invoicing and Bookkeeping Regulations
2. Applicable Tax Type
a. Registration Fee
b. Income Tax
c. Business Tax (VAT and Percentage)
d. Withholding Tax
• As Payor
• As Payee
1.
2
REGISTRATION
FEES
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
4
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
5
ON REGISTRATION
• Pay Annual Registration Fee of P500.00 upon
registration and every year thereafter on or
before Jan. 31
REGISTRATION OF BRANCH
Medical practitioners are also required
to register and pay the corresponding
Registration Fee for each separate or
distinct establishment.
7
ON REGISTRATION
RR 4-2014
 All self-employed professionals shall submit an
affidavit indicating the rates, manner of billings
and the factors they may consider in determining
their fees
 Due date


Upon registration and every year thereafter on or
before Jan. 31
Transitory provision

Affidavit to be submitted within 30 days from
effectivity of this Regulation
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INVOICING
REQUIREMENTS
9
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.
10
INVOICING REQUIREMENTS
 The
OR shall be accomplished at least in
duplicate
 The
duplicate retained & preserved in place
of business for 10 years from close of
taxable year (RR 17-2013).
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SAMPLE OF COMMERCIAL INVOICE – A NON-VAT OFFICIAL
RECEIPT
SAMPLE ONLY
PROPER INVOICING AND RECEIPTING OF OUTPUT TAX

Revenue Regulations 18-2011

Reiterates Sec. 237 of the Tax Code that VATregistered taxpayers should separately bill the
VAT.

The amount shall be shown as a separate item
in the invoice or receipt
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13
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
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14
SAMPLE OF VAT OFFICIAL RECEIPT
SAMPLE ONLY
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15
PROPER INVOICING

Revenue Regulations 4-2014

In cases when no professional fees are charged
by the professional and paid by client, a BIR
registered receipt, duly acknowledged by the
latter, shall be issued showing a discount of
100% as substantiation of the “pro-bono” service.
16
16
PRINCIPAL RECEIPTS VS. SUPPLEMENTARY INVOICES
(RR 18-2012)
 Principal

A written account evidencing the sale of
goods and/or services issued to customers
in an ordinary course of business
Official Receipt
 Sales Invoice

17
PRINCIPAL RECEIPTS VS. SUPPLEMENTARY INVOICES
(RR 18-2012)
 Supplementary
Also a commercial invoice
 Also to be registered in the BIR
 Ex: Delivery Receipt, Collection Receipt,
Billing Statement, Statement of Accounts,
Acknowledgement Receipt, etc.

18
VAT SALES INVOICE
A
written account evidencing the sale of
goods and/or properties
 issued whether cash sales or on account
 Basis of the output tax liability of the
seller and the input tax claim of the buyer
 Includes Cash Sales Invoices & Charge
Sales Invoices
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VAT OFFICIAL RECEIPT


A proof of sale of service and/or leasing of
properties
Basis of the output tax liability of the seller and
the input tax claim of the buyer
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NON-VAT RECEIPTS/INVOICES

Non-Vat Sales Invoices
A written account evidencing the sale of goods and/or
properties, whether cash sales or on account
 Basis of the Percentage Tax liability of the seller


Non-Vat Official Receipts
A proof of sale of service and/or leasing of properties
 Basis of the Percentage Tax liability of the seller

21
SALIENT FEATURES
 The

approved ATP shall be valid only
upon full usage of the inclusive serial
numbers or
 five
(5) years from issuance of the
same, whichever comes first.
22
SALIENT FEATURES
 ONLY
BIR ACCREDITED
PRINTERS shall have the
exclusive authority to print
principal and supplementary
receipts/invoices.
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TRANSITORY PROVISION
 Expiring
Authority to Print (ATP) for
invoices/receipts (principal and
supplementary) shall apply for a new ATP
not later than 60 days prior to actual
expiry date
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EXPIRED RECEIPTS/INVOICES
Those with ATP prior to Jan. 1, 2011 were valid
only until Aug. 30, 2013 while those with ATP
dated Jan. 1, 2011 to Jan. 17, 2013 were valid
only until Oct. 31, 2013.
 Issuance of receipts/invoices after its validity
constitute a violation of Sec. 264 of the NIRC of
1997
 It is considered as if no receipt/invoice was
issued

EXPIRED RECEIPTS/INVOICES


No deduction from gross income shall be allowed
using these invoices/receipts as there are not valid
proof of substantiation
In case of VAT-registered persons, no input tax may
be claimed using these receipts/invoices
BOOKKEEPING
REQUIREMENTS
27
BOOKKEEPING REQUIREMENTS
 Preserve
within the
prescriptive period of
10 yrs.
 Gross
receipts
exceeding P150,000 in
any given quarter
must be audited by a
CPA
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BOOKKEEPING REQUIREMENTS
 It’s
not required to register new set of books
every year; only before the pages of current
book is almost used up.
Ledger
 Journal

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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

30
OFFICIAL APPOINTMENT BOOKS (RR 42014)
Shall contain only the names of the client and the
date/time of the meeting
 Due date


Within 30 days from effectivity of this regulation
Published on March 21, 2014
 !5 days effectivity : April 5, 2014
 Due date: May 5, 2014

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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
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Income Tax
SAMPLE COMPUTATION – ITEMIZED DEDUCTION
Gross Receipts
Less: Allowable Deductions (itemized)
Rent
Fuel and Oil
Communication
Supplies
Professional Fees
950,000
Net Income
Less: Personal Exemption
Additional Exemption (2 dep.)
100,000
Net Taxable Compensation
950,000
Tax Due
Tax Withheld (1st to 4th Qtr) Form 2307
Quarterly Income Tax Payment
P2,000,000
P 500,000
50,000
20,000
280,000
100,000
P1,050,000
50,000
50,000
P
P 269,000
212,500
50,000
262,500
INCOME TAX TABLE
OVER BUT NOT OVER AMOUNT RATE OF EXCESS OVER
Not over
10,000
30,000
70,000
140,000
250,000
500,000
10,0000
30,000
70,000
140,000
250,000
500,000
over
500 +
2,500 +
8,500 +
22,500 +
50,000 +
125,000 +
5%
10%
15%
20%
25%
30%
32%
10,000
30,000
70,000
140,000
250,000
500,000
BUSINESS EXPENSES:

To be deductible, business expense must:
 constitute ordinary and necessary expense;
 to be paid or incurred during the taxable
year in carrying on or directly attributable to
operation and/or conduct of trade, business,
or profession;
 be reasonable in amount;
 be sustained by adequate proof;
 not be against law or public policy
RR 12-2013 – REQUIREMENTS FOR
DEDUCTIBILITY

Any income payment allowable as deduction
shall only be allowed to be deducted if:

The income tax required to be withheld has been paid
to the BIR

No deduction shall be allowed notwithstanding
payments of WTAX at the time of investigation
SAMPLE COMPUTATION – ITEMIZED DEDUCTION
Gross Receipts
Less: Allowable Deductions (itemized)
Rent
Fuel and Oil
Communication
Supplies
Professional Fees
950,000
Net Income
Less: Personal Exemption
Additional Exemption (2 dep.)
100,000
Net Taxable Compensation
950,000
Tax Due
Tax Withheld (1st to 4th Qtr) Form 2307
Quarterly Income Tax Payment
P2,000,000
P 500,000
50,000
20,000
280,000
100,000
P1,050,000
50,000
50,000
P
P 269,000
212,500
50,000
262,500
SAMPLE COMPUTATION –
OPTIONAL STANDARD DEDUCTION
Gross Receipts
Less: Optional Standard Deduction
800,000
P2,000,000
(40%)
Net Income
Less: Personal Exemption
Additional Exemption (2 dep.)
100,000
Net Taxable Compensation
1,100,000
Tax Due
Tax Withheld (1st to 4th Qtr)
Quarterly Income Tax Payment
Payable
P 1,200,000
50,000
50,000
P
P
212,500
50,000
317,000
262,500
P
54,500
ADVANTAGES OF USING OPTIONAL
STANDARD DEDUCTION (FOR INDIVIDUAL
TAXPAYERS)


shall not be required to submit with his tax return
such financial statements otherwise required under
the Code
shall keep such records pertaining only to his gross
sales or gross receipts,
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INCOME TAX DUE DATES
Income Tax Period
1st Quarter
2nd Quarter
3rd Quarter
Annual Return
Due Date
Individual
April 15
Aug. 15
Nov. 15
April 15
Value Added Tax/
Percentage Tax
VAT VS. NON-VAT
Value Added Tax (12%)
•
Medical/dental services rendered by professionals
whose gross receipts exceed the threshold of
P1,919,500
Non-VAT
If gross receipts do not exceed the threshold
• Subject to 3% percentage tax
•
43
VAT DEFINED


It is a tax on the value added to the
purchase price or cost in the sale or lease of
goods, properties, or services in the course
of trade or business.
Due Date
44
VAT PAYABLE
Output Tax ( P100,000* x 12%)
-
P12,000.00
Less Input Tax (60,000 **x 12%)
VAT payable
-
7,200.00
P 4,800.00
P112,000/112% = P100,000
** P67,200/112% = P 60,000
•
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46
HOW TO COMPUTE VAT-GOV’T TRANSACTION (PHIC)
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
46
SOURCES OF INPUT TAX

Purchase of goods/services for which the VAT was
actually paid, like:






Rentals on clinic
Purchase of medical supplies
Communication expenses
Fuel
Professional services
etc
47
SUBMISSION OF SUMMARY LIST OF
SALES AND PURCHASES

RR 1-2012
–

Mandatory submission of Quarterly
Summary List of Sales and Purchases by
all VAT registered taxpayers effective Jan.
1, 2012
Due Date:
On or before the 25th day of the month
following the close of the taxable
quarter.
SUBMISSION OF SLS / SLP
SLS/SLP
shall be submitted
in softcopy to the RDO
having jurisdiction of the
taxpayer on or before the
25th day of the month
following the close of the
taxable quarter
Percentage Tax
PERCENTAGE TAX


Rate - 3% of gross revenue
if gross revenue do not exceed P1.5M (now P1,919,500
pursuant to RR 16-2011) otherwise subject to VAT

Due Date – every 20th day of the following month

Professional Fee – P 100,000 x 3% = P3,000.00
Withholding Tax
DOCTORS AS WITHHOLDING AGENT (AS PAYOR)
 Required
to deduct Expanded Withholding Tax
Rentals – 5%
 Contractors – 2%
 Professional fees -10% or 15%
 etc. (see BIR Form 1601E)

53
DOCTORS
PAYOR)
Example:
AS
WITHHOLDING AGENT (AS
Dr. A is renting a clinic space at P10,000/mo.*
Expanded Withholding Tax is P 10,000 x 5% = P500.00
Due date: Every 10th day of the following month except
for the month of Dec., which shall be due on
Jan. 15 of the ff year
*net of VAT
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DOCTORS
PAYOR)
AS
Consequence
WITHHOLDING AGENT (AS
if not remitted on time:
Computation:
Basic Tax (P10,000 x 5%)
Add: 25% surcharge
20% interest per annum*
comp. pen for late payment
Total Payable
P
125.00
8.21
200.00
P
500.00
333.21
P
833.21
*assuming payment was delayed for 30 days (P500 x 20% x 30/365 days)
55
DOCTORS AS WITHHOLDING AGENT (AS PAYOR)

Withholding Tax on Wages
 Salary of employees, if paying more than the Minimum
Wage
56
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
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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)
58
DUTY AND RESPONSIBILITY OF THE HOSPITALS,
CLINICS, HMOS (RR 14-2013)
 To
withhold and remit taxes due on the
professional fees of their respective
accredited medical practitioners, paid by
patients who were admitted and confined
to such hospitals and clinics
 Must
ensure that correct taxes due on
the PF have been withheld and timely
remitted to the BIR
DUTY AND RESPONSIBILITY OF THE
HOSPITALS, CLINICS, HMOS
 Shall
NOT allow their medical
practitioners to receive payment of
professional fees directly from patients
who were admitted and confined
 Must
include the PF in the total
medical bill of the patient which shall
be payable directly to the hospital/clinic
EXCEPTION
 The
wtax shall not apply whenever there
is no PF has in fact been charged
There must be a sworn declaration jointly
executed by the medical practitioner and the
patient
 The hospital administrator shall inform the
RDO having jurisdiction over such hospital or
clinic if fails or refuses to execute within 10
days from date of occurrence.

(The doctor must still issue an OR indicating
100% discount – RR 4-2014)
RESPONSIBILITY OF HOSP./CLINICS/HMOS
•
Shall be responsible for the correct
computation and timely remittance of
Wtax
include in the 1604E
• Issue 2307 every 20th day ff the close of the
quarter or upon request of the payee
•
RESPONSIBILITY OF HOSP./CLINICS/HMOS
•
Shall submit a sworn statement executed by the
pres./managing partner as to the complete and
updated list of medical practitioners accredited
with them
Where: Collection Div / LT-Coll Div / LTDO
• 2 copies for the BIR and 1 copy for the TP
•
REPORTS TO BE SUBMITTED BY
HOSPITALS/CLINICS

Submit the names and addresses of medical
practitioners whose:
PF was paid by the patients directly to the
hospital/clinic
 Medical practitioners who did not charge any PF from
their patients


every 15th day after the end of each calendar
quarter to the Collection Div.
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

PHIC to withhold 2% EWT on the entire amount
 The
hospital will pay the professional fee
Shall withhold 10% or 15% EWT
 No 5% VAT or 3% PT withholding for nongovernment hospital
 Government hospital is required to withhold 5% for
VAT or 3% PT

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
69
69
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.
70
DATA

RDO 132

RDO 113
71
Thank you!
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