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1
Tax Update Seminar/Dialogue with
Medical and Dental PractitionersRevenue Region 19-Davao City
April 5, 20141:00 – 5:00 pm
Presented by:
SUSAN D. TUSOY, CPA, MPSAsst. Chief, Assessment Division
TOPIC OUTLINE
2
1. Registration, Invoicing and Bookkeeping Regulations
2. Applicable Tax Typea. Registration Feeb. Income Taxc. Business Tax (VAT and Percentage) d. Withholding Tax
• As Payor• As Payee
REGISTRATION FEES
WHEN TO REGISTER
4
On or before the commencement of business
Before payment of any tax dueUpon filing of a return, statement or
declaration as required by the NIRC.Employee: within 10 days from date of
employment
BIR REGISTRATION PROCEDURES
5
PRIMARY REGISTRATION
SECONDARY REGISTRATION
Application &Issuance of TIN
Registration of Business/Practice of Profession/Employment
Registration of books, Issuance of ATP, CAS and Loose-leaf
STAGE 1 STAGE 2
ON REGISTRATION
• Pay Annual Registration Fee of P500.00 upon registration and every year thereafter on or before Jan. 31
Medical practitioners are also required to register and pay the corresponding Registration Fee for each separate
or distinct establishment.
7
REGISTRATION OF BRANCH
ON REGISTRATION
RR 4-2014All self-employed professionals shall submit an affidavit indicating the rates, manner of billings and the factors they may consider in determining their feesDue 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 Regulation8
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).
11
SAMPLE OF COMMERCIAL INVOICE – A NON-VAT OFFICIAL RECEIPT
SAMPLE ONLY
13
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
13
14
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%) P 500.00Add12% VAT (12% of P500.00) 60.00Total Amount charged P 560.00
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SAMPLE OF VAT OFFICIAL RECEIPT
15
SAMPLE ONLY
16
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
PRINCIPAL RECEIPTS VS. SUPPLEMENTARY INVOICES (RR 18-2012)
PrincipalA written account evidencing the sale
of goods and/or services issued to customers in an ordinary course of business
Official ReceiptSales Invoice
17
PRINCIPAL RECEIPTS VS. SUPPLEMENTARY INVOICES (RR 18-2012)
SupplementaryAlso a commercial invoiceAlso to be registered in the BIREx: 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 19
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
20
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 seller21
SALIENT FEATURES
The approved ATP shall be valid only upon full usage of the inclusive serial
numbers orfive (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.
23
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
24
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 28
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.LedgerJournal
29
PATIENTS’ LOG BOOK (A SUBSIDIARY BOOK)
Daily list of clients w/ the corresponding fees including those free of charge, per branchName and addressDateOfficial receipt no.Amount charge
Must be registered with the BIR
30
OFFICIAL APPOINTMENT BOOKS (RR 4-2014)
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
31
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
32
Tax Compliance Verification Drive (Tax mapping)
Income Tax
SAMPLE COMPUTATION – ITEMIZED DEDUCTIONGross Receipts P2,000,000Less: Allowable Deductions (itemized)
Rent P 500,000 Fuel and Oil 50,000 Communication 20,000 Supplies 280,000 Professional Fees 100,000 950,000
Net Income P1,050,000Less: Personal Exemption 50,000 Additional Exemption (2 dep.) 50,000
100,000Net Taxable Compensation P
950,000
Tax Due P 269,000Tax Withheld (1st to 4th Qtr) Form 2307 212,500 Quarterly Income Tax Payment 50,000 262,500
Payable P 6,500
INCOME TAX TABLE
OVER BUT NOT OVER AMOUNT RATE OF EXCESS OVER
Not over 10,0000 5%
10,000 30,000 500 + 10% 10,000
30,000 70,000 2,500 + 15% 30,000
70,000 140,000 8,500 + 20% 70,000
140,000 250,000 22,500 + 25% 140,000
250,000 500,000 50,000 + 30% 250,000
500,000 over 125,000 + 32% 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 DEDUCTIONGross Receipts P2,000,000Less: Allowable Deductions (itemized)
Rent P 500,000 Fuel and Oil 50,000 Communication 20,000 Supplies 280,000 Professional Fees 100,000 950,000
Net Income P1,050,000Less: Personal Exemption 50,000 Additional Exemption (2 dep.) 50,000
100,000Net Taxable Compensation P
950,000
Tax Due P 269,000Tax Withheld (1st to 4th Qtr) Form 2307 212,500 Quarterly Income Tax Payment 50,000 262,500
Payable P 6,500
SAMPLE COMPUTATION – OPTIONAL STANDARD DEDUCTION
Gross Receipts P2,000,000Less: Optional Standard Deduction (40%)
800,000
Net Income P 1,200,000Less: Personal Exemption 50,000 Additional Exemption (2 dep.) 50,000
100,000Net Taxable Compensation P
1,100,000
Tax Due P 317,000Tax Withheld (1st to 4th Qtr) 212,500 Quarterly Income Tax Payment 50,000 262,500
Payable 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,
40
INCOME TAX DUE DATES
Income Tax Period
Due Date Individual
1st Quarter April 15
2nd Quarter Aug. 15
3rd Quarter Nov. 15
Annual Return 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%) - 7,200.00
VAT payable - P 4,800.00
• P112,000/112% = P100,000** P67,200/112% = P 60,000
45
46
HOW TO COMPUTE VAT-GOV’T TRANSACTION (PHIC)
Formula:Output Tax (12% of Gross receipts ) P xxxLess Standard Input Tax (7% of gross receipts) xxx
VAT Payable P xxx Less 5% withholding tax xxx VAT Payable 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 TaxRentals – 5%Contractors – 2%Professional fees -10% or 15% etc. (see BIR Form 1601E)
53
DOCTORS AS WITHHOLDING AGENT (AS PAYOR)
Example: 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 54
DOCTORS AS WITHHOLDING AGENT (AS PAYOR)
Consequence if not remitted on time:
Computation: Basic Tax (P10,000 x 5%) P 500.00 Add: 25% surcharge P 125.00 20% interest per annum* 8.21 comp. pen for late payment 200.00 333.21 Total Payable 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
57
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
58
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)
Doctors are Subject to Withholding Tax (as payee) on their Professional Fees
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 practitioners10% or 15% Expanded Withholding
Tax5% 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% EWTNo 5% VAT or 3% PT withholding for non-
government hospitalGovernment hospital is required to withhold 5%
for VAT or 3% PT
69
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
STOP FILER CASES
Can be detected in our systemSuch 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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