Memorandum # 2013-MS-10-10

DATE : October 10, 2013

TO : Medical Consultants, Accounting Section, Cashier, and All Concerned

FROM : Accounting Department

SUBJECT: ERC Compliance to BIR Revenue Regulations Circular 14-2013__________________________________________________________________________________________________________

In compliance with the recently issued BIR Regulation 14-2013 on professional fees dated September 20, 2013 the Eye Referral Center shall observe the following policies and procedures. However, due to the late notification of healthcare institutions by the Bureau of Internal Revenue, the Eye Referral Center as with many other institutions has become aware of the new regulation only on September 30, 2013, one day before its effectively. As there are unclear provisions in the circular, amendments by BIR can be expected. This joint memorandum of the administration and medical departments describing the procedure to be implemented beginning October 1, 2013 and will be revised and updated accordingly should there be any amendments to be made by BIR.

1. The eye center shall submit to the Collection Division of the BIR Regional Office a sworn statement by the administrator an updated list of its accredited medical practitioners (active and visiting). In connection with this, medical consultants who have not submitted their annual registration form 0605 are advised to submit as soon as possible.

2. Pursuant to Section 2.57.2 (1) a, medical practitioners are not allowed to receive payment of professional fees directly from patients. As such, doctor's professional fees shall be paid directly to the eye center cashier.

3. As with professional fees for walk-in and eye center-referred patients, the Eye Referral Center official receipt will be issued to the patient for professional fees for private patients. These professional fees shall be subject to appropriate withholding tax ( 10% for those with gross income of P 720,000 for the current year; 15% for those with gross income of P 720,000 for the current year). Consultants with gross income of less than or equal to seven hundred and twenty thousand pesos ( P 720,000 ) are advised to submit to Eye Referral Center a copy of a sworn declaration of gross income for the current year so that the 10% withholding tax will be applied. Without the document, professional fees will automatically be subjected to 15% withholding tax. Hence, those with gross income of more than P 720,000 need not submit the document.

4. For payment of fees other than professional fees, e.g., intraocular lens, medications, and other fees which are not subject to withholding tax, the physician's official receipt will be issued.

5. The eye center shall remit the appropriate withholding tax to the Bureau of Internal Revenue and shall issue 2307 certificate of creditable tax withheld at source either every month or every 20th day following the close of the taxable quarter whichever is preferred by the medical consultant.

6. Professional fees remitted by the eye center to the medical consultant will be net of the appropriate withholding tax. Professional fees for private patients paid in cash by patients from days Monday thru Saturday shall be remitted to the medical consultant every Wednesday of the following week to allow proper processing of taxes to be withheld as well as company financial internal control policies. Accordingly, payments made through credit card will be treated similar to cash payments but are cleared 3 days after transaction. For

Check payments, the clearance of such instruments will determine which cut-off period they fall under. E.g. a check is paid the center on a Friday and cleared the following Monday, remittance of the physicians payment by the center will occur the following Wednesday.

7. Upon receiving the professional fee from the eye center, the medical consultant shall issue the eye center an official receipt. One receipt may be issued for consultation of several patients as long as it will be indicated in the official receipt as such, e.g., professional fees for 12 patients seen on October 5, 2013. However, for purposes of Philhealth claims or similar establishments, separate official receipts will be issued.

8. For complimentary and charity cases, the medical consultant and patient must jointly execute a sworn declaration as proof that the patient was not charged any professional fee. This form must be filed within 10 days from date of service. The Community Tax Certificate number, place and date of issuance will have to be available with the nurse's stations and consultation areas for this purpose. Copies of the Affidavit-Declaration of No Professional Fee shall be made available at the nurse's station and consultation rooms.

9. Accomplished forms shall be compiled by the accounting section and shall be made readily available in case of audit. Consultants will be given a duplicate copy of the sworn declaration for their file. Every 15th day after the end of each calendar quarter, the eye center will submit to the Collection Division of BIR the following:

a. Names and addresses of medical practitioners whose professional fees were paid to the eye

center. b. A list of medical consultants who waived their professional fees and those who will refuse

or fail to submit the affidavit-declaration of No PF forms.

10. For any queries regarding these changes please seek assistance from the accounting department

11. Effectively October 14, 2013

Find attached the following: BIR Revenue Regulation No. 14-2013 Sworn Declaration of No PF form

Doctors are advised to submit the following documents 1. Annual registration form 0605 for the current year (if you have not done so)2. Sworn declaration of gross income for the current year 3. Community Tax Certificate number, date and place of issuance4. Updated official receipt Pursuant to BIR Revenue Circular 52-2013, only official receipts with authority to print (ATP) dated January 18, 2013 and onwards will be recognized as valid. Receipts with ATP dated January 1, 2011 to January 17, 2013 may be used until October 31, 2013 provided the original and duplicate pages of each official receipt is prominently stamped as “Valid until October 31, 2013 only”.

Pedro R. Realina, CPA Chief Accountant

cc: Nurse's stations (2nd floor, 3rd floor, diagnostic services, laser room, OR) Accounting section Cashier Administrator's file Medical director's file ERC bulletin board