BIR Ruling [DA-160-03]

May 14, 2003 BIR RULING [DA-160-03] Philippine Health Insurance Corporation CityState Centre, 709 Shaw Boulevard Pasig City Attention: Ms. Melinda C. Mercado, CESO IV Senior Vice President, Operation Sector Gentlemen : This refers to your letter dated March 18, 2003 requesting for the deferment of VAT to medical practitioner and an update of listings of registered VAT and Non-VAT physicians nationwide. It is represented that one of the benefits to PhilHealth members is the payment of professional fees for services rendered by PhilHealth accredited physician; that based on existing guidelines these payments to services are covered by the VAT implementation; that there are about 18,329 physicians accredited by PhilHealth nationwide who will be affected by the VAT implementation; that at present processing of payments for these professional services are decentralized in your PhilHealth Regional Offices nationwide; that based on Revenue Regulations 11-2003 the deadline for registration and other compliance requirements during the transitory period of imposing VAT was extended up to March 19, 2003; that it is your belief that the implementation of VAT will be dependent on the registration process based on your situation, gathering of data from physicians nationwide whether they are VAT or Non-VAT will take time; that you are requesting for the deferment to withhold the VAT from January 1, 2003 until such time that you update the records of your accredited physicians in your system whether they are VAT or Non-VAT and adjust the system applications accordingly; that you target everything to be ready for services rendered by the physicians for discharges effective July 1, 2003; that it is your view that the deferment will relieve your accountants from the liabilities for failure to deduct the VAT for services of accredited physicians from January 1 to June 30, 2003; and that you are presently deducting 10% VAT on gross professional fee payments and remit on time to your authorized collecting banks. In reply, please be informed that Revenue Regulations No. 1-2003 imposes value-added tax (VAT) on sale of services by persons engaged in the practice of profession or calling and professional services rendered by actors, actresses, talents, singers and emcees, radio and television broadcasters and choreographers, musical, radio, movie, television and stage directors and professional athletes as well as services rendered by customs, real estate, stock, immigration and commercial brokers, beginning January 1, 2003. Such being the case, your request for the deferment of VAT is hereby denied for lack of legal basis. With regard to the updated list of registration of VAT and Non-VAT physicians nationwide, the same can be obtained at our different Revenue District Offices which has jurisdiction over the matter. ITAaHc Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group