Accucare Medical Associates, Inc.

July 18, 2008 BIR RULING [DA-(VAT-006) 056-08] 109 (G) & (V); 116; DA-078-07 Accucare Medical Associates, Inc. Unit 211, 2/F, Molvina Commercial Complex Mayamot, Marcos Highway, Antipolo City Attention: Mr. Reynaldo S. Sandico President Gentlemen : This refers to your letter dated May 28, 2008 stating that Accucare Medical Associates, Inc. ("AMAI" for brevity) is engaged in facilitating and assisting in providing health care, medical needs and other allied medical services to a resident and nonresident United States (U.S.) military retirees; that AMAI provides to the said retirees doctors, nurses, medical practitioners, professionals, hospitals, laboratory services and medicines which AMAI purchased locally; that the cost and mark-up of medicine and medical services are being billed to Tricare Overseas Program Payment ("TOPP" for brevity), a U.S. based institution providing health care insurance benefits to all U.S. military retirees and active duty personnel; that AMAI receive payments from TOPP through checks, mostly, in U.S. dollar denomination; and that it is licensed by the City of Antipolo to operate a medical clinic, providing for medical services, under Permit No. 13582 dated January 23, 2008. Based on the foregoing, you are requesting in effect for a ruling that the above services rendered by AMAI to the U.S. retired servicemen is exempt from the coverage of the value-added tax in accordance with Section 109 (G) of the Tax Code of 1997. In reply, please be informed that Section 109 (G) of the Tax Code of 1997, as amended, medical, dental, hospital and veterinary services except those rendered by professionals are exempt from the imposition of the value-added tax. As such, regardless of the amount of the said transaction, you will not be subject to the VAT and consequently from the creditable VAT or to the 3% percentage tax under Section 116, in relation to Section 109 (V) of the same Code. (BIR Ruling No. DA-078-07 dated February 8, 2007 citing DA-370-2005) In view thereof, the medical, dental and other health services rendered by AMAI to the U.S. military retirees are exempt from the payment of the value-added tax/creditable value-added tax and from the 3% percentage tax. However, the medical, dental and other health services rendered by medical practitioners who are not employees of AMAI are subject to the 12% value-added tax, provided that the gross receipts derived by the said medical practitioners from the aforesaid services exceed the threshold of P1.5M as provided for under Section 109 (V) of the Tax Code of 1997, as amended. The medical practitioners whose gross receipts exceed the threshold are required to register as VAT registered persons and are required to issue VAT receipts for the medical services rendered. EcICSA This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service