Enterprise Providing Hospital Services is Not an Independent Contractor

August 31, 1987 BIR RULING NO. 250-87 170 208-86 250-87 Gentlemen : This refers to your letter dated July 15, 1987 requesting, in effect, confirmation of your opinion that you are not an independent contractor and hence not subject to the 4% contractor's tax under Section 170 of the Tax Code, as amended. It is represented that you are engaged in the pursuit of providing comprehensive and integrated medical and preventive health care services, facilities and assistance to member-individuals, group of individuals, associations, firms and corporations; that you have established and maintained clinics where members come for medical consultation and where it dispenses such medical care and treatment of the ailments and/or diseases of its members; that in Metro Manila, you have clinics in Gammon Centre Building in Makati, De los Santos Medical Center, Perpetual Help Medical Center; Philamlife Building in U.N. Avenue, Medico Building in Pasay City and in thirty nine (39) other affiliated hospitals in the entire Philippines. In reply, please be informed that your opinion is confirmed. This Office has ruled that a hospital, the primary function of which is that of being a place of confinement where sick and injured persons received medical care as patients requiring bed, board and other medical services, does not fall within the purview of the term "independent contractor" under Section 170 of the Tax Code, as amended. (BIR Ruling dated June 20, 1973) Hospital services do not consist essentially of all kinds of services for a fee but merely ancillary, supplementary and incidental to the medical care and treatment of patients. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner