Clinic Specializing in Services Ancillary, Supplementary and Incidental to a Hospital's Function Not Subject to Contractor's Tax

December 19, 1986 BIR RULING NO. 281-86 170 208-86 281-86 Gentlemen : This refers to your letter dated October 29, 1986 stating that your clinic services do not consist essentially of the sale of all kinds of services for a fee but are merely ancillary supplementary and incidental to the medical care and treatment of a patient; that you do not provide bed space, nurses and such other personnel; that your patients see you on an outpatient basis although those requiring hospitalization are hospitalized; and that you now request exemption from the 4% contractor's tax under Section 170 of the Tax Code, as amended. In reply, please be informed that your request is granted. 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 receive medical cure 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 the sale of all kinds of services for a fee, but are merely ancillary, supplementary and incidental to the medical care and treatment of a patient. Hence, your clinic which specializes in medical consultation, care and treatment of disease which are ancillary, supplementary and incidental to the function of a hospital is not subject to the 4% contractor's tax under Section 170 of the Tax Code, as amended. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue