Withholding Tax on Professional Fees of Doctors in Philippines

withholding tax of doctors in PhilippinesBy: Tax and Accounting Center Philippines

Revenue Regulations (RR) No. 14-2013 (RR No. 14-2013) dated September 20, 2013 was issued to further amend the provisions of RR 2-1998, as last amended by Revenue Regulations No. 30-2003 and Revenue Regulations No. 17-2003, relative to the application of the following expanded withholding tax on professional fees of medical practitioners or doctors in the Philippines:

  • 10% if annual gross income does not exceed P720,000; or
  • 15% if annual gross income exceeds P720,000

Medical practitioners or doctors refers to those accredited by the hospitals, clinics, and health maintenance organizations (HMOs) as independent parties practicing their medical profession and not under employer-employee of the hospital, clinic, HMO or similar establishment. As such, they are subject to expanded withholding tax in the Philippines and not to withholding tax on compensation. Notably, RR No. 14-2013 provides for the following rules:

Responsibility of hospitals,  clinics, HMOs and others  to withhold

It shall be the duty and responsibility of the hospitals, clinics, HMOs and similar establishments to withhold and remit taxes due on the professional fees of their respective accredited medical practitioners, paid by patients who were admitted and confined to such hospitals, and clinics. They must ensure that correct taxes due on professional fees of doctors have been withheld and timely remitted to the Bureau of Internal Revenue (BIR) using BIR Form No. 1601-E on a monthly basis.

Direct payment of patients not allowed

Hospitals and clinics shall not allow their medical practitioners to receive payment of professional fees from patients who were admitted and confined to such hospital and clinics. Rather, the fees must be included in the total billings to the patient of the practitioner which shall be payable directly to the hospital or clinic. This is imposed as a control to ensure that payments of patients for professional fees of doctors will be subjected to withholding tax.

Joint Affidavit if no professional fees collected

If the doctor did not charge professional fees, there should be no withholding tax. To establish such fact for tax purposes, the doctor who did not charge professional fee and the patient or his authorized representative, must jointly execute a sworn declaration (Annex “A” in RR 14-2013. If the medical practitioner fails or refuses to execute a sworn statement, the hospital or clinic shall inform the Revenue District Office of the fact within ten (10) days from such incident.

 Quarterly Report of hospitals and clinics

Hospitals and clinics shall submit the list of names and addresses of medical practitioners in prescribed format of the BIR every 15th day after the end of calendar quarter with the following details:

  • Medical practitioners or doctors whose professional fees was paid by the patients directly to the hospital or clinic.
  • Medical practitioners or doctors who did not charge any professional fee from their patients

The list in prescribed BIR format shall be submitted to the BIR – Collection Division of the Revenue Region for non-large taxpayer, or for large taxpayers, to Large Taxpayer Document Processing and Quality Assurance Division (LTDP & QAD) or to the Large Taxpayers District Office of registration. Failure to submit is subject to penalties.

Updated List of Accredited Doctors

All hospitals and clinics shall submit a sworn statement executed by the the president of the corporation or managing partner of the company with the complete and updated list of medical practitioners accredited with them in three (3) copies (2 copies for BIR and 1 copy for the hospital or clinic).

BIR Forms and Submissions

Based on the above obligations under RR No. 14-2013, the following list of BIR forms and submissions of hospitals, clinics, HMOs and similar establishments could be summed-up and enumerated:

  1. Monthly BIR Form No. 1601E for withholding tax of doctors ;
  2. Monthly Alphalist of Payees with list amount withheld from professional fees of doctors;
  3. Quarterly BIR Form No. 2307 to doctors and medical practitioners;
  4. Annual BIR Form No. 1604-E for the summary of monthly BIR Form No. 1601-E;
  5. Annual Alphalist of Payees with consolidation of monthly withholding taxes on professional fees;
  6. BIR prescribed Quarterly List of doctors directly paid by patients, and those who did not charge fees;
  7. Sworn declaration on the complete and updated list of accredited medical practitioners;

It should be noted that a penalty is imposed for each failure to file the above form and submissions.


This regulation shall be effective on October 1, 2013 and hospital, clinics, HMOs and similar establishments are advised to coordinate with the BIR office of registration for the corresponding compliance.


RR No. 14-2013 is a new measure of the BIR to ensure tax compliance on the medical field by imposing more obligations on the part of hospitals, clinics, HMOs and similar establishments dealing with the medical practitioners. Such reports are intended for a more transparency on the amounts of professional fees paid to doctors and medical practitioners to encourage them to report such income and pay the corresponding taxes due thereon. As such, we would highly recommend that hospitals, clinics, HMOs and similar establishments to comply with the above, and for the doctors and medical practitioners to also abide by the tax rules. It should be bear in mind the each failure is subject to penalty that may cost a fortune through times, or worst the professional career.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. 

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