RMC No. 39-2010: Directs the Revenue District Offices to verify the VAT Compliance of Health Maintenance Organizations

Key points

1. VAT base of HMOs. The taxable base is gross receipts with no deduction for medical utilization, such as medical and dental fees, hospital bills, laboratory fees and professional fees. This is as already clarified in Revenue Regulations No. 16-2005, as amended.
2. Gross receipts defined. Gross receipts are the total service fee actually or constructively received in the taxable period for services performed or to be performed, excluding VAT. The fee is presumed to be the total enrollment amount from members plus other charges.
3. Returns monitored. Monitoring covers VAT returns filed from the month or quarter ending June 30, 2010 through the month or quarter ending December 31, 2010. The BIR may still verify prior years’ returns and impose VAT on gross receipts.
4. Limits on RDO action. RDOs verify without a Letter of Authority or Tax Verification Notice and may only issue a reminder notice to non-complying HMOs. Any other action, such as an LOA/TVN or Assessment Notices, is referred to the Commissioner for approval.

Who is affected

• Health Maintenance Organizations (HMOs)
• Revenue District Offices

Deadlines and effectivity

• VAT returns for the month/quarter ending June 30, 2010 to December 31, 2010 are monitored