RMC No. 49-2011: Further clarifies RMC No. 38-2011 on Expanded Withholding Tax obligation of Philippine Health Insurance Corporation (PHIC), including the Income Tax withholding obligation of hospitals/clinics on case rates of PHIC and the matter of 5% Final Withholding VAT for government money payments

Key points

1. Scope of RMC No. 38-2011. RMC No. 38-2011 covers only Income Tax withholding (EWT) on PHIC payments for medical benefits where payments are made separately to the practitioners and the hospital or clinic.
2. Case rate paid to the facility. For cases and procedures where the entire case rate is paid directly to the facility under the New PhilHealth Case Rate (PhilHealth Circular Nos. 011-2011, 011-A-2011 and 011-B-2011), EWT of 2% applies on the entire case rate payment.
3. Facility withholds on doctors. The hospital, clinic or facility controls the fund. It must withhold the 10% or 15% EWT on professional fees paid to doctors or medical practitioners.
4. 5% withholding VAT. PHIC must comply with the 5% withholding VAT on government money payments under Revenue Regulations No. 16-2005. Section 109(G) of the Tax Code exempts only medical, dental, hospital and veterinary services, except those rendered by professionals, so PHIC withholds 5% VAT on payments to professionals and other non-exempt facilities.

Who is affected

• Philippine Health Insurance Corporation (PHIC)
• Hospitals, clinics and facilities
• Doctors and medical practitioners