RR No. 2-2019: Implements the imposition of Excise Tax on Non-Essential Services introduced by RA No. 10963 (TRAIN Law)

Key points

1. Tax and base. A five percent (5%) Excise Tax applies on gross receipts, net of Excise Tax and VAT, from invasive cosmetic procedures, surgeries and body enhancements directed solely at improving appearance. For the VAT base, gross receipts include the 5% Excise Tax.
2. Exclusions. Procedures to correct a deformity from a congenital or developmental defect, an accident or trauma, or a disfiguring disease, tumor, virus or infection are not taxed. Cases and treatments covered by the National Health Insurance Program and Non-Invasive Cosmetic Procedures are also excluded.
3. Return and payment. BIR Form No. 2200-C is filed monthly with the Monthly Summary of Cosmetic Procedures Performed (Annex B), and the tax is paid within ten (10) days following the close of the month. It is filed with an Authorized Agent Bank, or the Collection Agent outside the NCR where there is no accredited AAB, and a nil return is still filed.
4. Official receipts and ledger. Every taxpayer issues an Official Receipt, shows VAT separately, indicates discounts, and states Exempt from Excise Tax where applicable. A subsidiary ledger records each service with the patient name, TIN, OR details, procedures, gross receipts, 5% Excise Tax, 12% VAT and total collected.
5. Registration. Taxpayers register as Excise Taxpayer for Invasive Cosmetic Procedures on or before March 31, 2019, and update their Certificate of Registration using BIR Form 1905. Excise Tax on procedures performed starting January 1, 2018 may still be collected.
6. Non-invasive providers and penalties. Providers of only non-invasive procedures submit a Sworn Statement, signed by the President/CEO for juridical entities. Violations bring penalties under Sections 250, 251 and 255 of the NIRC and RMO No. 7-2015, and willful evasion under Section 254 carries a fine of not less than ₱500,000.00 but not more than ₱10,000,000.00 and imprisonment of six (6) to ten (10) years.

Who is affected

• Persons and entities performing invasive cosmetic procedures
• Clinics and hospitals performing cosmetic procedures
• Providers of non-invasive cosmetic procedures

Deadlines and effectivity

• Return and payment within 10 days following the close of the month
• Registration on or before March 31, 2019
• Excise Tax collectible on procedures from January 1, 2018