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RMC No. 21-2005: Circularizes the guidelines and policies for sourcing, pooling and distribution of Philhealth “Common Fund” in Department of Health (DOH) Hospitals and other Government Clinics and Hospitals

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Summary

RMC No. 21-2005 circularizes the guidelines and policies on sourcing, pooling and distribution of the Philhealth Common Fund in DOH hospitals and other government clinics and hospitals.

Key points

  1. Basis. The Circular implements Item N, Section 52, Rule VIII of the IRR of Republic Act No. 7875, the National Insurance Act of 1995. Professional fees of salaried public health providers may be retained by the health care institution for pooling and distribution among health personnel, in a manner it decides and kept in a trust account.
  2. No expanded withholding tax on the common fund. Professional fees paid by Philhealth and kept in the common fund are not subject to 10% expanded withholding tax. The payor and recipient are both government entities without proprietary function, and the income is paid in the name of the public health institution.
  3. Philhealth requirements. Philhealth issues a Certificate of Income Payment Not Subject to Withholding Tax (BIR Form No. 2304) and includes it in its Annual Information Return submission to the BIR.
  4. Distribution to personnel. On distributing their share to medical and non-medical personnel, public health institutions withhold tax on compensation, issue BIR Form No. 2316 and submit the Annual Information Return. The share forms part of compensation income for the taxable year.
  5. Other Philhealth disbursements. Disbursements other than additional compensation to public health workers are subject to expanded withholding tax under Section 2.57.2(N) of RR No. 2-98, as amended. The rates are 1% on purchases of goods and 2% on purchases of services not covered by other withholding tax rates.

Who is affected

  • DOH hospitals and other government clinics and hospitals
  • Salaried public health providers
  • Philhealth

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.

Related issuances

CitesRR No. 02-98

Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.