RMC No. 38-2011: Clarifies the application of Expanded Withholding Tax on the payments of PHIC to medical practitioners and/or hospitals pertaining to PHIC members’ benefits

Key points

1. PHIC must withhold. Under Section 2.57.3 of RR No. 2-98, the person who controls the payment and claims the expense withholds the tax. PHIC, having control of the payment, must withhold on income payments to professionals, including medical practitioners.
2. Fees to practitioners. Under Section 2.57.2(A) of RR No. 2-98, as amended, professional fees bear EWT of 10% if the professional’s gross income does not exceed P720,000 in a year, or 15% if it exceeds P720,000.
3. Facility fees. Facility fees paid to hospitals or clinics bear EWT of 2% under Section 2.57.2(N) of the same RR.
4. Basis of rates. PHIC sets benefits as a pre-approved amount per case, so it can identify the professional fee and the facility fee (medical procedures, room and board, pharmacy). The rate for each payment applies.

Who is affected

• Philippine Health Insurance Corporation (PHIC)
• Medical practitioners
• Hospitals and clinics