Revenue Regulations No. 5-2017

Revenue Regulations (RR) No. 5-2017 outlines the tax treatment of the sale of services, including professional services of doctors, subject to Value-Added Tax (VAT) or Percentage Tax. The key points are:


VAT Threshold
Doctors with annual gross sales or receipts exceeding PHP 3 million must register as VAT taxpayers and charge 12% VAT on their professional services, unless their services are exempt from VAT.

Percentage Tax
Doctors with annual gross sales or receipts of PHP 3 million or less may choose to be non-VAT registered taxpayers. Instead of VAT, they must pay a 3% percentage tax on their gross sales or receipts.

VAT-Exempt Services
Certain medical services are exempt from VAT, such as those rendered by medical practitioners in hospitals, clinics, or other similar establishments, as well as services provided by health maintenance organizations (HMOs). However, doctors offering these services must still adhere to other applicable tax requirements.

Invoicing and Receipt
Doctors must issue VAT sales invoices or official receipts for their professional services, with the applicable VAT or percentage tax indicated separately.

Filing and Payment
VAT and percentage tax returns must be filed and paid on a monthly or quarterly basis, depending on the taxpayer’s classification and the applicable tax type.


BIR Reference:
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