Taxation

Why doctors should register with the BIR

Do doctors really need to register, and what does it take?

When you get your PRC license, you may start to exercise your profession. Most doctors do this, commonly by moonlighting, working as a consultant, or being engaged by the government under a Contract of Service or Job Order. These avenues are covered by the Tax Code, and this article explores the reasons why doctors must register with the BIR and acquire their Certificate of Registration (COR).

Why it is needed

Here are two relevant sections of the Tax Code:

Section 236

Every person subject to any internal revenue tax, and that includes doctors, must register with the right Revenue District Office (RDO) and secure a Tax Identification Number (TIN).

Section 237

Everyone in business or in professional practice, doctors included, must issue a registered invoice for each sale of goods or service.

Registration gives you a taxpayer record for your practice, a Certificate of Registration, registered books, and the right to issue a valid service invoice that your patients and payors can use. Without it, you cannot issue a proper invoice, hospitals and HMOs cannot pay you the right way, and the longer you wait, the more you may owe later.

Reference: Sections 236 and 237 of the National Internal Revenue Code, as amended.

Who is required

Any doctor who earns income on their own, outside of pure employment. Employment and professional engagement are two different things, and you can read more about that here. If you are engaged professionally, such as a consultant, a moonlighter, a doctor in private practice with your own clinic, or in government service under a Contract of Service or Job Order, you are working as a professional and need to register with the BIR. Hospitals, clinics, and government institutions will usually also ask you for your Certificate of Registration and your Sworn Declaration.

Employment vs professional engagement →

Required to register

Consultants
Moonlighters
Doctors in private practice with their own clinic
Government service under a Job Order or Contract of Service

Not required

Income purely from employment

Usually a plantilla post, or any role where mandatory benefits are deducted (SSS or GSIS, PhilHealth, and Pag-IBIG).

How the BIR keeps track of your income

Most of the places you work with, hospitals, clinics, and institutions, will withhold a part of your pay as tax. For example, on a ₱50,000 fee they may hold back 5% or 10%. You receive the rest, and the amount they withheld is sent to the BIR together with your tax information. That is how the BIR sees how much you earned. So once tax has been withheld from your fees, you can assume the BIR already has a record of your income, and may review it at any time.

Your professional fee

₱50,000

↓

The clinic withholds

5% or 10%

this example uses 10%

↓

Goes to you

₱45,000

your take home pay

Goes to the BIR

₱5,000

with your tax information

This is how the BIR knows how much you earned.

What happens if you do not comply

If the BIR finds out, practicing as a professional without registering carries penalties, which can include surcharges and interest on the tax you should have paid. Because your payors already report your income, the BIR can go back and bill you for years you never filed. And without registration you cannot issue a valid service invoice, so hospitals and companies find it hard to pay you. Registering on time is always cheaper than registering late.

Ready to register?

When you are ready to register with the BIR, here is an article that walks you through exactly how to do it.

How to register with the BIR →