BIR requires professionals to disclose fees

MANILA, Philippines - Tightening its leash on self-employed individuals, the Bureau of Internal Revenue (BIR) will require doctors, lawyers, dentists and others practicing a profession to fully disclose their fees.

Internal Revenue commissioner Kim Henares said the agency would be issuing a memorandum circular, requiring professionals to post their rates in their offices and clinics as part of efforts to promote transparency and boost revenue collections.

Also considered professionals are accountants, engineers, architects and real estate brokers.

The move follows complaints received by the agency against several doctors who have been charging exorbitant or additional fees when they are asked by patients to issue an official receipt.

 â€œWithholding tax and value-added tax should be incorporated in the professional fee. These taxes are not on top of it,” Henares said.

Henares noted that all professionals are mandated to issue receipts or invoices that are printed only by accredited printers of the BIR.  This is intended to prevent individuals from under-declaring gross earnings.

The receipts should indicate the taxpayer’s registered name, date of transaction, description of service, total cost and serial number of the invoice.

Henares said the issuance of receipts is part of government efforts to ensure that professionals pay their respective income taxes.

Henares said those who will be found guilty of evading taxes face imprisonment and other criminal sanctions as provided under the Tax Code.

Based on BIR documents, there were 1.8 million professionals registered with the agency but only about 403,000 of them paid taxes.  The average payment received from them amounted to P33,000 a year.

Collections from self-employed individuals and professionals accounted for only 6.8 percent of individual income taxes last year.

The Finance Department and BIR aim to increase average tax payments to P200,000, which  will translate to a two percent increase in the country’s ratio of tax to gross domestic product by 2016.

For this year, the BIR is eyeing a 16.4-percent growth in its individual income tax collection to P258.14 billion from the previous year’s P221.77 billion.