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Understanding New Regulations on Creditable Withholding Tax: A Guide for Our Healthcare Providers
Understanding New Regulations on Creditable Withholding Tax: A Guide for Our Healthcare Providers

BIR Regulations on creditable withholding tax

Dennis S. avatar
Written by Dennis S.
Updated over a week ago

As of April 15, 2024: Deadline for compliance as been moved to July 14, 2024

Source: Revenue Memorandum Circular No. 55-2024

What is the new tax regulation?

The Bureau of Internal Revenue or BIR has introduced a new tax regulation (Revenue Regulation No. 16-2023) that specifically applies to payments facilitated within electronic marketplace operators.

Electronic Marketplace Operators such as SeriousMD/NowServing will be required to withhold 1% on one-half of the gross remittances to users of the platform starting April 1, 2024

Why does this affect SeriousMD/NowServing?

SeriousMD/NowServing is considered an online marketplace, which falls within the new regulations on creditable withholding taxes.

Compliance is mandatory, and it is crucial for maintaining transparency and accountability in digital transactions.

What documentation is required?

To ensure compliance with the new BIR regulations, we're requesting all doctors that bill through the platform (via paywall/manual billing/document billing) to provide necessary information and to upload their BIR Form 2303 - Certificate of Registration.

This documentation is necessary for us to fulfill our obligations as an electronic marketplace operator and to correctly calculate the Withholding Tax to be applied.

Withholding Tax

The BIR has mandated us to withhold 1% on 1/2 of the gross remittances (payment we received on your behalf from patients) to you.

From Revenue Regulation No. 16-2023
"On one-half (1/2) of the gross remittances by e-marketplace operators and digital financial services providers to the sellers/merchants for the goods or services sold/paid through their platform/facility. - One percent (1%)"

Understanding Tax Withholdings

It's important to note that the Withholding Tax calculation depends on whether you are VAT registered or Non-VAT registered. This can be determined within your BIR Form 2303 - Certificate of Registration under Tax Type.

To give you a clear picture of how the Withholding Tax is calculated within the platform, let's explore different scenarios based on the billing practices of three doctors.

*The Withholding Tax is only applicable to payments received thru the platform.

Scenario 1: Dr. Dela Cruz Paywall Billing

Dr. Dela Cruz operates a clinic, one online and one (F2F) physical, both with paywall enabled.

Consultation Fee via Paywall: ₱1,000

Amount Paid by Patient: ₱1,125 (including service fee of ₱125)

Non-VAT user

Withholding Tax: ₱1,000*0.5% = ₱5

Amount to be Paid Out = ₱1,000 - ₱5 = ₱995

VAT Registered user

Withholding Tax: (₱1,000/1.12)*0.5% = ₱4.46

Amount to be Paid Out = ₱1,000 - ₱4.46 = ₱995.54

Scenario 2: Dr. Dela Cruz Manual Billing

Dr. Dela Cruz bills a patient via Manual Billing thru the system.

Manual Billing Amount: ₱500

Amount Paid by Patient: ₱600 (including ₱100 service fee)

Non-VAT user

Withholding Tax: ₱500*0.5% = ₱2.50

Amount to be Paid Out = ₱500 - ₱2.50 = ₱497.50

VAT Registered user

Withholding Tax: (₱500/1.12)*0.5% = ₱2.23

Amount to be Paid Out: ₱500 - ₱2.23 = ₱497.77

Scenario 3: Dr. Dela Cruz Document Billing

Dr. Dela Cruz bills a patient for a Medical Certificate using Document Billing.

Document Billing Fee: ₱250

Amount Paid by Patient: ₱337.50 (including ₱87.50 service fee)

Non-VAT user

Withholding Tax: ₱250*0.5% = ₱1.25

Amount to be Paid Out = ₱250 - ₱1.25 = ₱248.75

VAT Registered user

Withholding Tax: (₱250/1.12)*0.5% = ₱1.12

Amount to be Paid Out: ₱250 - ₱1.12 = ₱248.88

BIR Form 2307 - Certificate of Creditable Tax Withheld

At the end of every quarter, we will generate a BIR Form 2307 - Certificate of Creditable Tax Withheld At Source for you.

Exemptions to the New Withholding Tax Regulation

The BIR has allowed exemptions to this new regulation if you meet the following criteria:

The gross remittances from the sale of services and goods by Electronic Marketplace Operators do not exceed Five Hundred Thousand Pesos (₱500,000.00).

Should you meet this qualification, kindly accomplish and upload a Sworn Declaration of Gross Remittances in your profile area here. Template can be found below.

Frequently Asked Questions

  1. I haven't registered with BIR yet. How do I do this?

    • You may inquire on how to process your Form 2303 by going to an RDO (Regional/District Office) near you.

  2. I don't have a physical clinic, should I even register with BIR?

    • Absolutely! Regardless of whether you have a physical clinic or not, all professionals are required to register with the BIR. This includes those without any income from private practice.

  3. Will I be getting a BIR Form 2307 from you?

    • Yes! An automated copy of BIR Form 2307 (Certificate of Creditable Tax Withheld At Source) will be generated and supplied to you quarterly.

  4. Am I required to submit the sworn declaration?

    • Submitting the sworn declaration is completely optional.

      If your annual gross remittances from electronic marketplaces does not exceed 500k and you won't be submitting the sworn declaration, we will be withholding 0.5% of the amount you bill your patients online.

      If you submit, then we will not withhold 0.5%. The exemption is up to Php500,000 gross income, so the maximum that you will be saving would be Php500,000 x 0.5% = Php2,500 in withholding tax.

      The Sworn Declaration requires you to print this out, have it notarized, go to your BIR RDO for the Php30 Doc Stamps, and then send us a hardcopy of the document along with uploading a soft copy in your account.

  5. I have yet to process my Certificate of Registration/BIR Form 2303. What will happen to my payout?

    • Non compliance (meaning no submission nor a response) will lead to having your payouts be on hold until further notice.

      Note: Payouts will be on hold starting July 14, 2024.

  6. I don’t bill my patients through the platform, how am I affected?

    • If you don't bill your patients through the platform, these regulations do not apply to you. The new BIR requirements specifically pertain to doctors who bill through our platform.

  7. What if I bill thru the platform but don't want to provide the above requirements?

    • You may still bill thru the system. However, the payouts will be held until we receive the requirements above. Simply submit your 2303 here in your profile area.

  8. Can you help me with registering with the BIR?

    • Yes. We have partners that we can refer you to, to help you with BIR registration. Please get in touch with us for referrals or questions.

  9. I have a sworn declaration to exempt me from withholding taxes, where can I submit it?

  10. What does a sworn declaration look like? Is there a template?

    • Here is an example. It will need to be stamped and verified by your BIR RDO.

  11. What is NowServing Paywall?

    • NowServing paywall is an option in your clinic settings wherein patients pay your consultation fee upon booking with you. 😄

      You will know if your paywall is enabled if you go to Clinics > Edit

  12. What is manual billing?

    • Manual billing is similar to NowServing paywall where you can bill patients online for

  13. I have yet to get my BIR Form 2303. What if I don't have it by April 1, 2024?

    • You may still continue to use SeriousMD, but we will hold the payouts until you can submit the necessary documents.

  14. If my total annual gross sale is less than 500K, can we execute the sworn declaration and submit it to you?

    • Yes! Take note that the annual gross sales that we are looking at is just from digital platforms like SeriousMD and NowServing.

  15. How do I know if i am VAT or non-VAT registered?

    • No worries, just upload your form 2303 and we can help make that distinction for you.

  16. Who is responsible for issuing Official Receipts (ORs) on SeriousMD/NowServing?

    • Doctors and healthcare providers are responsible for issuing ORs directly to patients for the payments they receive. SeriousMD/NowServing only issues ORs for the service fee charged within the platform.

  17. When is withholding tax reported in Form 2307?

    • Withholding tax applied by SeriousMD is processed at the time of payout to you, and Form 2307 reflects the withholding tax for the respective quarter, aligning with the timing of payouts and tax reporting.

  18. Since you're generating the 2307 form to me, do we have to issue an OR to you?

    • When we issue you a 2307 for the withholding, you don't need to issue an OR to us. Your only obligation for the OR would be to the patient. We also will issue ORs for the service fee directly to the patient.

  19. How is withholding tax applied to payouts received through SeriousMD/NowServing?

    • You receive their professional fees through SeriousMD, with a withholding tax of 0.5% applied to these payouts. Exemptions may apply, and the withholding tax is reflected in the 2307 form issued by SeriousMD/NowServing to doctors.

  20. Could you assist me in finding someone who can support me with the processing of my Certificate of Registration?

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