Briefing On Republic Act (RA) 10963: Tax Reform For Acceleration and Inclusion (Train) - Invasive Cosmetic

Briefing on Republic Act (RA)
10963: Tax Reform for

Acceleration and Inclusion
(TRAIN) – Invasive Cosmetic
Procedure (Section 150A of the
Tax Code)
2
1. Plastic Surgery - refers to a surgical

Definition specialty dedicated to reconstruction of
of Terms facial and body defects due to birth
disorders, trauma, burns, and disease.
It intends to correct dysfunctional areas
of the body and is reconstructive in
nature.
TRAIN Briefing – Cosmetic Procedure

VER 1.0 – January 2018
3
2. Cosmetic Surgery - refers to a type of plastic

surgery that aims to improve a person’s
appearance, through invasive cosmetic
Definition procedures, surgeries, and body
of Terms enhancements directed solely on improving,
altering, or enhancing the person’s
appearance and do not necessarily promote
the proper functions of the body or prevent or
treat illness or disease.

4
3. Reconstructive Surgery shall refer to

another type of plastic surgery which
aims to improve function and give a
Definition normal appearance to a part of a
of Terms person’s body that has been damaged,
ameliorate a deformity arising from, or
directly related to, a congenital or
developmental defect or abnormality, a
personal injury resulting from accident
or trauma, or disfiguring disease, tumor,
virus or infection.
5
4. Invasive Cosmetic Procedure - refers to a

surgery that is carried out by entering the
Definition body through the skin or through a body
cavity or anatomical opening, but with the
of Terms
smallest damage possible to these
structures. Invasive Cosmetic Procedures
shall include, but not be limited to the
following:

6
Invasive Cosmetics Procedures
1. Liposuction
Definition 2. Mammoplasty
of Terms 3. Breastlift
4. Buccal Fat Reduction
5. Buttocks Augmentation

7
6. Chin Augmentation
7. Facelift/Necklift
Definition
8. Thread Lift
of Terms
9. Hair Restoration/
Transplantation
10. Eyelid Surgery

8
11. Vaginal Plastic
Surgery
Definition 12. Abdominoplasty or
of Terms Tummy Tuck
13. Auto Grafting
14. Rhinoplasty/ Alar
Trimming
15. Otoplasty

9
5. Non-Invasive Cosmetic Procedure - refers

to a conservative treatment that does not
require incision into the body or the
Definition removal of tissue, or when no break in the
of Terms skin is created and there is no contact
with mucosa, or skin break, or internal
body cavity beyond a natural or artificial
body orifice. Non- Invasive Cosmetic
Procedures shall include, but not be
limited to the following:

10
Non-invasive Cosmetics Procedures
1. Acupuncture Rejuvenation
Therapy
Definition 2. Air Dissector
of Terms 3. Botulinum Toxin
Injection/Treatment
4. Collagen Induction Therapy
5. Dermal Fillers (Crosslinked and
Non-Crosslinked)
6. Embedded Protein Threads
11
7. Non-surgical facelifting &
skin tightening using
radio frequency,
Definition ultrasound, infrared
of Terms 8. Fractional CO 2
9. Lasers and Light
Treatments
10.Body Treatments and
Contouring Procedures

12
11. Cleanings and

Definition Facials
of Terms 12. Peelings (Face and
Body)
13. Injectables and
Weight
Management
Treatment

13
Rate and Base of Excise Tax
Rate = five percent (5%)
Coverage,
Tax Base = Gross Receipts, net of excise tax
Nature, Basis and VAT
and Rate of
Excise Tax Coverage = invasive cosmetic procedures,
surgeries and body enhancements directed
solely towards improving, altering, or enhancing
the patient’s appearance and do not
meaningfully promote the proper function of the
body or prevent or treat illness or disease.
14
1. Non-invasive cosmetic procedures and

surgeries necessary to ameliorate a deformity
arising from or directly related to,
 congenital or developmental defect or
Exclusion abnormality,
 personal injury resulting from an accident
or trauma,
 disfiguring disease, tumor, virus or
infection
2. Cases or treatments covered by the National
Health Insurance Program

15
Rate and Base of Excise Tax
 “Gross Receipts” means the total amount of money
or its equivalent representing the contract price
Coverage, including deposits applied as payments for services
Nature, Basis rendered and advance payments actually or
and Rate of constructively received for services performed or to
Excise Tax be performed for another person
 “Constructive Receipt” occurs when the money

consideration or its equivalent is placed at the
control of the person who rendered the service
without restrictions by the payor/customer. Also
covers exchange deal arrangement.
16
Persons Liable to File a Return
Any person, whether individual or juridical entity,
Filing of performing invasive medical/cosmetic
Returns and procedures, surgeries, body enhancements
Payment of directed solely on improving, altering, or
Excise Tax enhancing the patient’s appearance and do not
on Invasive meaningfully promote the proper functions of the
Procedures body or prevent or treat illness.

17
Nature and Characteristic of
Excise Tax
Filing of An excise tax is considered an indirect tax,
Returns and meaning that the service provider who is
Payment of the statutory bearer of the said excise tax
Excise Tax is expected to shift the tax by billing the
on Invasive same to the customer-client.
Procedures

18
Nature and Characteristic of Excise Tax
Excise taxes are typically imposed in addition to
another indirect tax such as VAT. The service
Filing of provider is hereby authorized to act as
Returns and withholding agent for the five percent (5%) excise
Payment of tax billed and is ultimately liable to remit the
Excise Tax excise tax collected from the client/customer.
The five percent (5%) excise tax to be withheld
on Invasive and remitted is based on gross receipts net of
Procedures VAT and is considered final and no adjustment
shall be allowed to be made by the statutory
bearer of the said excise tax.

19
Manner of Remittance of Excise Tax
Under existing rules on goods subject to

Filing of
excise taxes, the excise tax return is
Returns and
required to be filed and the excise tax
Payment of
paid by the manufacturer or producer of
Excise Tax
the goods before removal from the place
on Invasive
of production.
Procedures

20

However, Section 150-A (Non-Essential
Filing of Services) of the Tax Code involves performance
Returns and of medical/cosmetic services and not goods,
Payment of hence, an innovative remittance scheme is
Excise Tax hereby employed under which the seller of
on Invasive services/service provider collects the five percent
Procedures (5%) excise tax from its client/customer and
remits the same to the Bureau based on gross
receipts, net of VAT.

21

This practice outlines the circumstances when the
Filing of withholding tax obligation in respect of payment is
Returns and reversed and placed on the recipient of the
Payment of payment instead of the payor, as an exception to
the existing tax rules on withholding on income
Excise Tax payments for good and services. This concept of
on Invasive withholding tax reverse charge obligation on
Procedures payments is herein prescribed for administrative
expediency.

22

In cases where no service subject to excise tax is
Filing of performed and there are no payments received, the
Returns and Monthly Remittance Return of Final Withholding of
Payment of Excise Tax shall still be filed with Excise Large
Taxpayers Field Operations Division (ELTFOD) for
Excise Tax
Large Taxpayers/Revenue District Office for
on Invasive taxpayers in the National Capital Region
Procedures (NCR)/Excise Tax Area (EXTA) in Regional Offices
for taxpayers outside NCR.
Taxpayers filing via EFPS shall comply with the
provisions of the EFPS Regulations.
23
Invoicing Requirements
Every person subject to excise tax herein

imposed shall issue:
Administrative
Requirements 1. An Official Receipt for services
performed whether invasive/non-
invasive.
2. The following information shall be
indicated in the Official Receipt:

24
The total amount which the patient/client pays or is
obligated to pay to the service provider including the
excise tax and value added tax: Provided, that:
Administrative  The amount of excise tax shall be shown as a
Requirements separate item in the OR;
 Discounts given shall be indicated in the OR,
otherwise the same shall not be allowed as
deduction from gross receipts;
 If the procedure performed is non-invasive
and considered exempt from excise tax, the
term Exempt from Excise Tax shall be shown
on the OR;
25
 If the services performed involved both invasive
(excisable) and non-invasive (exempt from excise
tax) procedures, the receipt shall clearly indicate
Administrative the breakdown of the amount received between its
Requirements taxable and exempt components and the
calculation of excise tax on each portion of the
procedure performed shall be shown on the
receipt:
 Provided, that the service provider may issue
separate ORs for the excisable and exempt
components of the services rendered.
Illustration
26
To improve her body shape, Starlet S

engaged the services of Dok Salamat, a
Administrative well-known cosmetic surgeon in the
Requirements country, to perform a liposuction procedure
on her thighs, and Dok Salamat charged
Starlet S the amount of P50,000.00
inclusive of 12% VAT for the services
rendered.

Based on the foregoing, the 5% excise tax shall be computed, as follows:
Contract Price (inclusive of 12% VAT) (50,000/112%) P 50,000.00

Price (net of 12% VAT) (Excise Tax Base) P 44,642.85
Add: 5% excise tax (44,642.85 x 5%) 2,232.15*
12% VAT (44,642.85 x 12%) 5,357.15
Total Amount to be Collected from Customer P 52,232.15
*Represents the excise tax to be withheld and remitted by the service

provider to the BIR
A sample Official Receipt is shown in Annex B hereof.

28
Accounting Entries
CASH 52,232.15
Administrative
Requirements FWT-EXCISE TAX 2,232.15
OUTPUT TAX 5,357.15
SERVICE INCOME 44, 642.85

30
Accounting Requirements
Not withstanding the provisions of Section
233, all persons subject to excise tax under
Section 150-A of the Tax Code shall, in
Administrative
Requirements addition to the regular accounting records
required, maintain a subsidiary ledger on
which every service rendered/performed on
any given day is recorded. The subsidiary
ledger shall contain the following information:

31
Accounting Requirements
1. Name of Patient
2. Taxpayers Identification Number
3. Invasive Cosmetic Procedures Performed (indicate if
excisable or not; if not excisable, keep records as proof that
Administrative the procedures are not taxable)
4. Non-invasive Cosmetic Procedures Performed
Requirements
5. Official Receipts Number
6. Gross Receipts Number (net of VAT and 5% excise tax)
7. 5% Excise Tax to be Withheld and Remitted
8. 12% VAT due
9. Total Amount to be Collected from Customer (sum of 6, 7, 8)
10. Remarks (description of cosmetic procedure performed)

32 Violations of these Regulations shall be subject to the
corresponding penalties under Title X of the NIRC, as
amended.
1. Any violation of the provision of this Regulation shall be
subject to the corresponding penalties under Sec. 250
and 255 of the NIRC as amended and RMO 7-2015.
Penalties 2. Any person who willfully attempts in any manner to
evade or defeat any tax imposed under this regulation or
the payment thereof shall, in addition to other penalties
provided by law, upon conviction thereof, be punished
with a fine of not less than P500,000 but not more than
P10 Million, and imprisonment of not less than 6 years
but not more than 10 years. The conviction or acquittal
obtained under this section shall not be a bar to the filing
of a civil suit for the collection of taxes.
33
2. Any person willfully aids or abets in the

commission of any such act or omission shall
be criminally liable in the same manner as
the principal; and
Penalties
3. If the offender is not a citizen of the
Philippines, he shall be deported immediately
after serving the sentence, without further
proceedings for deportation.

34
Except as the Commissioner otherwise permits, the
return shall be filed with and the final excise tax withheld
remitted to any authorized agent bank (AAB) under the
Filing of jurisdiction of the Revenue District Office/BIR Office
Returns and where the taxpayer (Head Office of the business
Payment of establishment) is registered or required to register.
Excise Tax on
Invasive For taxpayers located outside the National Capital
Procedures Region (NCR) and in cases where there are no duly
accredited agent banks within the municipality or city,
Excise Tax due shall be filed and payments made to the
Collection Agent or duly authorized Treasurer of the
Municipality/City where such taxpayer (head office of the
business establishment) is required to be registered.
35
Exceptions
Filing of The Secretary of Finance, upon the

Returns and recommendation of the Commissioner, may, by
rules and regulations, prescribe the manner and
Payment of
time for filing of the return and payment of
Excise Tax excise tax other than as prescribed under
on Invasive Section 130, Chapter I, Title VI of the Tax Code,
Procedures as amended.

36
Time and Place for Filing of Return and
Payment of the Tax
Filing of BIR TIME OF FILING PLACE
FORM AND
Returns and REMITTANCE
Payment of BIR Every 10th of the authorized agent bank (AAB)
Excise Tax FORM following month under the jurisdiction of the
on Invasive 1620- Revenue District Office/BIR
Procedures XC Office where the taxpayer
(Head Office of the business
establishment) is registered or
required to register

37
Time and Place for Filing of Return and
Payment of the Tax
Filing of Submit Summary of Invasive Cosmetic Procedures
Returns and Performed (please refer to prescribed format on Annex
Payment of A hereof) as an attachment to the said form for
submission via email at xcp.attachment@bir.gov.ph.
Excise Tax
on Invasive NAME OF TAXPAYER
"Annex A"
Procedures Monthly Summary of Invasive Cosmetic Procedures Performed

For the Month _______________
COSMETIC
OFFICIAL RECEIPT PROCEDURES AMOUNT COLLECTED
Gross Receipts
(Net of VAT 5% Excise Tax
No. Date PERFORMED /Excise) Withheld 12% VAT Total

38
Application for Permit to Operate
Any person subject to excise tax under
Section 150-A of the Tax Code, as amended,
Administrative shall file an application for a Permit to
Requirements Operate with the Excise LT Regulatory
Division (ELTRD) BIR National Office
(whether Large or Non-Large Taxpayers) not
later than fifteen (15) days from the effectivity
of this Regulations.

39
The application shall be accompanied by the following:
1. Request Letter
Attention: Chief, Excise LT Regulatory Division
Administrative
Requirements 2. Certificate of Securities and Exchange
Commission, together with Articles of Incorporation
and By-Laws (for corporation and partnership) and
Certificate of Registration with the Office of the
Domestic Trade and Industry (for individual)

40
3. Mayor’s Permit
4. BIR Certificate of Registration (with latest
Administrative registration fee BIR Form 0605)
Requirements 5. Latest Copy of Income Tax Return
6. Location Map of Clinics/Hospitals where the
medical professionals/practitioners perform
the services
7. Price list of Invasive/Non-invasive Medical
Procedures

41
Application for Registration
Every person subject to excise tax under Section
150-A of the Tax Code, as amended, shall register
as Excise Taxpayer engaged in the performance of
Administrative Invasive Cosmetic Procedures with the ELTRD for
Requirements Large Taxpayers or with the Revenue District Office
(RDO) for Non-Large Taxpayers where the taxpayer
is required to be registered for updating of
Certificate of Registration. The application for
registration shall be filed within ten (10) days from
the effectivity date of this Regulations.

42
For the effective implementation of the Act, the

following guidelines shall be followed during
the transitory period:
Transitory
1. Taxpayer may continue to use existing
Provision
Official Receipts for a period of six (6)
months. After the said period, taxpayer
must apply for separate sets of Official
Receipts for invasive cosmetic procedures
and non-evasive cosmetic procedures.

43
2. The current Certificate of Registration

(COR) shall be updated to include excise
tax type using BIR Form 1905 and the
Transitory
same shall be issued to the applicant by the
Provision ELTRD for Large Taxpayers and Revenue
District Office (RDO) having jurisdiction of
the applicant for Non-Large Taxpayers in
compliance with the requirements for
registration.

44
3. The BIR Form No. 1620-XC (Monthly

Remittance Return of Final Withholding of
Excise Tax on Cosmetic Procedures) is
available for downloading from the BIR website
Transitory for purposes of remitting Final Withholding of
Provision Excise Tax on cosmetic procedures and shall
be manually filed with the BIR, together with
the prescribed attachment to the said form
(Summary of Invasive Cosmetic Procedures
Performed) for submission via email at
xcp.attachment@bir.gov.ph.

45
4. Submission of Pricelist for

Invasive/Non-Invasive Medical
Transitory Procedures to ELTRD as of December
Provision 31, 2017 which is due on or before the
filing of the application of Permit to
Operate.


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Briefing on Republic Act (RA)

10963: Tax Reform for

1. Plastic Surgery - refers to a surgical

TRAIN Briefing – Cosmetic Procedure

2. Cosmetic Surgery - refers to a type of plastic

TRAIN Briefing – Cosmetic Procedure

3. Reconstructive Surgery shall refer to

4. Invasive Cosmetic Procedure - refers to a

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

5. Non-Invasive Cosmetic Procedure - refers

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

11. Cleanings and

TRAIN Briefing – Cosmetic Procedure

1. Non-invasive cosmetic procedures and

TRAIN Briefing – Cosmetic Procedure

 “Constructive Receipt” occurs when the money

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

Manner of Remittance of Excise Tax

Under existing rules on goods subject to

TRAIN Briefing – Cosmetic Procedure

Manner of Remittance of Excise Tax

TRAIN Briefing – Cosmetic Procedure

Manner of Remittance of Excise Tax

TRAIN Briefing – Cosmetic Procedure

Manner of Remittance of Excise Tax

Every person subject to excise tax herein

TRAIN Briefing – Cosmetic Procedure

To improve her body shape, Starlet S

TRAIN Briefing – Cosmetic Procedure

Contract Price (inclusive of 12% VAT) (50,000/112%) P 50,000.00

*Represents the excise tax to be withheld and remitted by the service

A sample Official Receipt is shown in Annex B hereof.

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

2. Any person willfully aids or abets in the

TRAIN Briefing – Cosmetic Procedure

Filing of The Secretary of Finance, upon the

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

Procedures Monthly Summary of Invasive Cosmetic Procedures Performed

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

For the effective implementation of the Act, the

TRAIN Briefing – Cosmetic Procedure

2. The current Certificate of Registration

TRAIN Briefing – Cosmetic Procedure

3. The BIR Form No. 1620-XC (Monthly

TRAIN Briefing – Cosmetic Procedure

4. Submission of Pricelist for

TRAIN Briefing – Cosmetic Procedure

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