9.-BIR TRAIN Breifing Cosmetic 20180130

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 of specialty dedicated to reconstruction 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 of procedures, surgeries, and body
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 of normal appearance to a part of a
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 of body through the skin or through a body
cavity or anatomical opening, but with the
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 of 2. Mammoplasty
Terms 3. Breastlift
4. Buccal Fat Reduction
5. Buttocks
Augmentation

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

8
11. Vaginal Plastic
Surgery
Definition of 12. Abdominoplasty or
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
Definition of the removal of tissue, or when no break in
Terms the 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
2. Air Dissector
Definition of 3. Botulinum Toxin
Terms 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 of ultrasound, infrared
Terms 8. Fractional CO 2
9. Lasers and Light
Treatments
10.Body Treatments and
Contouring Procedures

12
11. Cleanings and Facials

Definition of 12. Peelings (Face and
Terms 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
Nature, Basis services rendered and advance payments actually
and Rate of or constructively received for services performed
Excise Tax or to 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 on enhancing the patient’s appearance and do not
Invasive meaningfully promote the proper functions of
Procedures the 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 on is expected to shift the tax by billing the
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 on excise tax collected from the client/customer.
The five percent (5%) excise tax to be withheld
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 on
the goods before removal from the place
Invasive
of production.
Procedures

20

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

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 on payments for good and services. This concept of
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
Monthly Remittance Return of Final Withholding of
Returns and Excise Tax shall still be filed with Excise Large
Payment of Taxpayers Field Operations Division (ELTFOD) for
Excise Tax on Large Taxpayers/Revenue District Office for taxpayers
Invasive in the National Capital Region (NCR)/Excise Tax Area
Procedures (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 the
Administrative breakdown of the amount received between its taxable
Requirements 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.

26
Illustration
A. Where the invasive cosmetic procedure is performed in a
clinic outside a hospital.
To improve her body shape, Starlet S engaged the

Administrative services of Dok Salamat, a well-known cosmetic
Requirements
surgeon in the 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
*The excise tax is to be billed/withheld and remitted by the Melo Medical

Group, Inc. and should be shown as a separate item in the Official Receipt
(as shown in Annex A)
A”
29
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
Illustration
B. Where the procedure is performed in a clinic operating
inside a hospital.
Same as in Illustration A, except this time Starlet S

Administrative
had procedure done by Doctor P, an individual
Requirements
practitioner operating a clinic inside a hospital. The
hospital bill for the procedure amounts to
P70,000.00 inclusive of P20,000.00 Doctor’s Fee
(inclusive of 12% VAT).

Billing by Hospital (VAT exempt) Note (1) P 50,000.00
Doctor’s Fee (20,000/112%) Note (2) 17,857.14
Total Excise Tax Base P 67,857.14
Add: 5% excise tax (67,857.14 x 5%) 3,392.86
12% VAT (20,000.00 x 12%) 2,142.86
Total Amount to be Collected from Customer P 73,392.86
Note (1): Medical, dental, hospital and veterinary services are exempt from value
added tax under Section 109(G) of the NIRC, as amended, except those rendered by
professionals.
Note (2): Doctor P is presumed to be self-employed and his annual receipts exceeded
the threshold for VAT of P3 Million.
32
Accounting Entry (Doctor P’s book):
Accounts Receivable - Hospital P 18,571.43
Prepaid Tax 1,428.57
Administrative Service Fee P 17,857.14 Output VAT
Requirements 2,142.86
Cash 18,571.43
Accounts Receivable – Hospital 18,571.43

33
Accounting Entry (Hospital’s books):
Cash P 73,392.86
Professional Fees Expense 17,857.14
Administrative Input VAT 2,142.86
Requirements FWT-Excise Payable P 3,392.86 Output
VAT 2,142.86
Payable to Doctor 18,571.43 Expanded
Withholding Tax Payable
- Prof Fees 1,428.57
Service Income - VAT 17,857.14
Service Income – Non-VAT 50,000.00

34
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:

35
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)

36 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.
2. Any person who willfully attempts in any manner to
Penalties 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.

37
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.

38
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 Returns jurisdiction of the Revenue District Office/BIR Office
and Payment of where the taxpayer (Head Office of the business
Excise Tax on establishment) is registered or required to register.
Invasive
Procedures For taxpayers located outside the National Capital
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.
39
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 on
excise tax other than as prescribed under
Invasive Section 130, Chapter I, Title VI of the Tax Code,
Procedures as amended.

40
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 on FORM following month under the jurisdiction of the
Invasive 1620- Revenue District Office/BIR
Procedures XC Office where the taxpayer
(Head Office of the business
establishment) is registered or
required to register
41
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 B"
Procedures Monthly Summary of Invasive Cosmetic Procedures Performed

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

42
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.

43
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)

44
3. Mayor’s Permit
4. BIR Certificate of Registration (with latest
registration fee BIR Form 0605)
Administrative
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 (whether inclusive of VAT or the 5%
excise tax) of Invasive/Non-invasive
Cosmetic Procedures
45
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.

46
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.

47
2. All individual practitioners and juridical entities

including medical clinics or hospitals performing
invasive cosmetic procedures shall update their
current Certificate of Registration (COR) to include
Transitory the tax type: Final Withholding Tax – Excise
Provision (FWT-Excise) on Cosmetic Procedures using BIR
Form 1905 with the concerned offices: the ELTRD
or Large Taxpayers Assistance Division (LTAD) for
large taxpayers registered under the LTS and
Revenue District Office (RDO) having jurisdiction
over the non-large taxpayer.

48
The individual practitioners and juridical entities

including medical clinics or hospitals performing
Transitory non-invasive cosmetic procedures, will execute
Provision and submit a Sworn Statement stating that only
non-invasive cosmetic procedures are being
performed by the said individual practitioners
and juridical entities.

49
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 and shall be manually filed
Transitory with the FWT-Excise shall be remitted to any
authorized agent bank under the jurisdiction of the
Provision RDO where the taxpayer (head office of the
business establishment) is registered or required to
register. The prescribed attachment to the to the
said form (Monthly Summary of Cosmetic
Procedures Performed, Annex B, shall be submitted
via e-mail at xcp.attachment@bir.gov.ph.

50
4. The Pricelist as of December 31, 2017

(indicate whether inclusive of VAT
Transitory and/or inclusive of Excise Tax, as the
Provision case may be) for Invasive/Non-Invasive
Medical Procedures shall be submitted
to the ELTRD upon the filing of the
application of Permit to Operate.


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Briefing on Republic Act (RA)

10963: Tax Reform for Acceleration

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 -

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

11. Cleanings and Facials

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

TRAIN Briefing – Cosmetic Procedure

Every person subject to excise tax herein

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

To improve her body shape, Starlet S engaged the

TRAIN Briefing – Cosmetic Procedure

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

*The excise tax is to be billed/withheld and remitted by the Melo Medical

TRAIN Briefing – Cosmetic Procedure

Same as in Illustration A, except this time Starlet S

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure

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

Procedures Monthly Summary of Invasive Cosmetic Procedures Performed

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. All individual practitioners and juridical entities

TRAIN Briefing – Cosmetic Procedure

The individual practitioners and juridical entities

TRAIN Briefing – Cosmetic Procedure

TRAIN Briefing – Cosmetic Procedure