PROFESSIONALS: Exempted from Securing a Mayor's Permit and Paying Local Body Tax

PROFESSIONALS: Exempted in Securing Mayor's Business Permit and Paying Local Business Tax

PROFESSIONALS, like dentists and doctors, are exempted from securing a Mayor’s Permit and paying Local Business Tax (LBT) for the practice of their profession. 

Likewise, medical clinics are not subject to the graduated tax since they are considered necessary for the exercise of the medical profession. Thus, to impose a graduated tax on a medical clinic on the premise that it is a “business establishment rendering or offering to render professional services” would be to impose LBT on the practice of profession.

Bureau of Local Government Finance (BLGF) Opinion 

dated 3 December 2015, signed 5 January 2016

Facts:

Dr. X and the members of doctor's association of Muntinlupa Hospital requested for a refund of all payments made for the Mayor’s Permit and LBT except
regulatory fees, from 2012 up to the current year, on the ground that they are
exempt therefrom.

Issues:

1. Are professionals, like dentists or doctors, required to secure a Mayor’s Permit and pay LBT?

2. Are medical clinics subject to the graduated tax rate similarly imposed upon
business establishments?

Ruling:

1. NO. Professionals who are required to take government examinations, like dentists or doctors, are not required to secure a Mayor’s Permit and to pay LBT as a consequence of the exercise of their profession.

Under Section 139(b) and Section 147 of the Local Government Code (LGC),a professional shall be entitled to practice his profession in any part of thePhilippines once he pays the professional tax in one province. After such payment, a professional practicing his profession will be exempt from any other national or local tax, license or fee, including the Mayor’s Permit or LBT.

2. NO. Medical clinics are considered necessary for the exercise of the medical profession. Thus, to impose a graduated tax on a medical clinic on the premise that it is a “business establishment rendering or offering to render professional services” would be to impose a local tax on the practice of profession.

However, if the Local Government Unit concerned imposes such tax on medical clinics through specific ordinance, its validity can only be questioned or challenged in the proper courts of law. 

source: EY Philippines Tax Bulletin January 2016