Tax-exempt hospitals ordered to secure revalidated certificates from BIR

The government has ordered all tax-exempt hospitals to secure revalidated certificates from the Bureau of Internal Revenue (BIR). The order, contained in Revenue Memorandum Circular No. 4-2013, aims to prevent propriety and non-profit hospitals from abusing their tax-exempt privileges. The BIR said the circular essentially requires such hospitals to justify why they should continue to enjoy the same tax perks from the government.   Under the circular, tax-exempt hospitals, or those operated by non-profit institutions, must submit to the BIR the following:

• a letter of application,
• copies of their Articles of Incorporation,
• Certification of Registration with the BIR,
• a Tax Clearance issued by the Revenue District Office where the hospital is registered,
• copies of income tax returns the last three years, and a
• statement detailing its source of income.

  Section 27 of the National Internal Revenue Code (NIRC) requires proprietary hospitals to a 10-percent income tax on their taxable income.   However, some hospitals, which are owned and operated by non-stock and non-profit institutions, were able to secure tax exemption rulings from the BIR on the ground that these institutions are charitable or social welfare organizations.   Section 30 of the NIRC allows these hospitals to be exempt from corporate income tax.   “In order to uniformly apply these guidelines, it is necessary to re-evaluate tax exemptions previously issued to proprietary non-profit hospitals or to non-stock, non-profit institutions/entities operating hospitals,” the BIR said in the circular dated January 11, 2013. The circular was published Thursday. — KBK, GMA News