Professionals exempt from paying business permit fees — DOF

While professionals are exempt from paying business permit fees for the operation of their offices or clinics, the Department of Finance (DOF) on Tuesday clarified that they are still mandated to secure such permits.

Under the Local Finance Circular (LFC) 001-2019 signed by Finance Secretary Carlos Dominguez III on June 12, 2019, professionals are exempt from paying fees needed to process their respective business permits.

"Under the guidelines, while professionals still need to secure business permits from LGUs, such should be at no cost at all during the registration or renewal of the operation of their clinics or offices, given that such permits cannot regulate the practice of their profession," the DOF said in an emailed statement.

"This is because regulations over the practice of professions are within the exclusive domain of the respective agencies or regulatory boards empowered by law to supervise and regulate professions," it added.

Professionals are those who are given licenses by the Philippine Regulatory Commission (PRC) for them to be able to practice their respective lines of employment.

The DOF noted, however, that LGUs may impose a local business tax on professionals, provided that they are verified to be engaged in selling, trading, or distributing goods and services unrelated to their professions.

"In this case, the LGU can impose a business permit fee during the registration and renewal of the operation of the office or clinic of the concerned professional," it said.

The recent circular mandates the DOF-attached Bureau of Local Government Finance (BLGF) to monitor the compliance and to provide technical assistance to the LGUs.

The DOF said it released the LFC to address reports and complaints received regarding the improper imposition of local taxes, fees, and other charges imposed by LGUs on professionals.

The same LFC maintained that professionals in both the private and public sectors of the country will still have to start paying as much as P300 for "professional taxes" and P5,000 for "community taxes."

In terms of the professional tax, this will "not exceed P300 or the rate provided under a duly enacted local ordinance, subject to adjustment not exceeding 10% every five years."

"(A)n individual or corporation employing a person subject to the professional tax shall require payment by that person of the tax on his/her profession before employment and annually thereafter," it said.

In the case of multiple professions, the professional will have to also pay for the tax for each profession practiced.

"Thus, a lawyer who is also a Certified Public Accountant (CPA) must pay the professional tax imposed on each profession, if he (or she) is to practice both professions," said the DOF.

For community taxes, the LFC states that individuals and corporations may be charged not more than P5,000. This is computed as P5.00 plus P1.00 for every P1,000 of income from the exercise of the profession.

"LGUs may impose and collect other applicable fees and charges (i.e. garbage fee, sanitary inspection fee, occupancy permit fee, etc.), the amount of which shall be reasonably commensurate to the cost of regulation or provision of service, as may be provided under a duly enacted local ordinance; provided, however, that no service charge shall be based on capital investments or gross sales or receipts of the persons or business liable therefor," the LFC read. — RSJ,  GMA News