REVENUE MEMORANDUM CIRCULAR NO. 64-2012 issued on October 31, 2012 clarifies the imposition of business taxes on services performed by persons engaged in the practice of profession or calling.
         Apart from applicable Income Taxes and Withholding Taxes, a professional is liable to Value-Added Tax (VAT) at the rate of 12% if his gross receipts/professional fees for the past 12 months is more than P1,919,500.00. A professional is likewise liable to register as a VAT-taxpayer if there are reasonable grounds to believe that his gross receipts/professional fees for the next 12 months will exceed P1,919,500.00. If he fails to register, he shall be liable to pay the 12% output tax under Section 108 of the 1997 Tax Code, as amended, as if he were a VAT-registered person, but without the benefit of input tax credits for the period in which he was not properly registered.
        A professional is liable to Percentage Tax at the rate of 3% if his gross receipts/professional fees for the past 12 months is equal to or is below P1,919,500.00 and he is not a VAT-registered person.
       If the professional registers as a VAT-person, he shall be liable to VAT upon registration as VAT taxpayer and not to Percentage Tax, irrespective of the amount of his gross receipts/professional fees. A professional who is not required to register for VAT may elect to be VAT-registered but he shall not be allowed to cancel such registration for the next 3 years counted from the quarter when the election was made.