Published 28 January 2019, The Daily Tribune

The practice of profession in the Philippines is heavily government-regulated. Through the Professional Regulation Commission (PRC), the government conducts and administers licensure examinations to aspiring professionals and supervises the practice of professions in partnership with Professional Regulatory Boards (PRBs) in the fields of health, business, education, social sciences, engineering, and technology. The PRBs govern their respective professions’ practice and ethical standards and accredit the professional organization representing the professionals. For the practice of law, it is supervised by the Supreme Court.

On top of fulfilling the legal mandate of the PRC, other relevant statutes are considered before a professional may exercise his profession. One of these laws is the Local Government Code of 1991 (LGC) which requires the payment of professional tax.

The LGC provides as a cardinal rule that every person legally authorized to practice his profession shall pay the appropriate professional tax. The professionals subject to the professional tax are only those who passed the bar examinations, or any board or other examinations that the PRC conducts. A lawyer who is concurrently a Certified Public Accountant (CPA) must pay both the professional tax imposed on lawyers and on CPAs if he is to practice both professions. The settled principle is that a line of profession does not become exempt even if conducted with another profession for which the corresponding professional tax therefor has been paid.

If a professional is liable to pay professional tax, is he likewise required to secure a business permit?

Statutorily, a person who has paid the corresponding professional tax shall be entitled to practice his profession in any part of the Philippines without being subjected to any other national or local tax, license or fee for the practice of such profession. As such, the professional is not required to secure a business permit in addition to the payment of professional tax. Conversely, persons exercising an occupation or profession without the benefit of taking and passing a government licensure examination is required to obtain a business permit. This provision of the LGC is, of course, without prejudice to the imposition of income tax under the National Internal Revenue Code on the privilege to earn income.

The professional tax shall in no case exceed P300 annually. The place of payment is the province or city where the professional practices his profession or where he maintains his principal office. Once the professional tax is paid to any province or city, the profession may be exercised anywhere in the country.

The imposition of professional taxes is expressly reserved by the LGC to provinces and cities. Municipalities in turn may impose and collect such reasonable fees and charges on the exercise of occupation, profession or calling, commensurate with the cost of regulation, inspection and licensing.

The professional tax shall be payable annually, on or before January 31 except, of course, if the profession is commenced thereafter. Regardless of the initial date of the exercise of profession, payment of professional tax is a condition sine qua non. Professionals exclusively employed in the government are, however, exempt from the payment of professional tax.

For those in the private sector, employers are bound to require their employees within the coverage of the LGC to pay their professional tax prior to employment and annually thereafter. Furthermore, any person subject to the professional tax shall write in deeds, receipts, prescriptions, reports, books of account, plans and designs, surveys and maps, as the case may be, the number of the official receipt issued to him.

In sum, the basic rule is pay first, exercise later.

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