BIR Form 2307 for Physical Therapists and Rehabilitation Clinics: Facility Fee vs Individual Professional Fee

A rehabilitation clinic or a corporate wellness program that pays a physical therapist generally withholds 2% expanded withholding tax (EWT) under RR No. 2-98, Section 2.57.2(E), and issues BIR Form 2307 — the flat general-services rate, not the 5%/10% bracket this series covers for doctors, lawyers, and other named professionals, because physical therapists are not individually named in that same professional-fee enumeration.

This guide is part of the BIR Form 2307 series. It covers who withholds on a physical therapy or rehabilitation payment, why the rate differs from doctors and other named professionals, the facility-vs-individual ATC split, and a worked corporate wellness example.

Who withholds on a physical therapy or rehabilitation payment? #

The same payor-status test applies here as everywhere else in this series: a corporation or business-connected individual withholds, a private individual paying for their own care generally does not. RR No. 2-98 sets the test this way:

“(A) In general, any juridical person, whether or not engaged in trade or business; (B) An individual, with respect to payments made in connection with his trade or business…”

— RR No. 2-98, Section 2.57.3(A)–(B)

A corporation running a corporate wellness or return-to-work program that pays a rehab clinic for on-site sessions, or an HMO reimbursing a clinic under a service contract, is a withholding agent under clause (A) or (B). A patient paying a rehab clinic out of pocket for their own personal physical therapy sessions falls outside the rule.

Why physical therapists aren’t in the same bracket as doctors and other named professionals #

Physical therapists are licensed under RA No. 10612, the Philippine Physical Therapy Law, but that licensing statute alone does not place them in the 5%/10% named-professional bracket. Doctors, lawyers, CPAs, engineers, and a specific list of other professions are individually named in RR No. 2-98’s professional-fee enumeration under Section 2.57.2(A), as amended by RR No. 11-2018 — but physical therapists are not part of that same named list. This is the identical situation this series already documented in BIR Form 2307 for Interior Designers and Landscape Architects: a profession can be regulated and licensed under its own enabling law without being individually enumerated in Section 2.57.2(A), and when that’s the case, payments to that profession commonly fall instead under the flat 2% general contractor/business-services bracket under Section 2.57.2(E), the same catch-all covered in BIR Form 2307 for Contractors and Subcontractors.

Because this distinction isn’t always obvious, a clinic, HMO, or corporate client should confirm with its finance team or tax adviser which ATC and rate a given engagement falls under before the first payment. Applying the 5%/10% professional-fee bracket to a payment that should be at 2% (or vice versa) results in an incorrect BIR Form 2307 that both parties then have to correct.

Facility vs individual: rehab clinic vs freelance physical therapist #

Unlike the named-professional bracket, where individual vs corporate status can change the rate itself, both a rehab clinic and an individually engaged freelance physical therapist land on the same 2% rate here — only the ATC code changes. This mirrors the facility-vs-individual distinction this series covers in BIR Form 2307 for Gyms, Fitness Studios, and Personal Trainers, but with one key difference: a gym’s corporate membership (2%) and a freelance personal trainer’s fee (5%/10%) sit in different brackets, while a rehab clinic and a freelance physical therapist sit in the same 2% bracket, because neither is named in Section 2.57.2(A).

• A corporate client contracting with a rehab clinic — a facility or business entity providing on-site physical therapy services — withholds 2% on the clinic’s billing.
• A corporate client engaging a specific freelance physical therapist directly as an individual contractor, rather than routing the payment through a clinic, also withholds 2%, not 5%/10%, following the same reasoning already established for interior designers and landscape architects.

What ATC code applies? #

When a physical therapist is an employee instead #

A physical therapist who is an actual employee of a hospital, clinic, or rehab center — with income tax withheld on compensation through the facility’s payroll — is covered by BIR Form 2316, not Form 2307. The 2307 treatment described in this guide applies only when the therapist or the clinic bills a client as an independent contractor for services rendered, not when the therapist draws a regular salary as staff.

Worked example: a corporate wellness program #

A corporate wellness program pays MoveWell Rehab Clinic Corp. ₱18,000 per month for on-site physical therapy sessions for employees recovering from workplace strain injuries.

The company withholds ₱360 — 2% of the ₱18,000 monthly fee — and remits it through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, lists MoveWell Rehab Clinic Corp. on its Quarterly Alphalist of Payees, and issues a BIR Form 2307 showing ₱18,000 as the income payment, ATC WC160, and ₱360 tax withheld.

Contrast this with the same company instead engaging a freelance physical therapist, Mr. Villanueva, directly as an individual contractor for the same ₱18,000 monthly scope of work:

The withheld amount is identical — ₱360 either way. Only the ATC code changes, from WC160 for the corporation to WI160 for the individual; unlike the architects, doctors, and lawyers this series covers under the named-professional bracket, choosing an individual physical therapist over a clinic does not push the payment into a different rate.

Frequently asked questions #

Does a company have to withhold tax when paying a rehab clinic or a physical therapist? #

Yes, if the payor is a corporation or a business-connected individual. A corporate wellness program, hospital, or clinic paying a rehabilitation clinic or an independent physical therapist for services is a withholding agent under RR No. 2-98, Section 2.57.3(A)-(B), and must withhold expanded withholding tax and issue BIR Form 2307.

Are physical therapists withheld at the same 5%/10% rate as doctors and lawyers? #

Generally no. Doctors, lawyers, CPAs, engineers, and a specific list of other professions are individually named in RR No. 2-98’s professional-fee enumeration under Section 2.57.2(A), as amended by RR No. 11-2018, which puts them in the 5%/10% individual professional-fee bracket. Physical therapists, though licensed under RA No. 10612, are not named in that same enumeration, so payments to them commonly fall instead under the flat 2% general business-services bracket under Section 2.57.2(E).

Does the withholding rate change if a company hires a freelance physical therapist directly instead of contracting a rehab clinic? #

No, not the rate. Both a rehabilitation clinic (a corporation or business) and an individually engaged freelance physical therapist are withheld at the same flat 2% rate under Section 2.57.2(E), because neither is named in the 5%/10% professional-fee enumeration. What changes between the two is only the ATC code used — WC160 for the clinic as a corporation, WI160 for the individual therapist — not the percentage withheld.

Is a physical therapist employed by a hospital or clinic given a BIR Form 2307? #

No. A physical therapist who is an employee of a hospital, clinic, or rehab center, with income tax withheld on compensation, is covered by BIR Form 2316, not Form 2307. Form 2307 applies only when the therapist or the clinic bills a client as an independent contractor for services rendered.

Summary #

Physical therapists licensed under RA No. 10612 fall outside the 5%/10% named-professional bracket that covers doctors, lawyers, and other professions individually enumerated in RR No. 2-98, Section 2.57.2(A) — the same situation this series already documented for interior designers and landscape architects. Both a rehab clinic and an individually engaged freelance physical therapist are withheld at the flat 2% general business-services rate under Section 2.57.2(E), differing only by ATC code (WC160 for a corporation, WI160 for an individual) rather than by rate — a facility-vs-individual pattern related to, but distinct from, the one this series covers in BIR Form 2307 for Gyms, Fitness Studios, and Personal Trainers. Only a corporate or business-connected payor triggers the obligation, and a therapist who is a payroll employee is covered by BIR Form 2316 instead.