Competence, experience, know-how, skill, these are expected traits of any private contractor. How about being up-to-date with tax payments?

In 2005, then President, and now Speaker of the House of Representatives Gloria Macapagal-Arroyo issued Executive Order No. 398, requiring any private contractor desiring to enter into a contract for the delivery of goods and services with the government, to submit, along with its proposal, copies of its income and business tax returns, duly stamped and received by the Bureau of Internal Revenue (BIR). In addition, it shall also submit a tax clearance from the BIR to prove the full and timely payment of such taxes.

In this regard, the tax returns, to be validly accepted, must have been filed through the BIR’s Electronic Filing and Payment System (eFPS), and must be validated (together with the other documentary requirements) by the Large Taxpayer Service, (LTS), if the taxpayer is a Large Taxpayer, or if not, with the Revenue District Office (RDO) where the taxpayer is registered.

As for the issuance of the tax clearance, the Department of Finance and the BIR have issued several regulations through the years, which provide for the policies and guidelines in relation to its issuance. Quite recently, Revenue Regulations (RR) No. 18-2018 was issued, providing amendments on the guidelines on the processing of applications for tax clearance for bidding purposes. We provide below the guidelines, as amended by RR No. 18-2018:

All applications shall be filed with the Collection Division of the Revenue Regional Office where the taxpayer is currently registered, or with the LTS, until such time that an on-line application for prospective bidders is made available. Note that previous regulations required the applications to be filled with the office of the Accounts Receivable and Monitoring Division (ARMD) in the BIR National Office. This proved to be tedious for prospective bidders, as the ARMD was obviously swamped and had difficulty in processing said applications. Now that the function of processing the tax clearances have been devolved to the BIR Regional Offices, prospective bidders, especially those coming from the provinces, need not troop all the way to the BIR National Office in Quezon City to file their applications.

A tax clearance shall be issued to a prospective bidder, provided that the following

criteria has been satisfied:

No unpaid annual registration fee;

No open valid “stop-filer” cases;

For taxpayers who have been issued a tax clearance for previous government projects, a subsequent tax clearance shall only be issued if they are found to be regular FPS users from the time of enrollment up to the time of the filing of the tax clearance application.

The rule above shall not apply to applicants who have just recently enrolled with the eFPS; in which case, they may submit their latest income and business tax returns, even if not filled through the eFPS.

Not tagged as a “Cannot be Located Taxpayer”;

No pending criminal information filed in any court arising from any tax-related cases;

No delinquent accounts.

The amendments introduced by RR No. 18-2018 is in line with the BIR’s commitment of instituting the policy of “Ease of Doing Business” to enable taxpayers to cope with the ever-changing dynamics and demands of the business community.

Manila Times Source

ATTY. PEACHES ARANAS

Managing Partner LMA LAW