In order to ensure timely and complete tax payments pursuant to Executive Order (EO) No. 398, series of 2005, and Republic Act (RA) No. 9184, also known as the Government Procurement Reform Act, the Bureau of Internal Revenue (BIR) has issued Revenue Regulations (RR) No. 17-2024. These regulations require contractors to present a tax clearance before the final settlement of government contracts.
This requirement applies to all individuals and entities, both local and foreign, that hold contracts with any government agency, including departments, bureaus, offices, state universities and colleges, government-owned or controlled corporations, government financial institutions, and local government units. The tax clearance, which must be obtained from the BIR, serves as confirmation that the contractor has no outstanding tax liabilities and that all income and business tax returns have been properly filed with the corresponding taxes paid. This document must be submitted to the relevant government body prior to the final settlement of the contract. Failure to provide a tax clearance will result in the suspension of the final settlement for any goods or services, including infrastructure projects, delivered by the contractor.
Any suspended amount due for final settlement will be subject to a tax lien in favor of the government, as may be warranted, to satisfy the contractor’s outstanding tax liabilities. Existing guidelines and procedures on distraint and garnishment will be applied accordingly.
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants
P&A Grant Thornton is the Philippine member firm of Grant Thornton International Ltd.
As published in SunStar Cebu, dated 26 September 2024
