Tax Digest
Volume 9,
Series 52
Stricter Rules on Giving Tax Clearance for Government Bidding

The Bureau of Internal Revenue (BIR) amended the long-time released Revenue Regulation (RR) No. 3-2005 in relation to Executive Order (EO) No. 398 directing timely and complete payment of taxes as a precondition for entering into, and as a continuing obligation in contracts with the government, its departments, agencies and instrumentalities. The amendments made a major overhaul on the previous RR, which demands the use of Electronic Filing and Payment System (eFPS) of the BIR. The securement of Tax Clearance, in order to avail a contract with the Government, became profuse, to wit:

  1. No unpaid annual registration fee;
  2. No open valid “stop-filer” cases;
  3. A regular user of eFPS for at least two consecutive months prior to the application for Tax Clearance (for new applicants);
  4. No pending criminal charge with the Department of Justice or any competent court; and
  5. No delinquent account and/or judicially protested tax assessments with decision favorable to the BIR (not protested within the prescribed period).

Moreover, the Tax Clearance should disclose the current financial status of the taxpayer as indicated in the latest audited Financial Statement submitted to the BIR, and it will serve as the basis of the Procuring Government Agency in computing the Net Financial Contracting Capacity (NFCC). Those who will provide Tax Clearance which arises from deception will face criminal charges by the Bureau’s Prosecution Division, or be sanctioned until lifted, whichever is appurtenant thereto.

Finally, the authenticity of the Tax Clearance can be verified on the BIR website which will have periodic updates of the list of taxpayers or participating firms with BIR-issued Tax Clearances.

Revenue Regulations No. 1-2016, February 10, 2016
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