Government contractors should show proof – via an updated tax clearance – that they do not have any outstanding tax liabilities before the final settlement of a government contract, the Bureau of Internal Revenue said.
“The BIR will require an updated tax clearance. Otherwise, the government has the power to suspend the final settlement of the government contract,” BIR Commissioner Romeo Lumagui Jr. said in a statement.
Lumagui said this is to ensure that before government contractors are paid, they are cleared of any tax liabilities. “This way, the BIR will be able to protect the taxes collected from our hardworking taxpayers against government contractors, who do not even pay their taxes.”
Under Revenue Regulation 17-2024, government contractors are required to obtain updated tax clearance from BIR as proof that the contractor has no remaining or outstanding tax liability, income and business tax returns, respectively, or contractor’s fee.
Before the release of RR 17-2024, the tax clearance is among the requirements to qualify for the procurement process.
“This reform is part of our taxpayer service. Through RR 17-2024, the tax will be more protected against temporary government contractors who do not pay taxes,” Lumagui said.
If a government contract is suspended due to the absence of a BIR tax clearance, it will have a tax lien in favor of the government, he added. ||
