Tax Clearance Certificate for Bidding Purposes by EmelinoTMaestro.com

REVENUE REGULATIONS NO. 3-2005

SUBJECT : Rules and Regulations Implementing Executive Order No. 398 (EO 398) and Requiring Timely and Complete Payment of Taxes as a Precondition for Entering Into and as a Continuing Obligation in Contracts with Government

TO 1.0
2.0

: All Internal Revenue Officers and Others Concerned
Objectives

1. 1.1  Ensure that only tax compliant entities are allowed to enter into contracts with government, its departments, agencies and instrumentalities for the supply of goods and services.
   
2. 1.2  Provide a simple and convenient way by which tax compliant applicants can obtain the required documents and comply with the submission requirements of EO 398.
   

General Provisions

1. 2.1  Latest Tax Returns as Pre-Condition for Participation.
   
   1. 2.1.1  EO 398 provides. - "All persons, natural or juridical, local or foreign, desiring to enter into or participate in any contract with the government, its departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units shall, as a pre-condition, submit, along with their proposal and/or bid, a copy of their latest income tax and business tax returns."
      
   2. 2.1.2  The above returns must be duly stamped and received by BIR and duly validated with the tax payments made thereon except in cases provided for in 4.2.2 below.
      
   3. 2.1.3  Returns filed with AABs or thru EFPS with corresponding reference numbers shall be deemed duly stamped and received by the Bureau of Internal Revenue (BIR).
      
2. 2.2  Tax Clearance
3. 
   
   Also part of the submission for the bid/offer to be accepted for evaluation is the Tax Clearance from the BIR described in 3.4, 4.4 and 4.5 below.
   2.3 Summary List of Contracts and Payments Made to Contractors
   EO 398 provides. - “All departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units, shall regularly furnish the Bureau of Internal Revenue with the names of private contracting parties that they have contracted with, as well as the amount of payments made to these private contracting parties, to enable the Bureau of Internal Revenue to scrutinize full and timely payment of taxes.”
   To comply with the above, the concerned entities must submit via EFPS BIR Form 1600 (a copy of which is attached herewith and made an integral part of these Revenue Regulations), with the Alphabetical list of Payees completely filled up for all contracts for the period of the report.
   3.0 Definitions
   

   1. 3.1  Electronic Filing and Payment System (EFPS)
      The internet-based system of the BIR for the paperless filing of tax returns, the payment of taxes due thereon, and the submission of information such as Summary List of Sales and Purchases. This system is available through the BIR Portal.
      
   2. 3.2  Latest Income Tax Return (ITR)
      For participants already with an Annual ITR, latest ITR shall refer to the ITR for the preceding Tax Year be it on a calendar or fiscal year. For new establishments which, therefore, have no annual ITR yet, it shall refer to the most recent quarter’s ITR.
      
   3. 3.3  Latest Business Tax Return
      Refers to the Value Added Tax (VAT) or Percentage tax returns covering the previous six (6) months. For those with less than six (6) months of operations, this refers to the monthly business tax returns filed to date.
      
   4. 3.4  Tax Clearance
      Refers to the clearance issued by the Collection Enforcement Division (CED) attesting that the taxpayer has no outstanding Final Assessment Notice and/or delinquent account.
      
   5. 4.0 Specific Provisions
      

      1. 4.1  Mandatory EFPS Filing
         Effective 1 April 2005, all prospective participants to any government procurement of goods and services are mandated to file their income and business tax returns and other required information electronically using the Electronic Filing and Payment System (EFPS).
         
      2. 4.2  Acceptable Tax Return Submissions for Participation in Government Procurement
         
         1. 4.2.1  Effective 1 May 2005, only tax returns filed thru EFPS will be accepted as the required submission under Section 1 of EO 398.
            
         2. 4.2.2  Interim Procedure.- From the date of effectivity of these Regulations
            up to April 30, 2005, Non-EFPS filed tax returns and payment documents may be submitted as compliance to para 2.1. Provided that these documents must first be presented to the Revenue District Office with jurisdiction over the taxpayer for authenticity check and stamping.
            
      3. 4.3  Processing of the Tax Return by the Procuring Government Entity
         
         1. 4.3.1  For EFPS generated or printed Tax Returns, the documents must be checked for authenticity either by telephone with the BIR Contact Center Tel 981-8888 or through the BIR Portal www.my.bir.gov.ph.
            
         2. 4.3.2  For those submitted under Section 4.2.2, copies of the Non-EFPS generated tax return must be faxed to BIR Contact Center with a covering letter stating the name of the procuring government agency, the name of the responsible procurement officer, and such officer’s telephone/fax numbers.
            
      4. 4.4  Tax Clearance

      4.4.2
      

      Requests for Tax Clearance by the bidding taxpayers must be in writing and contain the following information: the name of the taxpayer requesting the tax clearance, its tel/fax number, its taxpayer identification number (TIN), the revenue district office with jurisdiction over the taxpayer, .the name of the Procuring Government Agency, the name of the responsible procurement officer, and his tel/fax number.
      
      The application must be addressed to the Division Head, Collection Enforcement Division, BIR National Office Telefax 928-7466.
   6. 4.0 Specific Provisions
      

      1. 4.1  Mandatory EFPS Filing
         Effective 1 April 2005, all prospective participants to any government procurement of goods and services are mandated to file their income and business tax returns and other required information electronically using the Electronic Filing and Payment System (EFPS).
         
      2. 4.2  Acceptable Tax Return Submissions for Participation in Government Procurement
         
         1. 4.2.1  Effective 1 May 2005, only tax returns filed thru EFPS will be accepted as the required submission under Section 1 of EO 398.
            
         2. 4.2.2  Interim Procedure.- From the date of effectivity of these Regulations
            up to April 30, 2005, Non-EFPS filed tax returns and payment documents may be submitted as compliance to para 2.1. Provided that these documents must first be presented to the Revenue District Office with jurisdiction over the taxpayer for authenticity check and stamping.
            
      3. 4.3  Processing of the Tax Return by the Procuring Government Entity
         
         1. 4.3.1  For EFPS generated or printed Tax Returns, the documents must be checked for authenticity either by telephone with the BIR Contact Center Tel 981-8888 or through the BIR Portal www.my.bir.gov.ph.
            
         2. 4.3.2  For those submitted under Section 4.2.2, copies of the Non-EFPS generated tax return must be faxed to BIR Contact Center with a covering letter stating the name of the procuring government agency, the name of the responsible procurement officer, and such officer’s telephone/fax numbers.
            
      4. 4.4  Tax Clearance

      
      

      4.5 Processing of Tax Clearance by Procuring Government Agency
      A Tax Clearance obtained under paragraph 4.4 above must be verified for authenticity by telephone with the BIR Contact Center or through the BIR Portal which will have an updated list of participating firms with Tax Clearances.
      

   REVENUE REGULATIONS NO. 1-2016
   

   Amending Certain Provisions of Revenue Regulations No. 3-2005 : All Internal Revenue Officers and Others Concerned
   

   SECTION 1. SCOPE. – Pursuant to Sections 7(a) and 244 of the National Internal Code of 1997, as amended, these regulations are hereby promulgated for the purpose of amending certain provisions of Revenue Regulations No. 3-2005, particularly in the issuance of Tax Clearance, one of the eligibility requirements pursuant to the Implementing Rules of Republic Act (RA) No. 9184, in relation to Executive Order (EO) No. 398.
   SECTION 2. AMENDMENT. Items 2, 3 and 4 of Revenue Regulations No. 3-2005 shall be amended as follows:
   “2.0 General Provisions
   2.1 Latest Tax Returns as Pre-condition for Participation
   2.1.1 EO398provides.-Allpersons,naturalorjuridical,localorforeign, desiring to enter into or participate in any contract with the government, its departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units shall, as a pre-condition, submit, along with their proposal and/or bid, a copy of their latest income tax and business tax returns.
   2.1.2 The above returns and the taxes due thereon must be filed and paid
   

   thru the Bureau’s Electronic Filing and Payment xxx xxx xxx
   3.0 Definitions
   xxx xxx xxx
   

   System (eFPS) xxx
   xxx 
   

   1. 
      
4. 
   
   3.4 Tax Clearance
   Refers to the clearance issued by the Accounts Receivable Monitoring Division (ARMD) (formerly Collection Enforcement Division) attesting that the taxpayer has no delinquent account and has satisfied all other criteria for the issuance of Tax Clearance as prescribed under 4.4.2 hereof.
   4.0 Specific Provisions
   

         xxx         xxx         xxx         xxx
   

   4.2 Acceptable Tax Return Submissions for Participation in Government Procurement- Only tax returns filed thru EFPS will be accepted as the required submission under Section 1 of Executive Order No. 398.
   4.3 Validation of Tax Return and its applicable attachment/s by the Procuring Government Entity – The tax returns must be checked for authenticity by verifying from the list of Tax Clearances issued published in the BIR website www.bir.gov.ph, by accessing Tax Clearance under “announcement”, then choose the applicable period of issuance. However, attachments to the tax returns (e.g., Audited Financial Statements, etc.) must be validated with the concerned Office under the Large Taxpayers Service if the bidder is classified as a large taxpayer, or with the Revenue District Office where the bidder is registered.
   4.4 Tax Clearance
   

   1. 4.4.1  All applications for the issuance of Tax Clearance in accordance with the requirement under RA No. 9184 and EO No. 398 shall be manually filed with the Office of the ARMD, until such time that an on-line application for this purpose has been made available for use of prospective bidders.
      
   2. 4.4.2  TaxClearance,withavalidityperiodofsix(6)monthsfromthedateof issuance shall be issued to any applicant who has satisfied the following criteria:
      
      1. no unpaid annual registration fee;
         
      2. no open valid “stop-filer” cases;
         
      3. a regular user of the BIR’s Electronic Filing and Payment System (eFPS) for at least two (2) consecutive months prior to the application for Tax Clearance ; The required two (2) consecutive months usage of eFPS shall only apply to new applicants. For those which were previously issued Tax Clearance for bidding purposes, the requested Tax Clearance shall only be issued if they are found to be regular eFPS users from the time of enrollment up to the time of application.
         
         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
            For purposes of this regulations, delinquent account shall refer to the outstanding tax liabilities arising from either self-assessed taxes (i.e., unpaid second installment of income tax due per income tax return filed, unredeemed dishonored check, tax payments using expired Tax Debit Memo and any unpaid tax due as declared in the tax return filed) or a result of an audit or third party information thru the issuance of an assessment notice which was not protested within the prescribed period.
            Tax assessments timely protested administratively pursuant to the provisions of Revenue Regulations (RR) No. 12-99, as amended by RR No. 18-2014 and/or elevated to the Court of Tax Appeal (CTA) or to higher court within the prescribed period, and where the collection of the assessments are not yet considered final, executory and demandable, shall not be considered delinquent account. Timeliness in the filing of the administrative protest and/or the elevation of the case to the competent court must be certified by the handling office (i.e., Regional Legal Divisions, Litigation Division, Appellate Division); thus, this certification shall form part of the documentary requirements in the filing of an application for Tax Clearance.
            However, indiscriminate filing of appeals to the CTA or with the higher court after the assessment has already become final, executory and demandable, is considered frivolous and dilatory in nature; and the same shall not be considered as timely filed. Hence, the concerned handling office should exercise prudence and due diligence in the issuance of the aforesaid required certification.
            Applicants with tax assessments which were timely judicially protested but already covered by an earlier court decision favorable to the BIR and the same are subject of appeals or motions for reconsideration timely filed by the taxpayers, shall be issued Tax Clearance, provided an escrow deposit shall be made with any authorized agent bank equivalent to the tax liabilities being protested. However, for pending cases with the higher court which were covered by a decision in favor of the taxpayer, there is no need for the applicant to make an escrow deposit.
            
            For applicants with delinquent accounts but the tax liabilities involved were the subject of the applicant’s application for either abatement of penalties or compromise settlement pursuant to Section 204 of the Tax Code, Tax Clearance shall also be issued, provided, the applicant shall make an escrow deposit with any authorized agent bank equivalent to the tax liabilities, including the applicable delinquency penalties (net of the amount offered for payment upon application of the abatement or compromise settlement).
            4.4.3 The Tax Clearance to be issued by the Bureau, thru the ARMD, shall indicate, among others, the information regarding the taxpayer’s current assets and current liabilities as indicated in the latest audited Financial Statements submitted to the Bureau. This information shall serve as reference by the Procuring Government Agency in the computation of the bidder’s Net Financial Contracting Capacity (NFCC). The Tax Clearance to be issued to applicant with deficiency tax assessment which was timely protested administratively or elevated to the competent court as mentioned in Section 4.4.2.e of these regulations shall likewise have information on the details of these tax liabilities and the same shall be considered by the concerned Procuring Government Agency in the computation of the aforesaid NFCC.
            4.4.4 The name of the prospective bidders/taxpayers who shall be found to have submitted a spurious Tax Clearance shall be forwarded to the Prosecution Division of the Bureau for the filing of the appropriate criminal charges. The Procuring Agency, on the other hand, shall impose the appropriate administrative penalty, in accordance with Section 69 of Republic Act No. 9184.
            No Tax Clearance shall be issued to this prospective bidder, notwithstanding the satisfaction of the criteria provided under 4.4.2 of this regulations, until such time that the criminal case filed against the prospective bidder is resolved or the administrative sanctions imposed by the concerned procuring agency has been lifted, whichever is applicable. 4.5 Validation of Tax Clearance by Procuring Government Agency
         6. A Tax Clearance obtained under paragraph 4.4 above must be verified for authenticity through the BIR website which will have a periodic updates of the list of taxpayers / participating firms with BIR-issued Tax Clearances.”
            SECTION 3. REPEALING CLAUSE. – All existing rules and regulations, revenue issuance, memoranda, rulings or parts thereof, which are contrary to or inconsistent with the provisions of these Regulations are hereby amended, modified or repealed accordingly. EmelinoTMaestro.com
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