This revenue regulation is issued to prescribe the presentation of BIR tax clearance prior to final settlement of government contracts.
All persons, natural or juridical, local or foreign, who have existing contracts with the government, its departments, bureaus, offices and agencies, including State Universities and Colleges (SUCs), Government-Owned and Controlled Corporations (GOCCs), Government Financial Institutions (GFIs) and Local Government Units (LGUs) for the supply of goods and services, including infrastructure projects, shall secure from the Bureau of Internal Revenue (BIR) an updated tax clearance certifying that they have no outstanding tax liabilities and that they have duly filed the latest income and business tax returns and paid the corresponding taxes due thereon. Such tax clearance shall be presented by the contractor to the concerned department, bureaus, offices and agencies, including SUCs, GOCCs, GFIs, and LGUs prior to the final settlement of the contract it entered into with them.
Failure to secure and present the prescribed BIR tax clearance shall entitle the government, its departments, bureaus, offices and agencies, including SUCs, GOCCs, GFIs and LGUs to suspend the final settlement for any goods or services, including infrastructure projects, delivered by the contractor.
The amount of final settlement on the contract for any goods and services, including infrastructure projects, delivered by the contractor which was suspended by the government, its departments, bureaus, offices and agencies, including SUCs, GOCCs, GFIs and LGUs due to present the BIR tax clearance prescribed by these Regulations, including the retention money required pursuant to the provisions of Republic Act No. 9184 and its implementing regulations, shall be subject to tax lien as may be warranted in favor of the government to satisfy the contractor’s outstanding tax liabilities. The existing guidelines and procedures governing distraint and garnishment shall be applied accordingly,
Any violation of these Regulations shall be subject to the corresponding penalties under the pertinent provisions of the National Internal Revenue Code of 1997, as amended, and applicable regulations issued by the BIR.