The Bureau of Internal Revenue (BIR) launched an “Al Capone-style” tax fraud audit of contractors linked to alleged anomalous flood control projects, aligning with President Ferdinand Marcos Jr.’s order to step up the government’s anti-corruption campaign.
BIR Commissioner Romeo Lumagui Jr. said Thursday that all revenue offices have been directed to conduct parallel audits to determine whether contractors involved in questionable projects paid the correct taxes.
“If it can be proven that they underpaid or incorrectly paid their taxes, they will not be issued an updated tax clearance,” Lumagui said in a public briefing.
“This means they will be disqualified from future government procurements and the final settlement of their current contracts will also be suspended,” he added.
The Palace earlier announced that Mr. Marcos ordered lifestyle checks on government officials amid the widening probe into ghost flood control projects, infrastructure works declared completed and paid for but found to have no actual implementation.
Lumagui said the BIR would issue deficiency tax assessments against contractors implicated in ghost projects, stressing that expenses for non-existent projects cannot be treated as tax-deductible.
“No project means no deductible expense,” he said.
Beyond administrative penalties, the commissioner warned that contractors proven to have wilfully underdeclared taxes could face tax evasion charges. The BIR may also impose tax liens to protect public funds.
Under Revenue Regulations No. 17-2024, government contractors must secure an updated tax clearance before receiving final settlement on projects.
The clearance certifies they have no outstanding tax liabilities and have complied with all filing requirements.
Lumagui added that the agency would play a “wide role” in the Marcos administration’s lifestyle checks, which will cover both contractors and government officials.
“The only purpose of that is to see if their assets match the taxes they paid,” he said.
The measures are part of President Marcos’ directive to tighten oversight of infrastructure projects and ensure taxpayer money is not lost to corruption.
