Bureau of Internal Revenue (BIR) Commissioner Romeo Lumagui Jr. issued Revenue Regulation No. 17-2024 (RR No. 17-2024) which requires government contractors to secure from the BIR an updated tax clearance.
The clearance should certify that the contractor does not have any outstanding tax liabilities, and that the contractor has duly filed its latest income and business tax returns and paid the corresponding taxes due, prior to the final settlement of a government contract.
“Government contractors have to show that they do not have any outstanding tax liabilities before the final settlement of a government contract. The BIR will require an updated tax clearance. Otherwise, the government has the power to suspend the final settlement of the government contract” Lumagui said.
Before the issuance of RR No. 17-2024, a BIR tax clearance is submitted by a government contractor during the procurement process as an eligibility requirement.
“Part of our commitment to excellent taxpayer service is ensuring that before government contractors are paid, they are cleared of any tax liabilities. In 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,” said Lumagui.
RR No. 17-2024 also provides that the amount of final settlement on the government contract which was suspended for failure to present an updated BIR tax clearance will be subject to a tax lien in favor of the government to satisfy the contractor’s outstanding tax liabilities.
Commissioner Lumagui also issued Revenue Memorandum Order No. 002-2025 prescribing the policies, guidelines, and procedures in the processing and issuance of tax clearance certificate for final settlement of government contracts.
