The Bureau of Internal Revenue (BIR) said Monday it has served letters of authority to examine the taxes paid by 15 of the country’s largest flood control contractors as part of a government investigation into alleged “ghost projects.”
BIR Commissioner Romeo Lumagui Jr. told a Senate Blue Ribbon Committee hearing that the letters were issued under the agency’s Run After Tax Evaders (RATE) program, which gives examiners the authority to scrutinize the financial records and tax compliance of the companies.
Lumagui assured senators that the BIR would cooperate fully with both the Senate and President Ferdinand Marcos Jr. to uncover any irregularities.
“The people’s taxes are for real projects, not for ghost projects,” he said in a Facebook post.
Lumagui said the BIR also issued Revenue Regulation (RR) No. 17-2024, which requires contractors to present updated income tax returns and tax clearances before they can participate in public bidding.
He said the new rules are designed to ensure that those who profit from government projects pay the correct taxes.
RR 17-2024 reinforces Executive Order No. 398, Series of 2005, which mandates that all government contracts include a clause promoting full and correct tax payment.
The regulation also allows the government to withhold final payments to contractors who fail to show updated tax clearances, with retention money and unpaid balances subject to levy for tax obligations.
The BIR said the audits of the 15 contractors would follow standard fraud audit procedures, while upholding taxpayer rights guaranteed under the National Internal Revenue Code (NIRC) and related regulations.
