Question & AnswerQ&A (BIR REGULATIONS NO. 3-2005)
The main objective is to ensure that only tax-compliant entities are allowed to enter into contracts with the government and to provide a simple process for applicants to submit the required documents for compliance.
All persons, natural or juridical, local or foreign, desiring to enter into or participate in any contract with the government, including its departments, agencies, state universities and colleges, government-owned or controlled corporations, government financial institutions, and local government units.
For those with an annual income tax return, it refers to the return for the preceding tax year. For new establishments without an annual ITR, it refers to the most recent quarter's ITR.
It refers to VAT or percentage tax returns covering the previous six months, or monthly business tax returns filed to date for those with less than six months of operation.
Tax returns filed through the Electronic Filing and Payment System (EFPS) with corresponding reference numbers are deemed duly stamped and received by the BIR and thus valid for participation.
Mandatory EFPS filing took effect on April 1, 2005.
The latest income tax return, the latest business tax return duly validated, and a tax clearance issued by the BIR's Collection Enforcement Division.
A tax clearance is a certificate issued by the Collection Enforcement Division of the BIR attesting that the taxpayer has no outstanding Final Assessment Notice or delinquent account.
All government entities must furnish the BIR with names of private contracting parties and payment amounts made to them to monitor full and timely tax payments.
For EFPS filed returns, authenticity is verified by telephone with the BIR Contact Center or through the BIR Portal. For non-EFPS filed returns submitted during the interim period, copies must be faxed to the BIR Contact Center.
Non-EFPS filed tax returns and payment documents could be submitted if presented first to the appropriate Revenue District Office for authenticity check and stamping.
Requests must be in writing to the Division Head, Collection Enforcement Division, BIR National Office and include taxpayer name, contact info, TIN, revenue district office, procuring government agency, and procurement officer's contact info.
Government entities must regularly submit the Summary List of Payees covering all contracts and payments for the reporting period via EFPS using BIR Form 1600.
They will not be allowed to enter into or participate in contracts with the government as the submission of validated tax returns and tax clearance is a precondition.
They took effect fifteen (15) days after publication in a newspaper of general circulation, following adoption on February 16, 2005.