The Bureau of Internal Revenue (BIR) has peeled off one layer in the process for public works contractors to get paid, in a move that officials hoped would speed up the completion of infrastructure projects under President Rodrigo Duterte’s ambitious “Build, Build, Build” program.
The BIR, in a memorandum order, removed an earlier requirement for contractors to submit two documents from the tax agency to the Department of Public Works and Highways (DPWH) before they are paid.
The memo revoked a previous order issued by Revenue Commissioner Caesar R. Dulay which had required contractors to submit BIR Form No. 217, or application for a certificate of final payment, before payment was released.
BIR Form 217 had allowed the agency to monitor withholding taxes paid by the DPWH which came from contractors’ payments, Dulay said.
The BIR chief, however, said tax clearances from the BIR, including copies of contractors’ business and income tax returns, already served as sufficient proof of correct and timely tax payments.
The Government Procurement Act of 2016 provided that only tax clearance from the BIR was needed to “prove full and timely payment of taxes, especially of those contractors transacting with the government,” Dulay said.
Dulay acknowledged that requiring both tax clearance and BIR Form 217 had been a “duplication” that led to “undue convenience and additional burden to contractors.”
“The concern raised is that this impedes the prompt disbursement of fund for final payment to contractors,” Dulay said.
He added that it also ran counter to the Ease of Doing Business law which required simplified processes in business and nonbusiness transactions in the government.