BIR Ruling [DA-137-06]

March 17, 2006 BIR RULING [DA-137-06] Philippine Amusement & Gaming Corporation PAGCOR HOUSE, 1330 Roxas Boulevard Ermita, Manila Attention: Ms. Maria Lourdes M. Jose Managing Head, Procurement & Property Department Gentlemen : This refers to your letter dated October 28, 2005 which was indorsed by the Assistant Commissioner, Collection Service on November 28, 2005 requesting for clarification on matters relative to the supplier's registration and public bidding requirements pursuant to Executive Order (EO) No. 398, as implemented by Revenue Regulations (RR) No. 3-2005 and Revenue Memorandum Circular (RMC) No. 16-2005, to wit: 1. Are the Tax Clearance Certificate/Certificate of No Delinquent Accounts and the Certificate of No Tax liabilities issued by the Revenue District Offices acceptable in lieu of the Tax Clearance Certificate issued by the National Office? 2. Are foreign suppliers with no local counterpart required to register with the Bureau of Internal Revenue? If they are required to do so, how can these foreign suppliers register with the BIR and how can they apply for a Tax Clearance Certificate? AaEcDS In reply thereto, please be informed as follows: 1. The Tax Clearance, contemplated under the provisions of EO No. 398, to prove full and timely payment of taxes refers to the clearance issued by the Collection Enforcement Division (CED) attesting that the taxpayer has no outstanding Final Assessment Notice and/or delinquent account (Section 3.4 of RR No. 3-2005) Accordingly, the Tax Clearance Certificate/Certificate of No Delinquent Accounts and the Certificate of No Tax Liabilities issued by the Revenue District Offices cannot be used in lieu of the Tax Clearance which can only be issued by the CED of the BIR National Office. 2. Section 1 of EO No. 398 categorically requires that " all persons, natural or juridical, whether local or foreign, who desire to enter into or participate in any contract with the government, its departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units, shall, as a pre-condition, submit along with their proposal and/or bid, a copy of their latest income and business tax returns duly stamped and received by the Bureau of Internal Revenue (BIR), and duly validated with the tax payment made thereon ". (Emphasis supplied) In view thereof, foreign suppliers with no local counterpart are also required to register with the BIR as mandated by EO 398. DaEcTC Since the foreign suppliers have no local counterpart, its local representative shall register for and on behalf of the foreign supplier and secure the necessary Tax Clearance in accordance with RR No. 3-2005 and RMC No. 16-2005. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service