Implementation of Tax Clearance for Public Utility Vehicles

December 6, 2016 LTO MEMORANDUM CIRCULAR NO. 2017-2060 TO : Regional Directors Assistant Regional Directors District Heads All Concerned Employees SUBJECT : Implementation of Tax Clearance for Public Utility Vehicles For clarification and pursuant to LTFRB Memorandum Circular No. 2005-013 regarding the submission of tax clearance instead of income tax, LTO Memorandum Circular No. 651-2005 dated 04 October 2005 which reads as follows, is hereby reiterated: "Since tax clearance is already a requirement of the LTFRB before a public utility vehicle gets a confirmation, there is no need for LTO to require tax clearance . Hence, we just require confirmation from the LTFRB upon registration of PUVs." For your guidance and compliance. (SGD.) EDGAR C. GALVANTE Assistant Secretary ATTACHMENT REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Revenue Region No. 16 Cagayan De Oro City October 18, 2016 MR. OSCAR S. SALCEDO Regional Director Land Transportation Office Bulua, Cagayan de Oro City Dear Director Salcedo, This pertains to a series of letters sent to us by Mr. Herculano G. Babatido Jr., complaining about the practice of your Office of renewing registrations of common carriers' motor vehicles without requiring tax clearances. We understand that this is your Office policy per LTO Memorandum Circular No. 651-2005 which provides: EHaASD "xxx xxx xxx Since tax clearance is already a requirement of the LTFRB before a public utility vehicle gets a confirmation, there is no need for LTO to require tax clearance. Hence, we just require confirmation from the LTFRB upon registration of PUVs. xxx xxx xxx" However, when we verified with the Land Transportation Franchising and Regulatory Board (LTFRB) it was established that the said Office only requires presentation of the latest income tax return, tax identification number, and audited financial statements at the time when an operator applies for a franchise. When LTFRB issues confirmation, which your Office requires in the renewal of registrations, it does not require any tax clearance or tax return from an operator contrary to what your Office is saying in the above-mentioned Memorandum Circular. It is worth mentioning that the confirmation issued by LTFRB bears a stamp that it is "FOR BIR PURPOSES ONLY NOT VALID FOR LTO REGISTRATION." This situation creates confusion as to which Office should require presentation of a tax clearance or tax returns but one thing is certain it is required under Republic Act No. 1538 which provides: "Section 1. No person, partnership, association or corporation required by law to file an income tax return shall be issued a license to engage in any trade, business or occupation or practice a profession unless he shall have presented to the officer issuing such license or permit proof that he has filed his income tax return during the preceding year and that income taxes due have been paid thereon. For the purpose of this Act, a copy of such return on which is shown a certification or statement by the Collector of Internal Revenue or his duly authorized representative that the original has been filed with the received by him or a certification or statement by the Collector of Internal Revenue or his duly authorized representative that the aforesaid income tax return has been duly filed with and received by him even without a copy of such income tax return, and the corresponding receipts showing payment of all income taxes shall be sufficient proof. xxx xxx xxx" In order to address this issue, can we sit down with you or your representative together, with the LTFRB to discuss this matter so we can come up with a common ground? You may contact me at this number (08822)711637. Meantime, we request from your end a list of common carriers registered within your jurisdiction together with the type and the number of units they operate. This request is in accordance with Section 5 (B) of the National Internal Revenue Code which provides: "To obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation, or from any office or officer of the national and local governments, government agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government-owned or -controlled corporations, any information such as, but not limited to, costs and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures or consortia and registered partnerships, and their members;" The information we get will be cross-matched with our record so we can go after those who are not complying with tax laws, rules and regulations. Rest assured that any information you will furnish us will be used exclusively for this purpose. Thank you! Very truly yours, (SGD.) GLEN A. GERALDINO Regional Director LTO Memorandum Circular No. 651-05 October 4, 2005 LTFRB Memorandum Circular No. 026-05 August 4, 2005