Implementation of the Memorandum of Agreement between the Department of Public Works and Highways and the Department of Finance

September 9, 1992 REVENUE MEMORANDUM ORDER NO. 39-92 SUBJECT : Implementation of the Memorandum of Agreement between the Department of Public Works and Highways and the Department of Finance TO : All Internal Revenue Officers and Others Concerned I. Objective This order is hereby issued to set a uniform guidelines in the implementation of the provision of the Memorandum of Agreement between the Department of Public Works and Highways and the Department of Finance dated July 13, 1992, with the main objective of ensuring the correct and prompt assessment and collection of internal revenue taxes from contractors engaged by the government to construct infrastructures and other projects. II. Procedures A. Revenue District Office (Except RDO's Listed in Annex A) 1. Monitor the withholding of taxes by respective DPWH Regional/Provincial/City Offices from payments to contractors engaged to construct infrastructures and other projects. The withholding of 1% creditable income tax from both VAT and Non-VAT contractors and the 2% percentage tax from Non-VAT contractors shall be based on gross payments of money or its equivalent representing the contract price, compensation or service fee, including the amount charged for materials supplied, mobilization fee, deposits and/or advance payments actually of constructively paid; 2. Receive 3 copies of Application for Contractor's Final Payment Release Certificate (BIR Form No. Annex B) from contractors whose principal place of business falls within the jurisdiction of RDO concerned; 3. Issue claim slip if the application could not be approved within the day of filing which in no case should exceed 3 days; 4. Fill-up the "Certification" portion of the application in triplicate for signature of the RDO to be distributed as follows: Original - Contractor Duplicate - VAT Division Triplicate - RDO 5. Record approved application in a special logbook, serially numbered. Fill-up the corresponding log book number at the left lower portion of the Certificate as in the sample, to wit: Example: Date of Certification - August 31, 1992 RDO Concerned - Calamba, Laguna - RDO 37A Number in the Logbook - 1512 9 : 2 : - : 3 : 7 : A : - : 0 : 0 : 1 : 5 : 1 : 2 The numbering shall start with number one every year. 6. Prepare a duly certified monthly summary report of approved applications using the prescribed format (Annex C) which shall contain the following information: certificate number, name and principal place of business of contractor, TIN, project title, project location, date awarded, date terminated, contract price, amount collected, total taxes withheld by DPWH and collectible final payment; acd 7. Receive date of monthly transactions on or before the 20th day of the following month from the respective DPWH Regional/Provincial/City office using the prescribed format place of business of contractor, TIN, Project ID and title, project location, date awarded, date terminated, contract price, amount collected, total taxes withheld by DPWH, collectible final payment (see matching of BIR RDO's and DPWH OFFICES, Annex E); 8. Transmit the summary report of approved Application for Contractor's Final Payment Release Certificate (Annex C), duplicate copies of approved applications and photocopy of information report from the respective DPWH Regional/Provincial/City office to the VAT Division not later than the end of the following month. Copies of transmittal letter are to be distributed as follows: Original - VAT Division Duplicate - RDO 9. Collate the data gathered for income and VAT purposes and compare it with the returns filed by contractors with the Revenue District Office (RDO). B. VAT Division 1. Monitor the withholding of taxes by the DPWH (Main) and National Capital Region Offices from payments to contractors; acd 2. Receive 2 copies of Application for Contractor's Final Payment Release Certificate from contractors whose principal place of business is located and registered in Metro Manila BIR offices (RDO Nos. 21; 22; 23; 24; 25; 28; 29; 30; 30A; 31; 32; 32A); 3. Issue claim slip if the application could not be approved within the day of filing which in no case should exceed 3 days thereafter; 4. Fill-up the "Certification" portion of the application in duplicate for signature of the Chief, VAT Division to be distributed as follows: Original - Contractor Duplicate - VAT Division 5. Record approved application in a special logbook, serially numbered. Fill-up the corresponding logbook number at the left lower portion of the certificate. 6. Receive data of monthly transactions on or before the 20th day of the following month from the DPWH Main Office, thru its Infrastructure Computer Center, contained in computer diskettes with the following information: name and principal place of business of contractor, TIN, Project ID and title, project location, date awarded, date terminated, contract price, amount collected, total taxes withheld by DPWH, and collectible final payment. Blank diskettes shall be provided by the VAT Division; 7. Receive data of monthly transactions on or before the 20th day of the following month from the DPWH-NCR Offices using the prescribed format (Annex D), containing the name and principal place of business of contractor, TIN, project ID and title, project location, date awarded, date terminated, contract price, amount collected, taxes withheld by DPWH, collectible final payment; 8. Receive duplicate copies of approved Application for Contractor's Final Payment Release Certificate, summary report of approved applications, and photocopy of information report from DPWH Regional/Provincial/City offices with transmittal letter from the RDO; cd 9. Transcribe and consolidate all data received in accordance with the prescribed computer program; 10. Collate the data gathered for income and VAT purposes and compare it with the returns filed by contractors having principal place of business in Metro Manila. III. Effectivity The provisions of this revenue order are effective immediately and all concerned are hereby enjoined to follow strictly the provisions hereof. (Sgd.) JOSE U. ONG Commissioner of Internal Revenue