Requesting Entity: Procurement Service (PS) – Department of Budget and Management (DBM)

Issues Concern: Foreign Partner in Joint Venture

Details

Whether the foreign partners participating in public bidding as a Joint Venture are still required to comply with the requirements under Section 34.2 of the Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184, particularly, the submission of Tax Clearance.

[T]he requirement under Section 34.2 of the IRR of RA 9184 for the submission of Tax Clearance is based on Executive Order (EO) 398. Section 1 of EO 398 requires the submission of Tax Clearance issued by the BIR to prove full and timely payment of taxes of all persons desiring to enter into or participate in any contract with government. Tax Clearance as defined under BIR Revenue Regulations (RR) No. 3-2005 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.

As regards the Tax Clearance form applicable to foreign corporations required under BIR RR 3-2005, x x x the CED of the BIR issues Delinquency Verification Certificates to Non-Resident Foreign Corporations (NRFC)/ Non-Resident Aliens Not Engaged in Trade or Business (NRANETB) attesting to the fact that the taxpayer has no outstanding Final Assessment Notice and/or delinquent account. Hence, for NRFC and NRANETB, a Delinquency Verification Certificate may be submitted as a form of Tax Clearance.