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THE BUREAU of Internal Revenue (BIR) will examine the contractors purportedly engaged in irregular flood control initiatives for potential tax evasion, as stated by Commissioner Romeo D. Lumagui, Jr.
“The BIR will conduct a concurrent investigation of contractors involved in questionable flood control initiatives. We will uphold the President’s initiative by reviewing the tax filings and dues of these entities,” Mr. Lumagui mentioned in a declaration on Tuesday.
The tax authority’s inquiry follows President Ferdinand R. Marcos, Jr. directing a comprehensive assault on corruption in governmental works, especially in flood control.
Earlier this month, Mr. Marcos identified 15 contractors that have secured roughly 20% or P100 billion of the flood control budget from the total P545 billion since 2022.
Mr. Lumagui stated that the tax evasion inquiry will zero in on the contractors linked to these questionable flood control initiatives as highlighted by Mr. Marcos.
“If any contractor is proven to have underpaid or circumvented taxes, the BIR will refrain from issuing an updated tax clearance to them. The contractor will be barred from future government procurement opportunities, and the final resolution of their current government contracts will be halted,” he remarked.
According to Revenue Regulation (RR) No. 17-2024, contractors are required to obtain an updated tax clearance from the BIR prior to the final resolution of any government contract.
Failing to present this clearance will lead to the halt of contract resolutions and a tax lien on the contract sum in favor of the government, the BIR indicated.
The updated clearance assures that each contractor has no pending tax obligations and has appropriately filed and remitted all applicable taxes.
The BIR specified that this document differs from the initial tax clearance mandated during the eligibility phase of the procurement process.
These provisions under Sections 2 and 3 of RR No. 17-2024 are designed to protect public resources from contractors who do not fulfill tax responsibilities.
Moreover, Section 235 of the National Internal Revenue Code empowers the BIR to carry out multiple audits within the same taxable year in instances involving fraud or discrepancies, as assessed by the commissioner.
Earlier this week, the Department of Public Works and Highways revealed the suspension of District Engineer Abelardo D. Calalo, who allegedly proposed about P3.13 million in cash to Batangas Rep. Leandro L. Leviste to deter investigations into discrepancies in flood control initiatives.
In addition, Mr. Lumagui noted that contractors involved in “ghost” projects will receive deficiency tax assessments, once the BIR obtains formal confirmation from relevant agencies indicating that there were no actual projects.
“If the BIR, through certification or endorsement from the proper government bodies, establishes that a flood control project is a ghost project, we will deny all associated cost and expense claims,” he stated.
“No project implies no deductible expense. A tax deficiency assessment will be processed accordingly.”
Both the Senate and House of Representatives have initiated inquiries into the purported discrepancies in flood control initiatives. — Aubrey Rose A. Inosante
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