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Manila Bulletin devider Business devider The Economy devider BIR to audit contractors implicated in questionable flood control projects

BIR to audit contractors implicated in questionable flood control projects

Published Aug 26, 2025 08:28 am
BIR Commissioner Romeo D. Lumagui Jr.
BIR Commissioner Romeo D. Lumagui Jr.
The Bureau of Internal Revenue (BIR) is initiating a tax fraud investigation against contractors involved in questionable flood control projects identified by President Marcos Jr.
In a statement on Tuesday, Aug. 26, BIR Commissioner Romeo D. Lumagui Jr. said he has directed all offices of the bureau to launch a parallel audit of these contractors’ tax returns and payments.
Lumagui said this action supports the President’s investigation into anomalous flood control projects.
Lumagui said the BIR will not issue an updated tax clearance to any contractor found to have underpaid or evaded taxes.
He added that without this clearance, the contractor will be disqualified from future government procurements, and the final settlement of their current contracts will be suspended.
According to the BIR, this directive is in accordance with the provisions of Revenue Regulation No. 17-2024 (RR No. 17-2024), which requires government contractors to secure an updated tax clearance from the BIR before the final settlement of any government contract.
The regulation specifies that the updated clearance must certify that the contractor has no outstanding tax liabilities and has duly filed and paid all applicable taxes. This is a separate requirement from the initial tax clearance needed during the procurement process's eligibility phase.
Failure to present the updated tax clearance will result in the suspension of the contract’s final settlement and the imposition of a tax lien over the contract amount. These measures, outlined in Sections 2 and 3 of RR No. 17-2024, are designed to protect public funds from non-compliant contractors.
Additionally, Section 235 of the National Internal Revenue Code (NIRC) allows the BIR to conduct multiple audits within the same taxable year in cases of fraud or irregularities, as determined by the Commissioner. This provision is applicable to the contractors under scrutiny.
“The BIR will ensure that all contractors in the country pay the right taxes. They earn from projects funded by taxes from millions of Filipinos and businesses—it's unacceptable if they don't pay the right taxes,” Lumagui noted. “If you know of any contractor not paying the right taxes, report them immediately to the BIR.”
The BIR chief also addressed reports of “ghost” flood control projects that were fully paid for but never constructed, confirming that the BIR will investigate these cases as well upon official confirmation from the relevant government agencies.
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