January 16, 2021

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The Philippines adopts online tax clearance system for government bidding

Tax clearance processing for government bidding is set to be more seamless in the Philippines after a rollout of an online system anticipated to give traditional bidding procedures a massive boost.

In a press release, the Bureau of Internal Revenue announced the launch of its Electronic Tax Clearance for Bidding Purposes and Tax Compliance Verification Certificate (eTCBP-TCVC) as part of the government’s most recent additions to its roster of online systems.

BIR Commissioner Cesar Dulay noted that the online tax clearance system was driven by the need to encourage more investments and cultivate a more conducive business atmosphere for interested investors amid restrictions brought by the COVID-19 pandemic.

Dulay added that they “are targeting to implement this online application [for] all prospective bidders nationwide soon, [as] part of our initiatives to fast track the processing and be more efficient in releasing tax clearances. This will also promote “no contact” taxpayer transactions that could lessen corrupt activities in the Bureau”.

According to a memorandum released, individuals, corporations, partnerships, cooperatives and associations, taxable and non-taxable, must first secure a Tax Certificate (TCVC) from the Collection Section of the Revenue District Office where he or she is registered. The TCVC, which can be accessed through the BIR website, is required for any application for tax clearance in relation to bidding transactions. The applicant may then send the application with all the required documents to the BIR’s email address for processing.

The online application is an additional method for taxpayers which can be utilised by those in certain areas in the country including the East-National Capital Region and the province of Pampanga. The system can also be availed of by non-resident aliens who are not currently engaged in any business in the Philippines.

The memorandum further stated that all tax documents shall be processed, issued and released in two working days, counted from the day the application is received, if filed manually, or upon acknowledgement of application via email, if filed electronically.

Earlier this month, the Department of Finance noted that 86% of tax payments made to the BIR were coursed through online channels. The finance department added that this figure constitutes PHP 1.24 trillion (US$ 25.8 billion) of BIR’s total collected taxes which amounted to PHP 1.45 trillion (US$ 30.1 billion) during the January to September period. This comes after BIR’s online transactions took a beating from restrictions made due to the COVID-19 pandemic.

The introduction of the online bidding system forms part of a slew of government-led initiatives aimed at infusing innovative technology to an otherwise traditional way of handling transactions. As earlier reported by OpenGov Asia, the Department of Information and Communications Technology (DICT) has formally launched an e-business application. This application, called the Electronic Business Permits and Licensing System or the eBPLS, allows businesses applying for permits and licenses to secure these documents online, hence, foregoing the need to wait in line at government offices.

The government-initiated programs come after President Rodrigo Duterte issued directives for an improved internet connectivity in the country, alongside orders to accelerate the implementation of innovative projects that would help citizens adapt to the new normal sparked by the pandemic.

One of these projects is the National Broadband Program under the wing of the DICT. The NBP is the country’s main blueprint for fibre optic and wireless technology programs that are anticipated to create faster and affordable connectivity channels even in remote or far-flung areas.