The Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Order (RMO) No. 2-2025, introducing new guidelines for obtaining Tax Clearance for Government Contracts (TCFGs). This clearance ensures that businesses have no outstanding tax liabilities before engaging in government contracts.
If your company is involved in government procurement, you must secure a TCFG to remain eligible for bidding and contract execution. Understanding the updated procedures will help you avoid delays and penalties.
Read the official BIR announcement here: BIR RMO No. 2-2025
Key Takeaways from BIR RMO No. 2-2025
- A TCFG is now mandatory for businesses entering government contracts.
- Applicants must provide proof of full tax compliance, including recent tax returns and financial statements.
- Processing times vary based on taxpayer classification, with separate rules for large and non-large taxpayers.
- Failure to secure a TCFG may result in disqualification from government projects and potential penalties.
Who Needs a Tax Clearance for Government Contracts (TCFG)?
A Tax Clearance for Government Contracts (TCFG) is required for:
- Companies bidding on government projects.
- Businesses renewing existing government contracts.
- Contractors providing goods or services to any government agency.
How to Apply for a Tax Clearance Certificate (TCC) Under BIR RMO No. 2-2025
To secure a Tax Clearance for Government Contracts (TCFG), follow these steps:
1. Check Your Tax Compliance Status
Ensure that:
- All tax returns have been filed.
- There are no outstanding tax liabilities or penalties.
- Your business is compliant with BIR tax compliance for government contractors.
2. Prepare Required Documents
Applicants must submit:
- Latest income tax returns.
- Audited financial statements.
- Proof of payment for all outstanding tax liabilities.
Tip: Keep your tax records updated throughout the year to simplify the TCFG application process.
3. Submit Your Application
Submit your request to the appropriate BIR office based on your taxpayer classification.
- Large taxpayers: Submit to the Large Taxpayers Division (LTD) in Cebu, Davao, or the Large Taxpayers Collection Enforcement Division (LTCED).
- Non-large taxpayers: Apply through the Tax Clearance Section of the Regional Collection Division.
4. Monitor Your Application Status
Track the progress of your TCFG application through the BIR’s online portal or follow up with your assigned revenue office.
Tax Clearance Classification & Processing Offices
| Tax Clearance Classification & Processing Offices | Taxpayer Classification | Processing Office |
| TCVC-FG | Non-large taxpayer | Collection Section of the relevant Revenue District Office |
| TCVC-FG | Non-large taxpayer | Tax Clearance Section of the Regional Collection Division |
| TCFG | Large taxpayer | Large Taxpayers Division (LTD)-Cebu, LTD-Davao, or Large Taxpayers Collection Enforcement Division (LTCED) |
| TCFG | Nonresident foreign corporation (NRFC), nonresident alien not engaged in trade or business (NRA-NETB), or other entity authorized by the Commissioner of Internal Revenue (CIR) | Accounts Receivable Monitoring Division (ARMD) |
Approving Officials & Validity Period
| Type of Tax Clearance Certificate | Taxpayer Classification | Approving Revenue Official | Validity Period |
| TCVC-FG | Non-large taxpayer | TCFG | 90 days |
| TCVC-FG | Non-large taxpayer | Chief, Collection Division of the Revenue Regional Office | 90 days |
| TCFG | Large taxpayer | Chief, LTD-Cebu; Chief, LTD-Davao; or Chief, LTCED | One year |
| TCFG | NRFC, NRA-NETB, or other entity authorized by the CIR | Chief, ARMD | One year |
Consequences of Non-Compliance
Failure to secure or renew a Tax Clearance for Government Contracts (TCFG) can lead to:
- Disqualification from bidding on government projects.
- Legal penalties and potential tax audits.
- Delays in contract execution or renewal.
Warning: Non-compliance may affect your business reputation and future government contract opportunities.
How to Stay Compliant with BIR RMO No. 2-2025
- Regularly review your tax compliance status to prevent last-minute issues.
- Keep financial records organized and ensure all tax filings are up to date.
- Submit TCFG renewal applications early to avoid business disruptions.
- Consult tax professionals for guidance on tax compliance services in the Philippines.
Need Help with Your Tax Clearance Application?
Navigating the Tax Clearance for Government Contracts (TCFG) process under BIR RMO No. 2-2025 can be complex. At UNA Tax and Accounting Services, we provide expert tax compliance services in the Philippines to ensure smooth applications and full compliance.
Schedule a FREE 15-minute consultation today! Let us help you secure your tax clearance and stay compliant.
For the official memorandum, visit the BIR website.
