In the Philippines, an official document known as a Tax Clearance is issued by the Bureau of Internal Revenue (BIR). The submission of a Tax Clearance Certificate is one of the requirements for entering a new or ongoing contract with the government to demonstrate compliance with tax laws and timely payments of taxes.
Moreover, tax services in Manila say that this clearanceis also frequently requested by taxpayers or businesses to demonstrate to investors or customers that the company complies with tax laws or is in good standing. Thus, it is essential to keep your business or company’s BIR documents in case you need to obtain a tax clearance.
Additionally, it is advantageous if you have never missed a tax payment to avoid being given harsh penalties and paying hefty surcharges. With arrears, it may take time for you to secure a tax clearance, which could be cumbersome if you have a business opportunity you want to explore. In this article, we present the requirements needed to obtain a Tax Clearance Certificate and a general guide to its process.
Requirements For Obtaining a Tax Clearance
All tax and accounting services in the Philippines say that you need the following requirements to get a tax clearance:
1. To file and pay your income taxes online, you must be a registered taxpayer in an online portal called the BIR Electronic Filing and Payment System (eFPS). Otherwise, you must go to a Revenue District Office (RDO) and bring the following items to sign in for eFPS:
a. A letter requesting participation in eFPS. Include the following information for two authorized users: email, phone number, and position.
b. Certificate of Registration
2. Bring the tax payment form and printed BIR acknowledgment email. In any case, one must not miss previous tax payments, otherwise, settle the taxes in the office and pay the penalty.
3. Request for tax clearance in writing.
The Actual Tax Clearance Process
After securing all the appropriate documents, here is what you need to do:
1. Bring a written request for tax clearance and any other necessary documents to the RDO.
2. The RDO will determine whether you have missed a tax payment or ate in delinquency. If you have installment misconduct, you are required to pay the penalty fee.
3. The RDO will issue a Certificate of No Tax Liability if everything is in order.
4. Through eFPS, pay the P100 Tax Clearance Certification Fee. The Efps Bank Payment Confirmation Receipt should then be attached.
5. Bring the following to the BIR Regional Office:
a. Proof of no tax penalty (Certificate of No Tax Liability).
b. Application form for Tax Clearance, which can be acquired on the BIR website’
c. eFPS Bank Payment Confirmation Receipt (from paying the Tax Clearance Certification Fee) and BIR Form 0605 (Payment Form).
d. Photocopy of Certificate of Registration
e. Preceding grant of tax clearance
f. Two unattached documentary stamps
g. A letter requesting for Tax Clearance
h. The most recent tax returns were filed and paid through eFPS from the registration fee payment.
5. Accounting services in the Philippines attest that you have to patiently wait for any additional instructions after the submission of the necessary documents. The BIR will contact you to claim your Tax Clearance Certificate if everything clears.
Final Notes on the Tax Clearance
The Tax Clearance will have a one-year validity period from the time it is issued. If you have any need for it, bear this in mind. Moreover, just because you cleared now doesn’t mean you’re business is safe. Any one of the following justifies the revocation of Tax Clearance:
• The request for a compromise settlement and penalty abatement has been rejected.
• It was discovered that the taxpayer-applicant had attached false documents to his or her application.
• It was determined that the taxpayer-applicant did not meet the required standards.
• The taxpayer-applicant had mispresented themselves to either the Tax Clearance-issuing office or the government procuring agency.
If you need help securing your tax clearance, remember that this hinges on proper accounting systems, diligent bookkeeping, and proper compliance with all the BIR regulations. Working on your tax clearance is not something you do overnight.
Instead, it is a continual process that every business owner must undertake. Although it may seem tedious, it would help in the long run as it ascertains that you comply with the appropriate tax codes and are not remiss in your duty as a Filipino. If you need assistance processing your tax clearance, call our accounting services in Pasig. Our team will ensure that your paperwork is organized so we can process the tax clearance and help you avoid losing out on important business opportunities.