Internal Revenue Commissioner Kim Jacinto- Henares has relaxed the requirements for contractors of government infrastructure projects to process their Application for Contractor’s Final Payment Release Certificate (Bureau of Internal Revenue [BIR] Form 0217).
Henares issued Revenue Memorandum Circular (RMC) 1-2015, removing from the documentary requirements the Certificate of Acceptance issued by the Department of Public Works and Highways (DPWH) from the list of requirements that should accompany the application for contractor’s final payment release certificate.
“Pursuant to the implementing rules and regulations of Republic Act 9184, Certificate of Acceptance is issued after the defects liability period, that is, one year after the completion of the project, hence requiring this document in filing the contractor’s application for final release of payment is not feasible,” the new circular said.
Based on BIR Form 0217 (formerly BIR Form 2555), contractors should disclose the following: total contract price of projects; progress billing collected; final withholding of value-added tax; creditable withholding tax; total amount previously collected; and taxes withheld and collectible final payment.
The requirements for the application for contractor’s final payment release certificate are meant to ensure that contractors of government infrastructure projects are paying the correct taxes on their income from government transactions.
Under RMC 63-2014 issued last year, the BIR has required all contractors in government infrastructure projects to apply for contractor’s final payment release certificate before the government shall release the final payment in a particular project to such contractor.
The said application must be submitted by the contractor to the BIR 30 days before the filing of a claim for the release of final payment by the DPWH.
David Cagahastian