Tax Clearance Certificate Process In Philippines
In the Philippines, a Tax Clearance Certificate is a document issued by the Bureau of Internal Revenue (BIR). This document is required by businesses or taxpayers so they can bid on government contracts or they may offer businesses or services to the government.
This document serves as evidence that the company or business is following the tax rules and ensuring the timely payment of taxes. It is difficult to get the certificate in case of tax arrears. This may lead to a delay in starting a business. Paying taxes on time is important to save from penalties or extra charges. Tax Clearance certificate is valid for 1 year but it can be invalid in case the business does not comply with the tax rules.
A General Guide for the Tax Clearance Process in Philippines
Tax clearance is an essential prerequisite to demonstrate to investors or customers that the company complies with tax laws or is in good standing. Here is a general guide on the requirements and process details, needed to obtain a Tax Clearance Certificate.
Requirements for obtaining a Tax Clearance Certificate
Do’s
- You must be a registered Tax Payer in eFPS or the BIR Electronic Filing and Payment System.
- You must be a regular user of the eFPS from the time of enrollment to the time you apply to receive or renew your tax clearance certificate.
- In case, you are not registered in eFPS, ensure to apply for it first. Attach the enrollment letter of request with the name, email, position, and contact numbers of 2 authorized users.
- Submit a written request or an application for Tax Clearance.
- If, you are a new applicant, submit your latest income tax and business tax returns to start the process.
Don’ts
The Tax Clearance has a one-year validity period from the time it is issued. Be careful not to breach the following important points.
- You should not have tax arrears
- You should not be labelled as a CBL taxpayer. (Cannot Be Located Taxpayer)
- You should not have any unpaid annual registration fee or ARF.
- You should not have any pending taxes to be paid.
- You should not be involved in any pending tax case in the court.
- You should not have any criminal account
- You should not have mispresented anything either to the Tax Clearance-issuing office or the government procuring agency.
Read about Business Clearance Process.
Process for Tax Clearance Certificate
To initiate the process of Tax Clearance, a written application is required to be presented to the Revenue District Officer or RDO along with appropriate documents. After clearance of all unpaid taxes a clearance, the RDO verifies and a certificate is issued in the name of the applicant.
In case of non-payment of tax amount or any arrears, a penalty is charged along with the tax amount. After clearance of all the payments, the RDO issues you a No Tax Liability Certificate. The fee for the Clearance Certificate is ₱ 100. The fee transaction is made through eFPS. It is required to attach the fee receipt with all other important documents.
Documents to be attached with the Application
The Tax Clearance Certificate is pivotal to businesses. It favors you by demonstrating that you secure a tax clearance certificate to assure that your business is complying with the tax laws. It is easy to strike the opportunity with the availability of this document after ensuring the credibility of your company as a reliable taxpayer.
The following documents are required to be submitted to the regional office of BIR or the Board of Internal Revenue.
- Application requesting for Tax Clearance
- Certificate of No Tax Liability
- A copy of your Certificate of Registration (COR)
- Tax Clearance Application Form from the website of BIR.
- BIR Form 0605 or the Payment Form.
- eFPS payment transfer Receipt
- Last Tax Clearance Certificate
- Two loose documentary stamps
- Latest Tax Returns paid through eFPS.
To go through a smooth clearance process make sure you comply with all the requirements mentioned above. After submission of important documents with the application, an applicant has to wait patiently for the release of the clearance certificate as it finally takes some time to be released in your favor. That is why it is recommended to begin working on tax clearance documents beforehand if you intend to apply for any government tender or project to avoid any hassle or discomfort. It is advisable to consult any accounting firm for assistance in bookkeeping, accounting, auditing, or advice on BIR regulations, problems, and solutions.
After the verification of your accounting log and previous tax returns, the BIR representatives issue a clearance certificate in your name. You can get Business Clearance and Permits in Philippines.
Sample Tax Clearance Certificate
Here is a sample to give you an idea how what a |Tax Clearance Certificate looks like.
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Tax Clearance For No Money and Property
Tax Clearance or Certification of No Money and Property Accountability depends on taxpayer record. Any person or individual who has real property such as land, buildings, and machinery and establishes, operates, conducts, or maintains a business can be eligible for Tax Clearance. The certificate is issued upon request of the taxpayer.
| Office or Division: | Municipal Treasurer’s Office |
| Classification: | Simple |
| Type of Transaction: | G2C – Government to Citizen |
| Who may avail: | All Real Property Owners |
| REQUIREMENTS | Issuing Authority |
| For Real Property Tax Clearance | |
| Proof of Payment or Official Receipt, if available | Municipal Treasurer’s Office |
| For Certificate of No Money & Property Accountability | |
| Proof of Payment or Official Receipt, if available | Municipal Treasurer’s Office |
Tax Clearance Validity, Processing Time & Fees
Tax Clearance certificate is valid for 1 year but it can be invalid in case the business does not comply with the tax rules. The fee for the Clearance Certificate is ₱ 100. The fee transaction is made through eFPS. After submission of important documents with the application, an applicant has to wait patiently for the release of the clearance certificate as it finally takes some time to be released in your favour.
Final Notes on the Tax Clearance
Tax clearance is a continual process for every business. It is mandatory to undertake. It may appear long and challenging however compliance with the tax code of conduct and and fulfilling your duties as a Filipino business owner is an obligation. This conscientious approach avoids legal issues and supports the long-term success and sustainability of your business.
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Frequently Asked Questions (FAQs)
What is the certificate of clearance in the Philippines?
The certificate of clearance in the Philippines serves as a document to provide evidence that a business or individual has no pending tax arrears or jurisdiction. This document is a legal document to testify that a company is complying with tax laws.
How much is the payment for tax clearance in the Philippines?
The tax clearance certification fee is ₱ 100.
Can I file a tax clearance online?
Electronic Tax Clearance for Bidding Purposes and Tax Compliance Verification Certificate (eTCBP-TCVC) is an online system where the taxpayer-applicant can submit applications for Tax Clearance through electronic mail.
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