A tax clearance is a certificate issued by BIR or the Bureau of Internal Revenue. It’s a document that many businesses or taxpayers commonly request so they can bid on government contracts or render particular services to the government.
Moreover, this document can serve as a company’s proof, certifying that their business is of good standing or is tax compliant. Notably, the validity of this tax clearance is only 1 year from date of issue. However, it can be revoked for non-compliance of tax codes anytime.
If you’re a business owner who needs a tax clearance, this is something that you will have to renew annually. Without this document, you could miss out on important opportunities. Keep on reading to learn more about the tax clearance process.
Requirements for Securing the Tax Clearance
The most significant requirement is you have to be a registered taxpayer in eFPS or the BIR Electronic Filing and Payment System. If you need a tax clearance now, you cannot just register today. It doesn’t work that way.
You must be a regular user of the eFPS from the time you enrolled up to the time you filed to renew your Tax Clearance Certificate. For those who are not registered in eFPS yet, make sure to get registered and bring an enrollment letter of request with the name, email, position, and contact number of 2 authorized users.
However, if you are a new applicant, submitting your latest income tax and business tax returns that were filed via other means is essential to jump start the process. You must also take note of the following critical considerations:
- You should not have unpaid taxes.
- You should not be tagged as a CBL taxpayer which is an abbreviation for Cannot Be Located taxpayer.
- You should submit a written request for Tax Clearance.
- You should not have any unpaid annual registration fee or ARF.
- You should not have any pending tax or tax-related cases filed in court.
- You should not have a delinquent account.
If you are grappling with any of the above noted issues, don’t fret because all hope is not lost. You can still be issued a tax clearance certificate given that you have paid the full amount for your compromise settlement or to abate the penalties you incurred. If you have been remiss in accounting and bookkeeping, you need to organize them so you can submit sufficient evidence and pay the tax arrears.
The Process of Securing a Tax Clearance
To start, you must submit a written request along with other requirements to the Revenue District Office or RDO. After submission of appropriate documents, wait for the RDO to verify that you have no unpaid taxes.
If identified that you missed a tax payment, you have to pay for it as well as the penalty fee. Once you are cleared and free of unpaid taxes, the RDO or the Revenue District Office should give you the No Tax Liability Certificate. The tax clearance certification fee is P100. Pay the fee via eFPS and attach the confirmation receipt.
After paying the tax certification fee, you need to go to the regional office of BIR and submit the following documents:
- Letter of Request for Tax Clearance
- Certificate of No Tax Liability
- A Photocopy of your COR or Certificate of Registration
- Tax clearance Application Form found on the website of BIR or the Bureau of Internal Revenue
- BIR Form 0605 or the Payment Form
- eFPS Payment Confirmation Receipt
- Previous Issued Tax Clearance
- Two Loose documentary stamps
- Latest Tax Returns paid via eFPS
Prepare to Wait for the Release of the Tax Clearance
After you are done submitting the documents mentioned above, wait for further instructions. When you’re doing this process of securing the tax clearance, extend your patience and prepare to wait because it will take time. Thus, if you have any government tenders or projects that you would like to take part of, it would be best to prepare for the tax clearance ahead. Make sure you check your accounting books and look at the past filed tax returns to make sure you’re compliant. Once you are cleared, only then will the BIR representatives call you to get your Tax Clearance.
To have a smooth tax clearance process, make sure you satisfy the requirements mentioned. This tax clearance certificate is crucial to businesses so if you own one, ensure that you secure a tax clearance certificate to prove that your business is complying with the tax laws. With this document, you can strike while the iron is hot and never miss out on opportunities. If you need assistance in securing a tax clearance, don’t hesitate to call our accounting firm. Apart from the usual bookkeeping, accounting, and auditing, we provide advice on BIR problems and solutions.