(UPDATE) THE Bureau of Internal Revenue (BIR) will conduct a tax fraud audit of contractors flagged for alleged irregularities in flood control projects, its top official said on Tuesday.

“Should any contractor be found to have underpaid or evaded taxes, the BIR will not issue an updated tax clearance to them,” Tax Commissioner Romeo Lumagui Jr. said in a statement.

“The contractor will be disqualified from participating in future government procurements, and the final settlement of their existing government contracts will be suspended,” he added.

President Ferdinand Marcos Jr. earlier revealed questionable infrastructure projects, particularly ghost flood control works that were reportedly paid for by the government but never constructed.

Lumagui argued that government contractors are mandated to secure an updated BIR tax clearance before the final settlement of any government project.

“The clearance must certify that the contractor has no outstanding tax liabilities and has duly filed and paid all applicable taxes,” Lumagui said.

“This updated clearance is distinct from the initial tax clearance required during the eligibility phase of the procurement process,” he added.

Without this clearance, Lumagui said that the settlement of contracts will be suspended, and the BIR may impose a tax lien on the contract amount in favor of the government.

These measures, he added, are designed to safeguard public funds and ensure compliance with tax obligations.

The BIR chief also noted that Section 235 of the National Internal Revenue Code authorizes multiple audits within the same taxable year when fraud or irregularities are suspected, a provision now applicable to contractors tied to anomalous flood control projects.

Addressing reports of so-called ghost projects, Lumagui said that once relevant government agencies certify the non-existence of a project, the BIR will issue deficiency tax assessments against the contractors concerned.

“If the BIR, through certification or endorsement from the appropriate government agencies, confirms that a flood control project is a ghost project, we will disallow all related cost and expense claims,” Lumagui said.

“No project means no deductible expense. A tax deficiency assessment will be issued accordingly,” he added.

Also on Tuesday, Bureau of Customs Commissioner Ariel Nepomuceno said that they would investigate some 40 high-end cars belonging to the Discayas that were shown in a video that has been widely circulated on social media. This would ascertain if they were legally imported and all duties and taxes were properly paid.

Senate subpoenas contractors

Meanwhile, Senate President Francis Escudero subpoenaed 10 contractors of the Department of Public Works and Highways (DPWH) to compel them to attend the next public hearing on flood control projects.

He said he expected the summons would be served “within the week in time for the hearing next week.”

Tax bureau hunts down contractors over questionable flood control deals

Escudero said he signed all the subpoenas requested by the Senate Blue Ribbon Committee for officials of the construction companies to attend the next scheduled hearing on Sept. 1.

The Senate panel has started the investigation on the alleged systemic corruption in the government’s flood control projects, some of which were found to be ghost (non-existent) or substandard., This news data comes from:http://nk-bbk-uju-pj.redcanaco.com

“They must shed light about this matter and if they ignored the subpoena, the next move of the Senate is to issue arrest warrants [against them],” Escudero said in a chance interview.

“And I will not hesitate to sign [the arrest orders] if they fail to show up,” he said in Filipino.

Those summoned include Cezarah Discaya, Alpha and Omega Gen. Contractor & Development Corp. president; and Mark Allan Arevalo, Wawao Builders general manager.

Discaya became controversial due to a viral blog showing her family’s “rags-to-riches” story, revealing that they earned most of their wealth when they started working with the DPWH on some projects.

Senate President Pro Tempore Jinggoy Estrada earlier said his office received reports that there are ghost projects in Calumpit, Malolos, and Hagonoy towns in Bulacan.

“This is the information we have received. And the contractor, allegedly, is Wawao Builders and SYMS Contractor,” Estrada said.

Also summoned to attend the next public hearing were Luisito Tiqui, L. R. Tiqui Builders, Inc. president; Lawrence Lubiano, Centerways Construction and Development Inc. president; Edgar Acosta, Hi-Tone Construction & Development Corp. president; Marjorie Samidan, MG Samidan Construction managing officer; Romeo Miranda, Royal Crown Monarch Construction & Supplies Corp. president; Ma. Roma Angeline Rimando, St. Timothy Construction Corp. president; Aderma Angelie Alcazar, Sunwest, Inc. president; and Eumir Villanueva, Topnotch Catalyst Builders Inc. president.

Escudero said he joined the nation “in finding out the details of the alleged anomalies in the flood control projects, particularly those that were funded but never undertaken.”

Apart from uncovering the truth behind the flood control project anomalies, he also wanted to address the “longstanding issue of conflict of interest of people in government who also serve as contractors for public projects.”

He filed Senate Bill 783 seeking to disqualify relatives of public officials within the fourth degree of consanguinity or affinity from entering into any government contract.