REVENUE MEMORANDUM CIRCULAR NO. 20-2025 issued on March 20, 2025 clarifies certain policies, guidelines and procedures relative to the processing and issuance of Tax Clearance Certificate for Final Settlement of Government Contracts (TCFG) pursuant to Revenue Memorandum Order (RMO) No. 2-2025.

The TCFG shall be required and issued only for government contracts which involves the procurement of goods, consulting services, and infrastructure projects done through public bidding process pursuant to Republic Act (RA) No. 9184 (Government Procurement Reform Act), as amended by R.A. No. 12009. Procurement involving small value purchases are not required to secure TCFG.

The TCFG shall be presented only prior to the final settlement of the government contracts with its suppliers on a per contract basis to ensure complete and timely payment and remittance of taxes. For example, taxpayer ABC has a contract with a government agency that underwent a public bidding process pursuant to RA No. 9184 involving ten (10) installment payments, the TCFG shall only be required and secured before the 10th final settlement. Thus, no TCFG shall be required during the initial and partial payments for the said contract.

In strict compliance with RA No. 11032 (Ease of Doing Business and Efficient Government Service Delivery Act of 2018), a Tax Clearance Certificate for General Purposes specifically for collection purposes shall no longer be required from the contractor.