MANILA, Philippines —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. 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 as per the provisions of Revenue Regulation No. 17-2024 (RR No. 17-2024).

BIR to audit contractors flagged for ghost flood projects for tax fraud — BIR

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

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