Contractors’ Financial Capacity Under Review

17 March 2013

MANILA, Philippines --- The financial capacity of contractors transacting at the Department of Public Works and Highways (DPWH) will be placed under scrutiny, in a bid to raise revenue collections.

Public Works and Highways Secretary Rogelio Singson said he is pushing for the revision of the contractor's maximum capacity to undertake infrastructure projects. ''If a contractor pays a higher income tax, this means that he has a higher net worth and correspondingly, bigger capacity to undertake government projects.''

This means, Singson said, ''that the contractor is more financially capable and eligible to enter into much bigger contracts.''

Big-time contractors have been getting a respite from paying a higher income tax although they get big-ticket government projects. They have managed to continue with the practice because they allegedly ideclared smaller net worth and assets. But Singson said he is about to change this old practice.

''We want that contractors of DPWH pay the right taxes. Finance Secretary Cesar Purisima and Revenue Commissioner Kim Henares are fully behind this initiative,'' he said.

The DPWH has agreed in principle to require bidders to provide their income tax returns (ITRs) to determine their capacity to finish the project.

To check on the veracity of their financial data, Singson has secured the support of the officials of these agencies, including the Department of Budget and Management.

The contractors will be categorized according to ''size range'' and ''license category'' which are based on their financial capabilities and assets such as equipment to undertake infrastructure projects.