RR No. 10-2012: Defines the requirements for joint venture or consortium formed for the purpose of undertaking construction projects and prescribes the mandatory enrollment of local contractors in the Electronic Filing and Payment System

Key points

1. Local contractor joint ventures. A construction joint venture or consortium is not considered a corporation under Section 22 of the NIRC of 1997, as amended, if it is for a construction project and pools the resources of local contractors engaged in construction. The local contractors must be licensed as general contractor by the PCAB of the DTI, and the joint venture itself must also be licensed by the PCAB.
2. Joint ventures with foreign contractors. Treatment as a non-taxable corporation applies only if the foreign member has a special PCAB contractor license. The project must also be certified by the Tendering Agency as foreign financed or internationally funded, with international bidding allowed under the Bilateral Agreement, per the IRR of RA No. 4566 (Contractor’s License Law).
3. Missing requirement. If any requirement is absent, the joint venture or consortium is a taxable corporation. The tax-exempt joint venture does not include mere suppliers of goods, services or capital to a construction project.
4. Members’ income tax. Members of a joint venture that is not taxable as a corporation each report and pay the appropriate Income Taxes on their share of the joint venture’s profit.
5. eFPS enrollment. All licensed local contractors must enroll in the BIR’s eFPS at the Revenue District Office where they are registered as taxpayers.

Who is affected

• Joint ventures and consortiums for construction projects
• Licensed local contractors
• Foreign contractors in joint ventures