The Bureau of Internal Revenue (BIR) is charting a new course for tax administration. The BIR Partnership with the Multi-Sectoral Group (BIR-PMSG) held a high-level public-private consultation to discuss the roadmap for resuming tax audits following the suspension of Letters of Authority (LOAs) last November.
Central to the discussion was a sweeping draft order designed to replace outdated practices with a modern, objective, and taxpayer-centric framework.
The proposed reforms are a cornerstone of BIR D.A.R.E.S., Commissioner Charlito Martin R. Mendoza’s five-point legacy agenda. This comprehensive strategy focuses on:
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Digital and Data Transformation
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Audit Reform and Accountability
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Revenue Collection and Base Protection
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Employee Empowerment and Welfare Promotion
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Service Excellence and Stakeholder Engagement
“While these reforms cannot be completed overnight, they are already underway,” Commissioner Mendoza stated. “Our goal is to move forward responsibly with a system that is workable, fair, and sustainable.”
The Technical Working Group Review Committee on Assessment Integrity and Audit Reform (TWGRC-AIAR), led by Deputy Commissioner Marissa O. Cabreros, detailed several structural changes:
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Single-Instance Audit Framework: Taxpayers will generally be subject to only one electronic Letter of Authority (eLA) per taxable year for all internal revenue taxes. This eliminates the burden of multiple, overlapping audits.
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Consolidated Authorities: Existing multiple eLAs for the same taxpayer and year will be merged into a single authority through an automatic consolidation process.
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Risk-Based Selection: To remove human bias, non-mandatory audits will transition to a system-assisted, risk-based selection process using anonymized taxpayer lists.
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Integrity Safeguards: The BIR reaffirmed its commitment to ending “bloated” assessments by standardizing audit checklists, strengthening documentation requirements, and imposing strict sanctions for personnel violations.
The consultation saw a warm reception from the business community. Ruben Pascual, Secretary General of the Philippine Chamber of Commerce and Industry (PCCI), noted that the reforms strike at the heart of long-standing grievances. “The initial set of reforms is right smack at the heart of taxpayers’ concerns—indiscriminate issuance of LOAs, bloated initial assessments, and inconsistent interpretation of rules,” Pascual said. “We are convinced that the DOF and BIR are listening to us.”
Department of Finance (DOF) Undersecretary Rolando Ligon, Jr. added that these changes are vital for the national economy. “The BIR’s audit reforms reflect the big, bold reforms our government is undertaking this year… to inspire optimism and renew and encourage investor confidence in the Philippines.”
The BIR Technical Working Group is currently refining the draft order based on the constructive feedback provided by the 20 private sector organizations in attendance, including TMAP, MAP, FINEX, and the Joint Foreign Chambers. The lifting of the audit suspension will commence once the new framework is finalized.
