The Bureau of Internal Revenue (BIR) is set to resume tax audits under a new, tighter framework after securing broad support from the private sector for its proposed reforms.
The BIR said the reforms, which aim to curb abuse, strengthen due process, and restore taxpayer trust, will govern audits once the suspension of Letters of Authority (LOAs) is lifted in the coming weeks.
Central to the proposed reforms is a single-instance audit rule. Under the draft order, a taxpayer will generally face only one electronic Letter of Authority (eLA) per taxable year covering all internal revenue taxes, subject to limited and clearly defined exceptions. Multiple eLAs issued for the same taxpayer and year will be automatically consolidated into a single audit authority, with an option for taxpayers to request non-consolidation within set deadlines.
The proposed rules were presented by the Technical Working Group Review Committee on Assessment Integrity and Audit Reform (TWGRC-AIAR), led by Deputy Commissioner Marissa O. Cabreros. The committee also outlined changes to audit selection, shifting non-mandatory audits to a risk-based, system-assisted process using anonymized taxpayer lists to reduce discretion and improve objectivity.
The BIR said the reforms are designed to address long-standing complaints over inflated assessments and inconsistent audit practices. Safeguards include stronger documentation requirements, standardized audit checklists, stricter supervisory review, and sanctions for erring revenue officers.
Private sector groups welcomed the proposals and raised no objections to lifting the audit suspension. “The initial set of reforms is right smack at the heart of taxpayers’ concerns—indiscriminate issuance of LOAs, bloated initial assessments, and inconsistent application of audit rules,” said Ruben Pascual, secretary general of the Philippine Chamber of Commerce and Industry (PCCI), the private-sector chair of the BIR-PMSG.
BIR Commissioner Charlito Martin R. Mendoza said the audit reforms form a key pillar of BIR D.A.R.E.S., the agency’s five-point reform agenda. D.A.R.E.S. stands for Digital and Data Transformation, Audit Reform and Accountability, Revenue Collection and Base Protection, Employee Empowerment and Welfare Promotion, and Service Excellence and Stakeholder Engagement.
“While these reforms cannot be completed overnight, they are already underway,” Mendoza said. “Progress will continue as reforms are implemented, monitored, and refined over time.”
Department of Finance Undersecretary Rolando Ligon Jr. said the reforms support the administration’s push to boost investor confidence. “These audit reforms reflect the big, bold changes our government is pursuing to inspire optimism and encourage investment,” he said.
The technical working group will finalize the draft order based on the consultation feedback before audits resume under the new framework. The meeting was attended by senior BIR and DOF officials and 20 private-sector organizations, including MAP, FINEX, PICPA, MBC, JFC, PHILEXPORT, and FFCCCII.
