After reform talks, BIR readies audit restart

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January 25, 2026 | 12:00am

MANILA, Philippines — The Bureau of Internal Revenue (BIR) is moving closer to resuming tax audits after consulting the private sector on a sweeping set of audit reforms, following the suspension of Letters of Authority (LOAs) in November 2025.

In a public-private consultation held on Jan. 21 under the BIR Partnership with the Multi-Sectoral Group (BIR-PMSG), the agency presented proposed reforms and new guidelines that will govern the conduct of audits once operations restart.

The discussion was led by the Technical Working Group Review Committee on Assessment Integrity and Audit Reform (TWGRC-AIAR), headed by Deputy Commissioner Marissa O. Cabreros.

At the center of the reform package is the adoption of a single-instance audit framework, under which a taxpayer will generally be subject to only one electronic Letter of Authority (eLA) per taxable year for all internal revenue taxes, subject to defined exceptions.

The draft order also provides for the consolidation of multiple eLAs issued to the same taxpayer for the same taxable year into a single audit authority. This consolidation will be done automatically, with taxpayers given the option to request non-consolidation within set deadlines.

The BIR also outlined changes in audit selection, noting that non-mandatory audits will now be risk-based and system-assisted. Anonymized taxpayer lists will be used to minimize discretion and enhance objectivity in selecting audit targets.

To address long-standing concerns over assessments, the BIR said it is reaffirming its commitment to due process and accuracy by strengthening audit documentation, standardizing checklists, enforcing strict supervisory oversight and imposing sanctions for violations by officials and personnel. These measures are intended to prevent inflated assessments and ensure consistent application of rules.

Private sector representatives gave generally positive and supportive feedback during the consultation, offering constructive recommendations to further refine the draft order. No objections were raised to lifting the audit suspension.

BIR Commissioner Charlito Martin Mendoza said the audit reforms form a core part of BIR D.A.R.E.S., the bureau’s five-point priority reform and legacy agenda, which 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. He stressed that audit reform is a key pillar of the institution’s broader, phased transformation.

Mendoza noted that while some reforms can be implemented immediately and are already included in the draft order, others will take longer, particularly those involving digitalization and monitoring dashboards, which require system development, data integration, training and careful implementation.

“While these reforms cannot be completed overnight, they are already underway, and progress will continue as reforms are implemented, monitored and refined over time,” Mendoza said.

Ruben Pascual, secretary general of the Philippine Chamber of Commerce and Industry (PCCI), which serves as the private-sector chair of the BIR-PMSG, said the proposals strike at the core of taxpayer concerns.

“The initial set of reforms is right smack at the heart of taxpayers’ concerns – indiscriminate issuance of LOAs, bloated initial assessments, and inconsistent application and interpretation of audit rules. There are other concerns, but we are convinced that the DOF and BIR are listening to us,” Pascual said.