A significant shift is underway within the nation’s tax collection system. After a period of suspension, the Bureau of Internal Revenue (BIR) is preparing to reinstate tax audits, a move crucial for meeting revised revenue goals.
The decision to pause audits last November stemmed from serious allegations of misuse leveled by both business leaders and lawmakers, creating a climate of uncertainty. Concerns centered around inconsistent practices and the potential for abuse during the audit process.
Finance Secretary Frederick Go emphasized the necessity of resuming these audits, stating they are vital for bolstering revenue collection. The BIR aims to collect P3.431 trillion this year, a figure adjusted downwards from a previous target but still representing substantial growth.
However, the return to audits won’t be a simple resumption of the status quo. A key focus is limiting the potential for overreach and ensuring fairness. The number of BIR departments authorized to issue Letters of Authority – the official document initiating an audit – will be significantly reduced.
Furthermore, restrictions will be placed on the number of Letters of Authority a single taxpayer can receive annually. This aims to prevent businesses from being overwhelmed by repeated audit requests and fosters a more predictable environment.
A cornerstone of the reform is a move towards digitalization and data-driven audit selection. Automated risk-based modeling will be implemented, minimizing subjective decisions and strengthening accountability within the BIR.
This new system prioritizes “quality assessments,” with a firm commitment to eliminate arbitrary or abusive audit practices. The goal is to create a transparent and reliable process for all taxpayers.
To address past concerns, the BIR has established a Technical Working Group Review Committee dedicated to assessment integrity and audit reform. This committee is finalizing new policies to guide audit procedures once the freeze is lifted.
Taxpayers will soon have access to an LoA verifier through the BIR’s Chatbot REVIE, allowing them to confirm the validity of any audit request. A new policy will also enforce a limit of one Letter of Authority per taxpayer at a time.
Adding another layer of accountability, the BIR will implement a “revalida” system – essentially, an audit of the auditors themselves. This will ensure revenue officers adhere to the new standards and maintain ethical conduct.
These reforms are part of a broader initiative called BIR DARES – Digital and Data Transformation, Audit Reform and Accountability, Revenue Collection and Base Protection, Employee Empowerment and Welfare Promotion, and Service Excellence and Stakeholder Engagement – with audit reform taking the lead.
Alongside the BIR’s adjustments, the Bureau of Customs (BoC) has also seen its 2026 collection target lowered, reflecting slower import activity. The government has, however, increased its overall nontax revenue collection target significantly.
The changes signal a determined effort to modernize and improve the efficiency and fairness of the nation’s revenue collection processes, aiming to balance the need for funding with the concerns of the business community.
