BIR warned vs abusing letters of authority
Sen. JV Ejercito on Wednesday expressed alarm over the Bureau of Internal Revenue’s (BIR) alleged “weaponization” of its Letter of Authority (LOA), saying it was being used as a tool for corruption.
Ejercito said he had learned that some BIR officials were “making money” from LOAs as he cited complaints from foreign chambers and diplomatic partners.
He urged the BIR to review its processes, particularly those involving LOAs, emphasizing that action must be taken to address the issue.
“Concerns have been raised regarding the excessive issuance of letters of authority or LOAs … If not carefully regulated, this may create an atmosphere of uncertainty among businesses and discourage investors who may perceive it as a sign of unpredictability or overreach in tax administration,” Ejercito said during the Senate’s marathon plenary debates on the proposed 2026 BIR budget.
The BIR issues a letter of authority to initiate a tax audit. It grants revenue officers the power to examine the books and records of a taxpayer.
According to Ejercito, the country’s already low ranking in foreign direct investment attractiveness was being affected further by such practices which create “deterrents” for investors who seek stability and fairness in tax enforcement.
He cited several alarming reports, including the issuance of LOAs covering taxable years that were already settled and LOAs that lump multiple taxable years. In one case, a tax assessment of P100 million was reduced to P75 million after a “settlement,” with instructions to “fix the receipt.”
