BIR vows ‘clearer rules’, safeguards for tax audits

The Bureau of Internal Revenue (BIR) is gearing up for new reforms in its tax audit system, with the proposed changes already ‘stress-tested’ by the private sector.

The BIR said in a statement on Friday that it would relaunch tax audits under a five-point reform program dubbed BIR D.A.R.E.S., 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.”

Among the reforms are the addition of a public letter of authority (LOA) verifier, accessible via the BIR website chatbox Revie, and the abolition of overlapping audit units and task forces.

Accountability

The agency will also implement a system to “audit the auditors”, aiming to strengthen accountability after reports that some personnel allegedly collected millions of pesos through bloated tax assessments.

According to reports, certain revenue officers had applied a 70/30 scheme, pocketing 70 percent of assessed amounts while only 30 percent were officially documented.

Under the new rules, only one LOA will be issued per taxpayer per year.

Digitalization

Other measures include the digitalization of tax services and risk-based enforcement, especially for high-risk sectors, to improve compliance and recover missed revenue targets from 2025.

“These reforms are being carefully designed to ensure that when audits resume, they do so under clearer rules, stronger safeguards, and better oversight,” said BIR Commissioner Charlie Mendoza.

These reforms come as the BIR launched a full-scale crackdown on its LOAs last November, following complaints of misuse and abuse.

According to Mendoza, the suspension on LOAs will soon be lifted following a consultation with the BIR Partnership with Multi-Sectoral Group to stress-test the reforms provided in the draft order to relaunch the audits.

“It was generally well-received and supported by private sector partners. The technical working group is now refining the draft order based on the consultation results,” Mendoza told the Inquirer.

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