The Bureau of Internal Revenue in a recent statement said that it would relaunch tax audits under a five point reform program dubbed BIR DARES, which is a mouthful at “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.
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.
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 after 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 groups to stress-test the reforms provided in the draft order to relaunch the audits.
After the attention that has been brought to the BIR tax audits that have long been suspected as a source of corruption, can a reform program bring back the trust in the tax agency’s audits? The country’s taxpayers and business community have no choice but to wait, see, and hope that the BIR can do better this time around.*
