IN BRIEF:
• The Bureau of Internal Revenue (BIR) has established tax audits to address system weaknesses and improve the integrity of audit activities.
• The suspension was completed with new guidelines emphasizing a one-time audit framework, consolidation of pending audits, and a more objective selection process to improve transparency and accountability.
• Taxpayers must now adapt to a more structured audit environment that prioritizes compliance, documentation, and preparedness, promoting a fairer tax environment that benefits both the government and taxpayers.
The suspension of tax audits by the Bureau of Internal Revenue (BIR) was not just an operational disruption. It was an institutional acknowledgment that something deeper needed attention.
For taxpayers and practitioners alike, it confirmed the long-held view that tax enforcement is only effective if it is based on a fair, consistent and well-regulated audit process. As the BIR seeks to modernize and improve the integrity of its audit operations, taxpayers and practitioners are left to assess the implications of these changes.
This article examines the basis for suspension, resumption of audit activities, and the new framework that will govern tax audits going forward.
The suspension was first imposed through Revenue Memorandum Circular (RMC) No. 107-2025 on Nov. 24, following many complaints expressed by taxpayers, stakeholders and internal units regarding irregular audit procedures and inconsistency in all audits.
With RMC No. 1092025, issued on Dec. 12, the BIR clarified that the purpose of the suspension was to address systemic weaknesses in the audit process, protect the rights of the taxpayer, and improve the integrity of audit activities. The BIR recognized the need to address operational issues and develop a transparent, standardized and modern audit system.
The suspension was officially lifted through RMC No. 82026 dated Jan. 27, restoring all tax assessments and field operations previously established under RMC Nos. 1072025 and 1092025.
This included the restart of:
• Issuance of Electronic Letters of Authorization (eLAs), Mission Orders (MOs), and Tax Verification Notices (TVNs)
• Continuation of previously suspended audit cases
• Enforcement, verification, inspection, and collection activities that require auditing
• All other actions necessary to protect revenue or enforce compliance.
All tax assessments and related field activities must comply with the new guidelines provided under Revenue Memorandum Order (RMO) No. 1-2026, also dated January 27.
RMO No. 12026 introduced a renewed audit framework that focuses on compliance, control and accountability. Among its key changes are:
One frame of reference. Taxpayers will now be subject to only one eLA per taxable year covering all types of internal revenue tax, including value-added tax (VAT), subject to unique circumstances such as fraud cases, one-off transactions, tax clearance applications and business closure cases. This framework addresses the long-standing issue of redundant or redundant audits.
Merger of pending eLAs. Effective March 4, all pending eLAs for the same taxpayer and taxable year will automatically be consolidated into one eLA unless the taxpayer withdraws with a written request.
System-assisted and anonymous selection and allocation process. New eLAs will now be issued through a system-assisted, anonymous selection and allocation process based on automated risk parameters. This reduces comprehension, reduces potential manipulation, and supports the selection process for objective tests.
Removal of VAT audit divisions and audit task forces. The BIR abolished the VAT Audit Divisions and other audit forces, closed the audit authority in the Large Taxpayers Service and regional offices to ensure clear oversight.
Appropriate audit and inspection procedures. The RMO required the use of a standard audit checklist, complete documentation of audit activities, and minutes of interviews signed by both the taxpayer and the Revenue Officer. It also prevents arbitrary test releases. Assessment notices should only deal with issues that remain unresolved after the discussion of the disagreement and should clearly present their facts and legal bases, in accordance with the requirements of due process.
The resumption of audits under this revised framework marks a change not only in policy but in the culture of tax audits. What started as a stopgap has become a major milestone, setting expectations for both the BIR and the taxpayers it serves.
Going forward, taxpayers can expect:
• Systematic and transparent auditing
• Examining both factual findings and legal bases
• Greater emphasis on documentation and record keeping
• Strong accountability and oversight from fund managers
Since RMC No. 82026 proposing suspension of audit and RMO No. 12026 reshapes the audit system to one that is data-driven, risk-based, and accountable, taxpayers are now operating in a very difficult environment.
In this area, preparedness is more than a measure of self-defense. It is a strategic practice that protects business continuity, supports compliance, and strengthens trust in the tax system. A tax audit may start with the BIR, but the benefit always belongs to the right taxpayer.
As the BIR implements these changes, the emphasis on transparency, accountability, and fairness in the audit process is expected to promote a more equitable tax environment. Taxpayers should adapt to this new framework by improving their compliance processes and ensuring they are well prepared for the audit.
The changes reflect a commitment to a more robust and reliable tax system that benefits both the government and the taxpayers it serves. By adopting these developments, stakeholders can work together to achieve an efficient and fair tax environment.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.
Noel Andro D. Bico is a senior director from the Global Compliance & Reporting Sub-Service Line of SGV & Co.
