It’s Mon Abra, Global tax specialist Expert and principal tax consultant, Asian consulting group
Businesses – from small businessmen to large companies – breathed a sigh of relief after President Ferdinand Marcos, JR.
The President’s orders are more than a response to the boyfriend – they are a sign that the government is finally listening. For years, advocates for reform have urged the BIR to stop harassing compliant taxpayers and instead focus on high-risk, high-impact investigations where corruption and tax compliance are reformed.
This amendment, if supported, would mark the most significant change in the administration of state taxes since the railroad law. It is time for the institution to use this approach – to make accountability, not robbery, the core of the BIR’s audit culture.
Fixing a broken research plan
BI BIR data tells troubling news: Less than 3% of total revenue comes from research. Despite that, most of the aughts are aimed at micro, small and medium enterprises (MSMEs) – which are easier to intimidate but less likely to cheat.
Random tests, audits have been a problem of inefficiency and fraud. Some auditors are said to have used their power to solicit bribes for ‘accommodations,’ turning the mature audit process into a source of income. The result: Compliant taxpayers lose confidence, while political taxpayers remain elusive.
Redirecting audit efforts to those affiliated with the Anomalous Government is the right move. But to ensure that this is not just a ONE Off campaign, the BIR must adopt risk-based, technology-based programs that remove discretion and emphasize greater accountability – at the top.
Rebuilding trust through technology
Modern tax systems no longer rely on random surveys. They use Computerized risk-based assessment programs powered by – Yes, Blockchainagain Data Analytics identify red flags and find uneducated wealth.
The BIR must compile data from the commission on audit (COA), anti-bankruptcy council (AMLC), Securities and Exchange Commission (sec), Bureau of Customs (BOC), and the Office of the Ombudsman. Linking tax filings with statements of assets, liabilities, and fair value (salns) can find unexplained wealth in real time – a task impossible under manual systems.
Global experience shows that risk-based auditing Double check bookkeeping performance and raise revenue by 200%with many benefits from high ratepayers, who pay high taxes. For this to work, Congress must propose a Public Procurement Actto allow the tax authorities to verify if their borrowed money matches the real wealth. Transparency is the cornerstone of trust.
Freedom from Responsibility
Tax reform must be fair and robust. The financial proposal of the Department of Finance (DOF) is to increase the limits of free profits and reduce the burden on Filipinos from long-term excesses. Revising the income tax threshold from P250,000 to P400,000 or P500,000 – as proposed in Senator Win Gatshalian’s Ginhawa Bill – in the end you will adapt the tax policy to the economic reality.
The threshold has not changed since 2018, as prices rise and the cost of living rises. Fixing it would provide real relief for middle-income earners – the backbone of the economy – while boosting consumption and voluntary compliance. Any short-term revenue loss can be eliminated by reducing leaks, streamlining processes, and targeting the real culprits.
Digital conversion and vat conversion
Without auditing, transparency requires automation. This page Electronic Invoicing System (EIS) it must be fully implemented and accessible to all professionals and service providers. Real-time sales and revenue tracking will reduce fraud and deception at all levels.
Similarly, the World Bank’s recommendation to increase the VAT base – removing many exemptions other than food such as food, health, and education – provides a clear way to reduce the rate from 12% to 10% without losing money. A simple, comprehensive VAT will strengthen compliance, fairness and competition.
From Conversion to Conversion
The President’s order is a welcome start – but the real test is consistency. The BIR, DOF, AND Congress must now be at a higher level Risk-based auditing, digital invoicing, inter-agency data sharing, and public accountability.
A government that enforces tax justice will gain moral authority to collect taxes from others. The Philippines does not need high taxes; It requires a strict system that rewards honesty, punishes deception, and restores public trust.
Only then can we transform our tax system from one that reacts to fear to one that is built on justice – where doing the right thing is not the hardest thing to do.
About the author
Mon Abra a Global Tax Policy Expert and Senior Tax Consultant of Asia Consultative Group (ACG). A An alumnus of Harvard, Oxford, and Duke universitieshe works with governments and international institutions on tax reform, investment policy, and governance. He was accepted into the The 100 most influential Filipinos in the worldhe leads the global effort Renewing the World A series of books, Thought leaders and game changers podcast, too International Taxation and Fees, To promote the Philippines as an investment destination.
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