AT LEAST TWO of the country’s largest business organizations have expressed much hope that the new tax audit scheme of the Bureau of Internal Revenue (BIR) will attract both local and foreign investments and restore the community’s confidence in government’s financial management in terms of transparency and equitable enforcement of tax regulations.
For one, the Financial Executives Institute of the Philippines (FINEX) expects the country to be in a stronger position to attract both local and foreign investment this year because of the government’s reforms to the audit system.
While the Philippine Chamber of Commerce and Industry Inc., the largest and oldest business group, termed the tax audit system as a “game changer.”
In a statement, FINEX said it welcomed the issuance of Revenue Memorandum Order No. 1-2026, which introduced revised policies, controls, and procedures governing tax audits.
“The stated objectives—strengthening audit integrity, preventing misuse of authority, and ensuring due process—address long-standing concerns raised by taxpayers,” the group said.
BIR issued the order to coincide with the resumption of all tax audits and field operations, which were suspended for two months due to potential abuse and irregularities.
FINEX said the changes outlined in the order are a crucial step toward greater transparency and equitable enforcement of tax regulations.
SINGLE INSTANCE AUDIT
The group said one of its most significant reforms is adopting the single-instance audit framework, which prohibits issuing multiple electronic letters of authority (e-LOA) for the same taxpayer and taxable year, the statement said.
By reducing redundant audits, the FINEX said taxpayers can dedicate more time to growing their businesses instead of “constantly monitoring multiple ongoing audit processes.”
Under the RMO, the BIR also rolled out the system-assisted audit selection, which establishes defined criteria and centralized approval process for audit selection, which would address long-standing concerns that audits are concentrated on a limited pool of taxpayers, further ensuring objectivity and integrity in the taxpayer selection process.
FINEX said the government is ushering in a predictable and transparent tax regime through these reforms—a critical driver of investment.
“When tax administration is perceived as arbitrary or negotiable, it raises the cost of doing business and deters long-term capital,” the FINEX explained.
“The reforms introduced by the BIR strengthen investor confidence and help in making the Philippines a more competitive destination for foreign direct investment,” it added.
MORE REFORMS PUSHED
Even then, FINEX said the BIR can still implement additional reforms to address implementation gaps affecting businesses nationwide.
The group said there remains an inconsistency in the application and interpretation of tax rules and memoranda across Revenue District Offices, creating opportunities for irregularities.
“True integrity in tax administration depends on consistent nationwide enforcement, uniform interpretation of tax rules, and accountability at all levels,” it said.
By building a fair and credible tax system, FINEX said the country will attract more investment critical to sustaining inclusive economic growth.
“Both domestic enterprises and foreign investors place a premium on certainty, fairness, and the consistent application of tax laws,” the group said.
LANDMARK CHANGES
The PCCI, in supporting the tax audit reforms, noted that the reforms will help create the stable business environment needed to attract investors.
In a statement, the PCCI said it welcomed the recent issuance of RMO No. 1-2026 and RMC No. 8-2026 as landmark changes to the audit process.
“These landmark issuances lift the suspension on enforcement activities and introduce a modernized audit framework designed to strengthen transparency, predictability, and fairness in tax administration,” the PCCI said.
Under RMC No. 8-2026, the BIR resumed audit and field operations, including electronic letters of authority (e-LOA), mission orders, and tax verification notices, following a two-month suspension.
While suspended, the BIR reviewed audit policies and internal control mechanisms to prevent potential abuse and irregularities.
RMO No. 1-2026 rolled out the BIR’s revised policies, controls, and procedures governing tax audits. Under this order, the BIR is adopting the single-instance audit framework, which PCCI President Ferdinand Ferrer described as “game-changer.”
The single-instance audit framework limits multiple audits for the same taxpayer and year, designed to reduce business disruptions, the BIR explained.
The FINEX has expressed optimism regarding the BIR’s new tax audit reforms, specifically citing the introduction of RMO 1-2026 as a move toward a more predictable, transparent, and fair tax environment
FINEX welcomed the single-instance audit framework, which limits multiple audits for the same taxpayer and year, designed to reduce business disruptions.
However, FINEX warned that uneven enforcement across different Revenue District Offices (RDOs) could still disrupt businesses and harm investor confidence.
The group emphasized the need for consistent, nation-wide, and uniform application of tax rules, along with accountability to prevent irregularities.
FINEX assured it will continue to work closely with the BIR and Department of Finance to monitor the implementation of these new audit procedures.
The new scheme, which leverages technology and improves audit, follows a period of consultation with business groups like FINEX in refining its audit processes.
MISSED 2025 TARGET
The BIR missed its 2025 collection target by P127 billion (approximately 3.9 percent short) because of the deliberate suspension of audit activities during a major institutional overhaul amid numerous implementation problems under the old tax audit system.
Among the problems deemed solved by the new BIR leadership includes the following:
- The proliferation of fraudulent receipts has led to “billions” in lost tax revenues, driving the need for the BIR to re-evaluate its audit strategies
- Illicit tobacco trade that cost losses in 2023 for the government of an estimated P25.5 billion (US $448.6 million) in tax revenues
- Audit suspensions arising from mounting complaints regarding irregularities, the BIR suspended audit operations, including the issuance of Letters of Authority (LOA) and Mission Orders (MOs).
Under the regulations on tax audit, the BIR has fixed such irregularities by removing examiner discretion and imposing a single audit per taxpayer.