Quick Answer 

The BIR is currently reviewing its audit procedures and the issuance of Letters of Authority (LOAs). Once audits resume, the system is expected to rely more on digital tools, risk assessment, and data analysis, with tighter controls on how audits are approved and assigned. 

What’s the Update on BIR Audits? 

The Bureau of Internal Revenue is studying changes to its tax audit system while the issuance of Letters of Authority (LOAs) remains under review. 

Finance Secretary Frederick Go said the government is considering a digitized, risk-based, and data-driven approach to reduce excessive discretion, improve accountability, and prevent arbitrary or abusive audits. He made the statement during the “Big, Bold Reforms” business forum held at Shangri-La The Fort. 

What Are LOAs and Why Do They Matter? 

A Letter of Authority (LOA) is a legal document that: 

• Authorizes designated BIR officers to examine a taxpayer’s records 
• Identifies the tax periods and types of taxes to be reviewed 
• Signals the formal start of a tax audit or investigation 

LOAs are required before the BIR can legally conduct a full audit and assess possible tax deficiencies. 

What Changes Are Being Considered? 

According to the Department of Finance, once the issuance of LOAs resumes, the government plans to narrow and better control how audits are conducted. 

Among the measures being studied are: 

• Limiting the number of BIR offices authorized to issue LOAs 
• Limiting how many LOAs a taxpayer can receive in a year 
• Using data and risk indicators to guide audit selection instead of relying mainly on manual discretion 

These changes are intended to make tax audits more focused, transparent, and easier to monitor. 

BIR Collection Performance 

Despite the ongoing review of the audit system, the BIR reported ₱2.906 trillion in collections from January to November 2025. This is nearly 9% higher than the ₱2.668 trillion collected in the same period in 2024. 

The agency’s full-year collection target for 2025 is ₱3.13 trillion, based on Revenue Memorandum Order No. 014-2025. 

What Businesses Should Do Now 

While the new audit framework is still being finalized, businesses may consider: 

• Keeping accounting records complete and updated 
• Reconciling tax filings with financial statements 
• Ensuring consistency of supporting documents 
• Reviewing internal records for possible gaps or inconsistencies 

Preparing early may help reduce issues once risk-based audits become more widely implemented. 

Need Professional Audit Preparation Support? 

If your company wants to Strengthen compliance, Reduce audit risks, or prepare for digital tax enforcement 

Our team of accounting and tax professionals can assist with: 

• Audit preparation 
• Tax reconciliation 
• Compliance gap analysis 
• Documentation support 

Book a FREE 15-minute consultation to learn how we can help your business stay audit-ready under the new system.