Philippine Center for Innovation, Professionalism. Advocacy and Governance

https://businessmirror.com.ph/2026/05/25/loa-reform-at-six-months-audit-overhaul-or-business-as-usual/

LOA reform at six months: Audit overhaul or business as usual? | Joel L. Tan-Torres About six months ago, the Bureau of Internal Revenue (BIR) took the bold and welcome step of pausing, reviewing, and reforming its Letter of Authority (LOA) audit system. The move was triggered by mounting taxpayer concerns over LOAs, Mission Orders, audit conduct, and the broader taxpayer experienc...

The Bureau of Internal Revenue (BIR) is pivoting its enforcement strategy toward high-value targets, effectively abandoning the pursuit of small-scale tax delinquents where the cost of collection exceeds the potential recovery.

BIR Commissioner Charlito Martin R. Mendoza issued Revenue Memorandum Order No. 11-2026, raising the “cost to collect” threshold for delinquent accounts to ₱80,000 from the previous limit of ₱20,000. The new BIR order, which takes effect immediately, allows the bureau to classify certain accounts receivable as revenue losses if they are deemed no longer economically feasible to pursue.

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BIR shifts focus to bigger tax cases

The Bureau of Internal Revenue is changing its collection strategy: stop spending too much effort chasing small delinquent accounts and go after bigger targets instead.

BIR Commissioner Charlito Martin Mendoza issued Revenue Memorandum Order No. 11-2026, raising the bureau’s “cost to collect” threshold from PHP 20,000 to PHP 80,000.

This means the BIR may now classify certain delinquent accounts as revenue losses if pursuing them would cost more than what the government can realistically recover.

In simple terms: if the chase is more expensive than the tax due, the BIR may let the small case go and shift resources to higher-value delinquencies.

The order takes effect immediately.

The move signals a practical enforcement pivot for the tax agency, which is under pressure to raise collections without wasting manpower, time and public funds on cases with little recovery value.

Will this help the BIR catch bigger tax cheats, or let too many small delinquents slip away?

The Securities and Exchange Commission (SEC) has suspended the imposition of monthly penalties in the late or non-filing of reportorial requirements until December 31, 2026 in order to reduce transaction costs and promote the ease of doing business.

In its meeting last May 5, the Commission En Banc approved the suspension of penalties imposed for every month of delay for the late or non-filing of reportorial requirements, as provided under SEC Memorandum Circular No. 6, Series of 2024 (MC 6). MC 6 provides the scale of fines and penalties for the late or non-filing of annual financial statements (AFS) and general information sheets (GIS) submitted by corporations registered with the Commission.

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