Senate Deputy Majority Leader JV Ejercito has issued a strong warning about what he described as the growing weaponization of the Bureau of Internal Revenue’s (BIR) Letters of Authority (LOAs), saying this trend is fueling corruption, eroding investor confidence, and damaging the Philippines’ reputation as a predictable and stable destination for business and foreign investments.
During the Senate deliberations on the proposed 2026 national budget, Ejercito shared that numerous local business groups, foreign chambers, and even members of the diplomatic community have raised concerns about the abusive and excessive issuance of LOAs. He said the issue has become so widespread that it is now openly discussed by international partners, including the European Union ambassador and leaders of major American and European business groups.
LOAs authorize BIR examiners to audit taxpayers and are meant to ensure compliance with tax laws. However, Ejercito warned that the current pattern shows a system increasingly vulnerable to exploitation. Instead of serving as safeguards, LOAs are allegedly being used as leverage—sometimes bordering on intimidation—against businesses already facing intense operational challenges.
Sen. JV Ejercito Sounds Alarm Over Alleged Weaponization of BIR Letters of Authority
He cited troubling reports that show how deep the problem runs. Among these are LOAs issued for taxable years previously settled, creating confusion for compliant taxpayers; LOAs combining multiple years into a single audit, raising concerns about fairness; and a case where an initial ₱100-million tax assessment was reduced to ₱75 million after a questionable “settlement,” accompanied by instructions to “fix the receipt,” suggesting internal corruption.
These incidents fuel uncertainty and distrust, especially as the Philippines tries to improve its standing in global investment rankings. Ejercito stressed that predictable taxation is a key factor for investors, and inconsistent or abusive LOA practices undermine competitiveness.
Beyond economics, he warned of broader consequences on governance and public trust. Questionable LOA issuances diminish confidence not only in the BIR but in government institutions. When enforcement becomes unpredictable, he said, people assume corruption, favoritism, and an uneven playing field.
While acknowledging the BIR’s crucial role in raising funds, Ejercito emphasized that tax enforcement must balance firmness and fairness. He urged newly appointed BIR Commissioner Charlie Mendoza to address the issue urgently, strengthen internal controls, impose strict penalties for misuse, and implement clear guidelines to ensure LOA transparency.
Ejercito vowed to push for reforms to restore confidence in the tax system, stressing that enforcement must always be firm, fair, and grounded in integrity to attract investments and support sustainable growth.
