Philippines' BIR Launches New Risk-Based Audit Program to Enhance Transparency and Accountability

The Bureau of Internal Revenue (BIR) has rolled out a new nationwide audit program designed to strengthen risk-based taxpayer selection, standardize audit procedures, and enhance accountability among revenue officers. This initiative, established under Revenue Memorandum Order (RMO) No. 22-2026 signed by BIR Commissioner Charlito Martin R. Mendoza on August 24, builds upon reforms introduced earlier this year under RMO No. 1-2026. The new program establishes uniform policies, guidelines, and procedures for tax audits across all BIR investigating offices nationwide. "This new BIR Audit Program strengthens both sides of the process—fairness for taxpayers and accountability within the BIR. Audits must follow clear rules and proper procedures, and our revenue officers must be able to support the assessments they issue with facts and law," stated Commissioner Mendoza. For taxpayers, the program reinforces the Single-Instance Audit Framework, which generally limits audit authority to one electronic Letter of Authority per taxpayer for each taxable year, subject to specified exceptions. Audits are also limited to the tax types and taxable period covered by the issued authority. For Priority Cases, the BIR stated that taxpayers would be selected through system-assisted, risk-based processes using verifiable data. To reduce discretion, taxpayer identities would be kept anonymous during selection and assignment as far as practicable, while workload and eligibility controls would govern the distribution of cases. The program also provides separate rules for Mandatory Cases and institutionalizes the Revalida, or "Audit of Auditors." Under the Revalida, audit reports and assessments may undergo technical and quality reviews to determine whether findings are supported by facts and law and whether due process was observed. Revenue officers and officials are required to follow prescribed audit procedures, timelines, documentation, and monitoring requirements. According to the BIR, unauthorized audits, improper case classification, unjustified delays, and other violations may result in administrative sanctions and other liabilities under existing laws and rules. The strengthened framework advances the BIR's DARES agenda on Audit Reform and Accountability and Digital and Data Transformation. It also forms part of the BIR’s taxpayer-centric approach, which uses data and clearer controls to direct audit resources toward higher-risk cases while strengthening safeguards for taxpayers. The BIR noted that these reforms support President Ferdinand R. Marcos Jr.'s directive to restore trust in government and improve public service, as well as Finance Secretary Frederick D. Go's push to improve the ease of doing business by making government processes more predictable and reducing unnecessary uncertainty for taxpayers and investors. Commissioner Mendoza added, "When we began our comprehensive audit reforms at the start of the year, we committed to clearer rules, stronger safeguards, and greater accountability in the conduct of audits. This new BIR Audit Program delivers on that commitment and advances our taxpayer-centric approach to tax administration. Fair treatment of taxpayers and firm enforcement of the tax laws have to go together. A credible audit system requires both."