MANILA, Philippines — The Senate Blue Ribbon Committee is set to resume its investigation this week into the alleged systemic abuse of letters of authority (LOAs) and mission orders (MOs) by personnel of the Bureau of Internal Revenue (BIR).
Senate President Pro Tempore Panfilo Lacson announced the resumption of the hearings on Monday, February 2, 2026, stating that the committee must verify if the newly instituted BIR reforms are sufficient to protect taxpayers from extortion.
The “70/30 Scheme” Scandal The investigation follows a series of high-profile complaints from domestic and international companies regarding the “weaponization” of tax audits.
- Extortion Allegations: Previous hearings revealed a “70/30 scheme” where corrupt agents allegedly pocketed 70 percent of bloated tax assessments while only 30 percent was documented.
- Investor Confidence: Senators Erwin Tulfo and JV Ejercito have argued that these practices have severely lowered investor confidence and undermined the integrity of the national tax system.
- Suspension: The issuance of LOAs and MOs was suspended in November 2025 to allow for a comprehensive review of audit procedures.
Lifting the Suspension On January 27, 2026, the BIR announced it was lifting the suspension under a new set of guidelines developed in coordination with the Department of Finance (DOF).
- Single-Instance Audit: Taxpayers are now limited to only one LOA per taxable year to prevent multiple, overlapping harassment audits.
- Consolidation of Power: Various audit task forces and specialized units (such as the VAT Audit Section) have been disbanded. Authority to issue LOAs is now strictly limited to regional offices and the Large Taxpayers Service.
- Digital Transparency: To prevent the use of fake or unauthorized orders, the BIR has launched an online LOA verifier accessible via the REVIE chatbot on its website.
Institutional Reforms Senator Ejercito expressed cautious optimism following a meeting with the new BIR Commissioner, Charlie Mendoza. “I am satisfied that the new BIR commissioner acted on the matter of the weaponization of the LOA for extortion … we have to give the new commissioner the chance to institute these reforms,” Ejercito said.
The upcoming Blue Ribbon hearing will determine if these administrative changes are enough to conclude the legislative inquiry. If the safeguards are deemed effective, Lacson suggested the committee may finalize its report and focus on oversight to ensure the BIR’s “clean-up” continues.