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December 23, 2025 | 12:00am

One truth universally acknowledged is that taxes are the lifeblood of the nation. Yet even the most essential systems sometimes need a pause when their integrity is at stake.

The enforcement of tax laws and the collection of taxes are of paramount importance to sustaining public services, building infrastructure and supporting the institutions that enable the Filipino government to serve its people. At the same time, such collection should always be carried out lawfully and fairly, as any arbitrary and abusive enforcement undermines the very purpose of the government itself.

In the wake of recent corruption scandals, particularly those involving allegations of irregular issuance and misuse of Letters of Authority (LOAs), the BIR issued Revenue Memorandum Circular (RMC) 107-2025. This circular imposes a temporary suspension of all field audits and issuances of LOAs and Mission Orders (MO) starting Nov. 24, 2025. For many taxpayers, this is a reassuring move that the government hears the woes of the public.

Understanding the Scope of RMC 107-2025

The circular temporarily halts all ongoing field audits and related field operations, including the issuance of LOAs, MOs and the conduct of examinations or verifications of taxpayers’ books, records and transactions. This applies to all BIR operating units involved in field audits nationwide, such as Large Taxpayers Service, Revenue Regions, Revenue District Offices, National and Regional Investigation Divisions, Assessment Divisions, VAT Audit Units and Sections, Office Audit Sections and any task force or committee authorized to conduct audits or investigations.

Note that the suspension covers all taxable years up to 2022. As of now, no issuance has been released specifically addressing taxable year 2023.

Exceptions to the suspension

While the suspension is broad, the BIR cannot completely halt enforcement. Thus, the circular includes several key exceptions where the issuance of LOAs and MOs may still proceed:

Investigation of cases prescribing within six months from the date of the circular’s issuance;

Processing and verification of estate tax returns, donor’s tax returns, capital gains tax returns and withholding tax returns on the sale of real properties or shares of stocks, together with the documentary stamp tax returns related thereto;

Examination or verification of internal revenue tax liabilities of taxpayers retiring from business;

LOAs/MOs necessary for active criminal probes conducted by duly authorized enforcement units supported through verified intelligence reports, inter-agency referrals, third-party data validation or risk-scoring anomalies that require immediate audit action where delay would prejudice the government’s case;

Claims for refund where the issuance of an LOA is statutorily required; and

Other matters/concerns where deadlines have been imposed or under the matters of the Commissioner.

Why this suspension matters

From the taxpayers’ perspective, the suspension provides a “breathing room” to review their filings for the past years and assess their potential gaps before audits resume. It also reduces the immediate burden of audit scrutiny, allowing them to focus more effectively on meeting their filing and payment obligations to maintain regular compliance. At the same time, the timely suspension offers a much-needed reassurance that the BIR is committed to rebuilding trust in the government’s inherent power of taxation.

Notably, this is not the first time the BIR has implemented a temporary suspension of audits. A similar practice has been occurring annually for several years, typically from December to January. What sets this circular apart, however, is its indefinite period. The BIR makes it clear that it is not merely following its annual tradition but actively responding to the recent allegations hounding the tax agency.

The calm before the lift

While the circular provides a welcome respite, taxpayers should remain vigilant and anticipate a stricter and more standardized enforcement. The BIR is using this period to review and strengthen its internal processes. As stated in the circular, the Technical Working Group/Review Committee on LOA Integrity and Audit Reforms has been directed to evaluate existing policy frameworks, identify operational and systemic vulnerabilities, recommend a revised, integrity-based LOA issuance protocol and integrate digital safeguards and uniform audit standards.

The full implications will become evident once the suspension is lifted. How the BIR implements these measures will define the future and direction of audits and tax compliance, ideally, toward a system that values greater transparency and integrity while upholding taxpayers’ rights.

Mishelle Angeli Boligor is a supervisor from the Tax Group of R.G. Manabat & Co. (KPMG in the Philippines), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The firm has been recognized as a Tier 1 in Transfer Pricing Practice and in General Corporate Tax Practice by the International Tax Review. For more information, you may reach out to Mishelle Angeli Boligor or Eugene M. Pulga through [email protected], social media or visit www.home.kpmg/ph.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.