The Bureau of Internal Revenue (BIR) has officially lifted the temporary suspension of tax audits and field operations that had been in effect since November 24, 2025, pursuant to Revenue Memorandum Circular (RMC) No. 8‑2026. However, the resumption of audit activities is far from a return to “business as usual”.

Under RMC No. 8-2026, the BIR expressly directed that all audit and field operations moving forward shall be conducted in accordance with Revenue Memorandum Order (RMO) No. 1‑2026, a reform measure designed to enhance transparency, strengthen safeguards, and protect taxpayer rights. The new framework aims to prevent abuse of audit authority while ensuring accountability, predictability, and consistency in the conduct of tax audits.

Single-Instance Audit Framework: One audit per taxable year

At the core of RMO No. 1‑2026 is the Single-Instance Audit Framework, which generally limits taxpayers to one Electronic Letter of Authority (eLA) per taxable year. This single eLA covers all internal revenue taxes, including income tax, value-added tax (VAT), and withholding taxes, among others, thereby eliminating simultaneous, fragmented, or duplicative audits.

Key features of the framework include:

• Consolidation of pending eLAs: All pending eLAs issued to the same taxpayer for the same taxable year shall be consolidated into a single Replacement eLA, unless the taxpayer files a valid written Request for Non-Consolidation for pending VAT audits on or before February 16, 2026, as provided under the transition provisions of RMO No. 1-2026.
  
• Recognized exceptions: Separate audits may still be conducted in specific cases, such as fraud investigations, one-time transactions, tax clearance applications, and cancellation of business registration, consistent with the exceptions enumerated under RMO No. 1-2026.
  
• Transparency safeguards: eLAs, Mission Orders (MOs), and Tax Verification Notices (TVNs) are required to carry clear scope labels. Standardized audit documentation and duly signed audit minutes are mandated to establish a clear and verifiable audit trail.
  

How audits are selected

RMO No. 1‑2026 mandates that the issuance of new eLAs shall be based on a system-assisted, risk-based audit selection process. This process relies on objective, data-driven criteria and includes the anonymized assignment of examiners to minimize discretion-related risks. Only taxpayers included in the BIR-approved audit list may be issued new eLAs.

Fairer audits for taxpayers

To ensure fairness and due process, the new audit framework introduces several taxpayer-protective measures, including:

• Assessments require a proper factual and legal basis with references to applicable laws and jurisprudence.
• Fraud cases are referred to specialized investigation units, pausing audit actions on affected eLAs to prevent unwarranted penalties.
• Flexible procedures for handling voluminous records reduce disruption to business operations.

Key transition deadlines for taxpayers

Taxpayers should closely monitor the following transitions and implementation timelines, as provided under RMO No. 1-2026: 

• February 16, 2026: Deadline to submit a written Request for Non-Consolidation of pending eLAs for the same taxable year. Requests filed after this date will not be acted upon.
  
• March 4, 2026: Commencement of the automatic consolidation process for all pending eLAs covering the same taxpayer and taxable year, except those covered by a valid non-consolidation request.
  
• April 16, 2026: Full implementation of the system-assisted procedures for taxpayer selection, case assignment, and issuance of new eLAs is expected.
  
• April 30, 2026: VAT Audit Sections (VATAS) and Large Taxpayers VAT Audit Units (LTVAU) must complete the review, organization, and preparation of ongoing audits for transfer to regular BIR offices in accordance with the transition provisions.
  
• May 4, 2026: Mandatory consolidation of all remaining pending eLAs not covered by approved non-consolidation requests, through the issuance of Replacement eLAs.

Preparing for the new audit environment

To minimize disruption and ensure compliance, taxpayers are advised to:

• Review all existing and pending eLAs and assess whether a Request for non-consolidation is necessary. 
• Ensure that books of accounts and supporting records are complete, accurate, and audit-ready.
• Identify potential risk areas under the system-assisted, risk-based audit selection process.
• Closely track transition deadlines under RMO No. 1-2026.

With these reforms, the BIR aims to create a more predictable, transparent, and balanced audit environment, one that upholds taxpayers’ rights while safeguarding the integrity of the Philippine tax system. – Rappler.com

Mon Abrea, CPA, MBA, MPA, is the founder and Chief Tax Advisor of the Asian Consulting Group (ACG). ACG is the most trusted tax advisory firm in the Philippines, providing tax strategy, compliance, and policy advisory services to multinational corporations, foreign investors, and government institutions. With a strong presence in Asia and an expanding global network, ACG continues to bridge the gap between international investors and the dynamic Philippine market. To explore partnership opportunities or join ACG’s global investment promotion initiatives, CONSULT ACG, or you may also send an email to [email protected]