Senate Deputy Majority Leader Joseph Victor “JV” Ejercito on Wednesday, November 19 warned about the Bureau of Internal Revenue’s (BIR) alleged “weaponization” of Letters of Authority (LOA), saying the abusive issuance of LOAs is now being used as a tool for corruption, scaring off investors and undermining confidence in the country’s tax system.

At the Senate plenary deliberations on the proposed 2026 national budget on Monday, Nov. 17, Ejercito disclosed the complaints raised by foreign chambers and diplomatic partners against the BIR.

These concerns, particularly by the European Union (EU) ambassador and the American and European chambers of commerce, centered on the alleged excessive issuance of letters of authority or LOAs.

“The excessive use of LOAs by the BIR has raised serious concerns among domestic and foreign investors,” Ejercito said.

“If not carefully regulated, (this) may create an atmosphere of uncertainty among businesses and discourage investors who may perceive it as a sign of unpredictability or overreach in tax administration,” he added.

Ejercito lamented that the country’s already low ranking in foreign direct investment (FDI) attractiveness is further affected by these practices, which create “deterrents” for investors who seek stability and fairness in tax enforcement.

Moreover, Ejercito said among the several alarming reports include the alleged issuance of LOAs covering taxable years that are already settled and fully paid; LOAs that lump multiple taxable years; and a tax assessment of P100-million reduced to P75-million after a “settlement” with instructions to “fix the receipt.”

“These are just some of the instances wherein there is questionable process,” the senator stressed.

Ejercito said it is imperative for the government to strike a balance between enforcing tax laws and maintaining a stable, investor-friendly environment.

He urged newly-appointed BIR Commissioner Charlie Mendoza to move swiftly to “clean house” and install safeguards to prevent LOA misuse.

“I’m hoping that the agency can guarantee safeguards and internal mechanisms so that any form of corruption—ito pong pag-weaponize sa LOAs—would be prevented in the future,” he said.

“We wish you all the luck… and we hope reforms will be instituted so LOAs will no longer be weaponized for corruption,” he said.