The government is moving to curtail the power of tax investigators to conduct audits, part of an aggressive push to curb bureaucratic overreach and improve the business climate for the private sector.

Finance Secretary Frederick Go told reporters the Department of Finance (DOF) is “seriously” weighing a reduction in the number of agencies authorized to issue letters of authority (LOAs) and may cap the frequency of these audits per year.

The DOF move follows a recent directive to immediately suspend all field audits and related operations of the Bureau of Internal Revenue (BIR).

The policy review targets what Go identified as the most pressing administrative friction for taxpayers. The issuance of LOAs—the formal documents that initiate tax audits—has faced increasing scrutiny from the Senate amid allegations of red tape, systemic abuse, and “mission orders” that disrupt business operations.

Under the proposed framework, the DOF aims to streamline the audit process by consolidating investigations. Rather than subjecting a single firm to multiple, disjointed inquiries from different tax divisions, the government intends to merge assessments.

If a company is under investigation, the DOF plans to combine value-added tax and income tax investigations into a single process, Go said, noting this would prevent firms from having to deal with separate groups for each tax type.

The DOF is also considering a strict limit on how often a taxpayer can be targeted within a calendar year. Go suggested that instead of issuing a value-added tax-related (VAT) LOA in both the first and second halves of the year, the government may limit such issuances to once per year.

The finance chief said this shift is intended to provide businesses with more operational certainty and reduce the man-hours lost to compliance checks.

Perhaps the most significant structural change involves the creation of a centralized digital record for all authorized audits. 
According to Go, this digital ledger would allow businesses to verify the authenticity of an LOA in real time, ensuring that tax agents are acting under official orders rather than engaging in unauthorized “show” audits.

The overhaul comes as the BIR continues to see revenue growth despite the tightening of audit protocols.

Revenue collections rose 9.6 percent year-on-year to ₱2.65 trillion at end-October. The increase was fueled by strong performance in corporate and personal income taxes, as well as value-added tax and tobacco excise taxes.