The Bureau of Internal Revenue (BIR) missed its 2025 collection target after suspending audit operations during a leadership transition and institutional overhaul, though officials pointed to a late-year rebound as a sign of stabilizing taxpayer confidence.

The BIR, the government’s main tax agency, collected ₱3.11 trillion last year, falling ₱127 billion, or 3.9 percent, short of its goal, according to data released Wednesday, Jan. 14.

Despite the miss, the total represented an 8.9 percent increase from the ₱2.85 trillion collected in 2024. The bureau described the result as a resilient outcome considering the “deliberate suspension” of audit activities that took place during a major reform phase.

The BIR entered 2025 with double-digit growth, but momentum faded sharply in the second half of the year, with the notable decline beginning at the end of the third quarter.

However, the agency reported that revenue growth returned to 2.7 percent in November and accelerated to 8.6 percent in December. Officials cited this year-end uptick as evidence of a rapid restoration in taxpayer compliance following the appointment of BIR Commissioner Charlito Martin R. Mendoza in mid-November.

Mendoza said in a statement on Jan. 14 that the recovery was driven by the restoration of institutional credibility rather than aggressive enforcement.

He noted that even while formal audits were on hold, taxpayers continued to settle their obligations, suggesting that a shift toward predictability and fairness is beginning to influence behavior.

The commissioner emphasized that the BIR is moving away from a reliance on strict enforcement in favor of a trust-based model.

The collection figures come as the bureau prepares for a series of 2026 reforms, which include a restructuring of the audit process, new legal safeguards for taxpayers, and the expansion of digital filing and payment systems. These initiatives are intended to modernize the bureau's infrastructure and reduce opportunities for leakage.

The agency faces an escalating revenue trajectory for the remainder of the Marcos administration.

The BIR is tasked with collecting ₱3.58 trillion this year, with targets rising to ₱3.98 trillion in 2027 and ₱4.42 trillion in 2028. Achieving these figures will require the bureau to maintain the momentum seen in late 2025 while successfully integrating its new digital and structural reforms.