BIR Suspends All Field Audits, LOAs, and Mission Orders Under RMC 107-2025: What Philippine Businesses Need to Know

The Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) have announced a major and immediate policy shift affecting all taxpayers: the suspension of all field audits and related operations, including the issuance of Letters of Authority (LOAs) and Mission Orders (MOs).

This directive is formalized under Revenue Memorandum Circular (RMC) No. 107-2025, issued on November 24, 2025, and is effective immediately. It represents one of the most significant audit-related announcements in recent years.

This article provides a clear, comprehensive breakdown of the suspension, its legal basis, its scope and exceptions, and its impact on businesses.

Why the BIR Suspended Audit Operations

In a joint statement, Finance Secretary Frederick D. Go and Commissioner Charlito Martin Mendoza emphasized that this action responds to:

• Widespread taxpayer concerns
• Issues surrounding LOA and MO practices
• Longstanding inconsistencies in field audit operations
• The need for improved internal discipline and accountability

Secretary Go stressed:

“We hear the people. We hear your concerns and are immediately acting on them. The people deserve better.”

Commissioner Mendoza added that the suspension is part of a broader reform to ensure that BIR audits are fair, evidence-based, predictable, and transparent.

Legal and Regulatory Basis (from RMC 107-2025)

RMC 107-2025 outlines the legal foundation for the suspension, grounded primarily in the National Internal Revenue Code (NIRC):

• Section 4 — Authority of the Commissioner to interpret tax laws and oversee enforcement
• Sections 5 & 6(A) — Authority to obtain information, regulate LOA issuance, and establish audit procedures
• Section 7 — LOAs are delegated authority, and may be suspended, recalled, or withdrawn

The RMC also cites CIR v. Sony Philippines, Inc. (2010), where the Supreme Court affirmed that no valid tax assessment may be issued without a valid LOA. This highlights the centrality of LOAs in due process, and why an in-depth review is needed.

What Exactly Is Suspended Under RMC 107-2025

The suspension applies not just to the issuance of new LOAs and MOs, but to nearly all field audit and examination activities, including:

Suspended Nationwide

• Creation, printing, signing, or serving of LOAs
• Creation, printing, signing, or serving of MOs
• All ongoing field audits
• Examinations of books of account and accounting records
• Verification of returns
• Field investigations and site inspections
• Surveillance or fact-finding activities tied to LOAs or MOs

Covered BIR Offices

This suspension impacts all relevant units, including:

• Large Taxpayers Service
• Revenue Regions and District Offices
• Assessment Divisions
• VAT Audit Units
• Intelligence & Special Audit Units
• All committees, task forces, and offices conducting audit-related activities

This confirms that the suspension is comprehensive and nationwide.

Which Activities Are Not Suspended? (The Exceptions)

During the suspension, audits and related actions may still proceed only in the following legally mandated or urgent circumstances:

1. Cases prescribing within six (6) months from the date of the order
2. Verification of:
   • Estate tax returns
   • Donor’s tax returns
   • Capital gains tax returns
   • Withholding tax returns and Document Stamp Tax related to real property or shares sales
3. Examination of tax liabilities for taxpayers retiring from business
4. LOAs/MOs linked to active criminal probes, supported by:
   • Verified intelligence
   • Inter-agency referrals
   • Third-party data validation
   • Risk-scoring anomalies
5. Refund claims requiring an LOA
6. Any matter with legally imposed deadlines or Commissioner directives

Additionally, Assessment Notices, Warrants, and Seizure Notices may continue under these exceptions.

No New LOAs, No Revalidations, No Replacements

A crucial detail from the RMC is that no LOA or MO may be revalidated, extended, replaced, or supplemented unless it falls under the stated exceptions. This includes:

• Expired LOAs
• Revalidated LOAs
• Unserved LOAs
• LOAs previously prepared but not yet served

This restriction may delay or reset numerous audits in the pipeline.

Mandatory Inventory of All LOAs and MOs

All BIR units must submit, within 15 working days, a complete inventory of:

• Pending, unserved, or expired LOAs
• Revalidated LOAs
• Supplemental or related LOAs and MOs
• Their current status

This step signals an internal clean-up and review of audit instruments nationwide.

Reform Committee Formed to Overhaul Audit Practices

The RMC establishes a Technical Working Group / Review Committee on LOA Integrity and Audit Reforms, tasked with:

• Reviewing current audit policies
• Identifying systemic vulnerabilities and abuse points
• Recommending revised LOA protocols
• Developing digital safeguards
• Creating uniform audit standards across all BIR offices

These may lead to substantial long-term changes in how audits are initiated, conducted, and finalized.

Monitoring, Accountability, and BIR Internal Discipline

The circular emphasizes strict internal enforcement:

• Noncompliance with the order constitutes an administrative offense
• Erring personnel may face disciplinary or civil liability
• Internal revenue officers must ensure compliance within their jurisdictions

This strengthens the credibility of the suspension and signals a renewed focus on governance.

Effectivity

The suspension took effect immediately upon issuance on November 24, 2025.

What This Means for Businesses

1. Most audits are paused

Most field audits and LOA-triggered activities will halt temporarily.

2. Tax obligations continue

Regular filings, tax payments, and record-keeping requirements remain unchanged.

3. Refund claims may still require verification

Refund processes may continue, but timelines could shift depending on LOA requirements.

4. Ongoing audits may pause; unless they fall under exceptions

CloudCFO can assist in reviewing whether your audit is covered or exempt.

5. Future audit reforms are coming

The review committee is expected to introduce structural and digital improvements to audit procedures.

How CloudCFO Can Support You

CloudCFO is monitoring this development closely and can assist you in determining:

• Whether your ongoing audit falls under the suspension
• How the exceptions may apply to your tax compliance
• Whether refunds or tax clearance processes might experience delays
• How to prepare for potential procedural changes in BIR audits

Our team remains available to help you navigate compliance confidently during this period of transition.

Stay Informed

This suspension marks a significant step toward improving the taxpayer experience and modernizing revenue administration in the Philippines. As reforms take shape, we expect more updates and clearer guidelines from the BIR in the coming weeks.

CloudCFO will continue to keep clients informed and supported every step of the way. If you want to continue to receive essential tax updates, you may subscribe to our newsletter through this link.