BIR Suspends Field Audits Under RMC 107-2025: What Philippine Businesses Need to Know, and How Upcloud Accounting Can Help
Published Date: December 01, 2025
Published By: Jac Cantos, Upcloud Accounting
The Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) have announced a major policy shift: 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 breakdown of the suspension, its legal basis, scope, exceptions, and impact on businesses.
Why the BIR Suspended Audit Operations
Finance Secretary Frederick D. Go and Commissioner Charlito Martin Mendoza stated 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
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 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Section 7: LOAs are delegated authority and may be suspended, recalled, or withdrawn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), highlighting 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:
Creation, printing, signing, or serving of LOAs/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:
Cases prescribing within six (6) months from the date of the order
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
Examination of tax liabilities for taxpayers retiring from business
LOAs/MOs linked to active criminal probes, supported by:
Verified intelligence
Inter-agency referrals
Third-party data validation
Risk-scoring anomalies
Refund claims requiring an LOA
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
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 signals an internal clean-up and review of audit instruments nationwide.
Reform Committee Formed to Overhaul Audit Practices
A Technical Working Group / Review Committee on LOA Integrity and Audit Reforms is 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
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
Most audits are paused
Most field audits and LOA-triggered activities will halt temporarily.
Tax obligations continue
Regular filings, tax payments, and record-keeping requirements remain unchanged.
Refund claims may still require verification
Refund processes may continue, but timelines could shift depending on LOA requirements.
Ongoing audits may pause; unless they fall under exceptions
Upcloud Accounting can assist in reviewing whether your audit is covered or exempt.
Future audit reforms are coming
The review committee is expected to introduce structural and digital improvements to audit procedures.
Upcloud Accounting: Your Partner in Navigating Tax Compliance
The BIR's suspension of field audits is a significant development. Upcloud Accounting can help you understand the implications for your business and ensure continued compliance.
Upcloud Accounting: Virtual Outsourced Accounting and Bookkeeping Services in the Philippines
Upcloud Accounting offers accounting, bookkeeping, tax compliance, and business licensing services specializing with startups and SMEs in the Philippines.
Our goal is to increase efficiency, automation, and transparency across the accounting and finance functions of our clients with our cutting-edge technology. If you want to move your company’s finance function online, contact our Team of Expert Accountants and Bookkeepers directly via [email protected] or visit www.upcloudaccounting.comto learn more about how Upcloud Accounting accounting services can support your PH business!
Disclaimer: This article or blog is only for general knowledge and guidance and is not a substitute for an expert opinion. For technical advice, please consult your tax / legal advisor for your specific business concerns. For comments, suggestions, and feedback, feel free to email us at [email protected].
