SENATOR Bam Aquino urged stronger protections for small business owners as the Senate continues its investigation on the alleged abuse and “weaponization” of Letters of Authority (LOA) issued by the Bureau of Internal Revenue (BIR).
During a hearing of the Senate Blue Ribbon Committee, Aquino stressed that micro, small, and medium enterprises (MSMEs) are the most vulnerable to corrupt practices linked to tax audits.
He said many small entrepreneurs live in fear when approached by authorities, particularly when faced with questionable tax assessments.
“Small business owners are the most afraid when they are approached. They are the ones who are most fearful when someone tries to extort money from them,” Aquino said. “They often have nowhere to go and no one to ask for help.”
Aquino, a long-time advocate of MSMEs and the principal author of Republic Act 10644 or the Go Negosyo Act, said complaints against the BIR have been consistently raised by business groups across the country.
“In the previous campaign this year, everywhere I went local chambers, the Philippine Chamber, the Chinese Chamber, whether in the provinces or in the cities -- the complaints about the BIR and LOAs were overwhelming,” Aquino said.
“These complaints are repeated over and over. Many LOAs and tax assessments have no basis, or the amounts are unreasonably high,” he added.
The senator said the growing number of reports involving excessive or unjustified tax assessments raises concerns that these are being used to pressure business owners into settlements, a practice that could fuel corruption within the system.
To address the issue, Aquino proposed several reforms to improve transparency and accountability in the BIR.
He recommended that LOA data be made public so taxpayers can immediately verify whether an audit notice issued to them is valid.
“That is my intention so the information can be released and people can check whether an LOA is truly valid or not,” he said.
Aquino also called for the removal of the power of individual Revenue District Offices (RDOs) to choose which taxpayers to audit. Instead, he proposed a random or technology-driven audit system to prevent favoritism and abuse.
Under this system, taxpayers who have already been properly audited and have paid their taxes would not be re-audited for several years unless there is a strong and valid reason.
BIR Commissioner Charlie Mendoza and Department of Finance Secretary Frederick Go, for their part, committed to reviewing LOA data from previous years in coordination with the Senate.
The review aims to identify patterns such as repeated audits and initially high tax assessments that are later drastically reduced during settlements, possible indicators of corrupt practices.
Aquino also welcomed recent policy changes by the BIR, including the requirement that all LOAs must now be approved by the Office of the Commissioner, which he said strengthens oversight and accountability.
He further noted the creation of a special BIR email address for audit-related complaints, giving MSMEs a direct channel to report abuses. However, he emphasized the need for swift action on complaints to restore trust among business owners.
Aquino said the Senate investigation is a critical step toward institutional reform, assuring entrepreneurs that government agencies are meant to support not intimidate them.
“It is important for business owners to feel that government agencies are on their side,” Aquino said. “This investigation should lead to transparency, accountability, and peace of mind for every Filipino entrepreneur.” (ABC)