JV flags alleged BIR ‘extortion scheme,’ warns of weaponized LOAs

Senate Deputy Majority Leader JV Ejercito on Wednesday raised anew concerns over what he describes as the growing “weaponization” of Letters of Authority (LOAs) within the Bureau of Internal Revenue (BIR), warning that abusive practices linked to tax audits are fueling corruption and driving investors away.

Citing reports from foreign business groups and diplomatic partners, he said the excessive and questionable issuance of LOAs, documents that authorize BIR examiners to audit taxpayers, has become a serious red flag for both local and foreign investors.

“Concerns have been raised regarding the excessive issuance of letters of authority… the excessive use of LOAs by the BIR has raised serious concerns among domestic and foreign investors,” Ejercito said, referencing discussions with the European Union ambassador and the American and European chambers of commerce.

According to the senator, investors increasingly view the pattern of LOA issuance as a sign of unpredictability and possible overreach in the country’s tax administration. 

“If not carefully regulated, [this] may create an atmosphere of uncertainty among businesses and discourage investors,” he added.

Ejercito warned that the Philippines’ already low rankings in foreign direct investment (FDI) attractiveness are being dragged down further by alleged abuses in tax enforcement. 

He described the practice as a significant “deterrent” to companies seeking stability, fairness, and transparency.

He cited several troubling cases raised to his office, such as issuing LOAs covering taxable years that had already been settled and fully paid. He also mentioned the issuance of LOAs that lump multiple taxable years, and a tax assessment of P100 million reduced to P75 million after a “settlement,” with instructions to “fix the receipt.”

“These are just some of the instances wherein there is questionable process,” Ejercito said, underscoring the gravity of the claims.

The lawmaker urged newly appointed BIR Commissioner Charlie Mendoza to “clean house” and install stronger safeguards to prevent the misuse of LOAs for extortion or harassment.

“I’m hoping that the agency can guarantee safeguards and internal mechanisms so that any form of corruption—ito pong pag-weaponize sa LOAs—would be prevented in the future,” Ejercito said. 

“We wish you all the luck… and we hope reforms will be instituted so LOAs will no longer be weaponized for corruption.”

While affirming the Senate’s support for stronger tax enforcement, Ejercito emphasized that reforms must uphold fairness, predictability, and transparency to protect investors and restore public confidence in tax administration.