JV Ejercito: Foreign firms also targeted in ‘weaponized’ BIR LOA system

It’s not only local business owners who were victimized by the alleged money-making scheme involving the Letter of Authority (LOA) issued by the Bureau of Internal Revenue, but also international enterprises that have shops in the country.

“What alarmed me was when the European ambassadors and some ambassadors from different countries, and the American and European Chambers started to complain that they too had been subjected to harassment by the BIR through the LOA. So, they’re weaponizing the LOA for corruption,” Senator JV Ejercito revealed in a press conference on Tuesday at the Senate.

Ejercito said his claims were confirmed by these foreign businessmen and envoys following conversations two years ago about the LOA hullabaloo that has allegedly been victimizing both local and foreign companies.

“I’ve spoken to many people—local businessmen—who, as early as two years ago, were already complaining. Even their past fiscal years, which had already been cleared, were suddenly being reopened through LOAs,” he told reporters.

The senator maintained that while LOAs can be a legitimate tool to promote revenue generation, they should not be used as a source of corruption among BIR personnel, from revenue officers to regional directors.

“We support any revenue-generating measures by government agencies like the BIR. But it shouldn’t be abused. We have to strike a balance because this will not send a good signal. Of course, for both local and foreign investments, our policies should be clear-cut, and we must have safeguards so they won’t be prone to abuse. So again, they are weaponizing the letter of authority for corruption. If other agencies have their SOPs (standard operating procedures), in BIR, this LOA is what they use,” he explained.

Ejercito further claimed that if the BIR collected an estimated P6 to P8 billion from LOAs, only P2 to P3 billion actually reached government coffers.

“Why? Because 70 percent of what was collected didn’t go in. It was reversed. That part went into pockets. Only 30 percent went to the government. That’s why, from a 6-billion target, they only raised around 2 billion. So, it’s saddening that almost all agencies, not just DPWH, now have their own schemes. It’s disheartening. At the very least—I'm not condoning it—but at least more should go to the government. If they were to take a small cut, fine, but it’s reversed—70 percent is grabbed,” he said.

He added that he already raised the issue with the new BIR Commissioner, Charlito Martin Mendoza, who on Monday ordered the immediate suspension of all field audits and related operations — including the issuance of LOAs and Mission Orders (MOs) — in accordance with Revenue Memorandum Circular No. 107-2025.

“The current BIR Commissioner is new. That’s why when I raised the issue, I brought it to his attention so he could fix it. I told him to fix it and put the necessary safeguards and safety nets in place, so it wouldn’t be abused. Because this will turn off potential investors. Our stock market is down, and our investments are going out. Then they hear about this kind of modus in our BIR? Who would still invest here? It doesn’t send a good signal,” Ejercito said.

Also on Tuesday, Finance Secretary Frederick Go stressed that he suspended the issuance of LOAs and Mission Orders to allow a “careful and comprehensive review” of policies governing BIR audit operations.

The move comes after multiple reports of taxpayer harassment, prompting Go to pause all LOA and MO activities.

“Kaya po natin sinuspinde muna ang pag-iisyu ng letter of authorities at mga mission order kasi kailangan nating gumawa ng isang careful at comprehensive review ng mga patakaran na ito, polisiya na namumuno ng mga letter of authority,” he said in a radio interview.