Tax Alert No. 5 [Revenue Memorandum Order (RMO) No. 01-2026 dated 27 January 2026]

29 Jan 2026

Prescribing Revised Policies, Controls, and Procedures for Tax Audit and Assessment Following the Lifting of the Suspension Imposed Under Revenue Memorandum Circular No. 107-2025

The Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Order (RMO) No. 01‑2026, which prescribes revised policies, controls, and procedures on tax audit initiation, conduct, and assessment. The new rules aim to ensure transparency, prevent misuse or abuse of audit authority, uphold due process, and strengthen accountability across all BIR audit activities.

Set out below are the key provisions of the RMO:

1. Resumption of Tax Audits

The BIR has formally resumed audit operations, including:

Issuance of electronic Letters of Authority (eLAs), Mission Orders (Mos), and Tax Verification Notices (TVNs)
Continuation of cases previously suspended under RMC No. 107‑2025

2. Single‑Instance Audit Framework: One eLA per Taxable Year

As a general rule, a taxpayer will now receive only one eLA per taxable year, covering all applicable internal revenue taxes, including VAT.
Issuance of multiple or overlapping eLAs for the same taxable year is prohibited, subject only to limited exceptions (e.g., ONETT transactions, tax clearance, business closure, fraud cases).

3. Consolidation of Multiple Pending eLAs

The BIR will consolidate all pending eLAs for the same taxpayer and taxable year:

Automatic consolidation starts on 4 March 2026
- A single Replacement eLA will be issued; all prior eLAs for the same year will be cancelled.
Request for Non‑Consolidation (VAT cases only)
- Taxpayers with multiple pending eLAs may file a written request for non‑consolidation.
- Requests must be filed on or before 16 February 2026.
- Where granted, VAT eLAs may proceed independently until 30 April 2026.
Beginning 4 May 2026, all eLAs will be consolidated regardless of stage.

4. Wind‑Up of VAT Audit Sections (VATAS) and Large Taxpayers VAT Audit Units (LTVAU)

These specialized VAT audit units will wind up operations by 15 May 2026 in line with the new audit framework and transition directives.

5. Strengthened Controls on Audit Selection

New eLAs will be issued only through:

System‑assisted, criteria‑based selection, subject to centralized approval
An anonymized case assignment process, separating taxpayer identity from Revenue Officer designation to minimize discretion‑related risks

6. Due Process and Documentation Requirements

Key safeguards include:

Mandatory use of standardized audit checklists
Proper documentation of the Discussion on Discrepancy, including minutes signed by both parties
Restrictions on excessive, unnecessary, or irrelevant document requests
Clear communication of audit scope and proper/timely service of notices
Assessments must comply with RR No. 12‑99, as amended, and other applicable rules
For voluminous records, taxpayers may choose either:
- Physical submission of records to the BIR office conducting the audit; or
- Examination at the taxpayer’s principal place of business, subject to coordination with the handling RO