Ejercito: Businessmen, diplomats raised concerns over BIR’s alleged LOA scheme

MANILA, Philippines – Senate Deputy Majority Leader JV Ejercito said he has been receiving a stream of complaints from businessmen and even foreign ambassadors over an alleged extortion racket inside the Bureau of Internal Revenue (BIR).

At a press conference on Tuesday, November 25, Ejercito said BIR personnel have allegedly been running an aggressive shakedown using Letters of Authority (LOAs), targeting not only local firms but also foreign companies operating in the country.

LOAs are formal documents that authorize BIR revenue officers to examine the books and records of a taxpayer. These are considered the starting point of any BIR audit or investigation.

Senator Erwin Tulfo earlier filed a resolution to direct the Senate blue ribbon committee to probe the alleged extortion scheme. Tulfo claimed that BIR personnel used LOAs to pressure businesses into paying “discounted” rates to avoid inflated tax assessments.

The BIR has since suspended field audit operations, including LOA issuances, pending an evaluation of internal processes in order to protect taxpayers from abuse. (READ: BIR suspends field audits amid calls to probe alleged extortion scheme)

Ejercito also warned that news of rampant corruption in the Philippines such as the flood control scandal may deter potential investors from entering the country.

Fitch Solutions unit BMI forecast that the corruption scandal will dampen foreign direct investments entering the Philippines in 2026 as inflows’ share of gross domestic product have already fallen below pre-COVID-19 pandemic averages. – Rappler.com