CAGAYAN de Oro City — Allegations that some Bureau of Internal Revenue (BIR) examiners demanded millions of pesos from business owners have put tax audits back in the spotlight, raising concerns among Northern Mindanao entrepreneurs.
Yolanda dela Cruz, vice president for the National Capital Region of the Philippine Chamber of Commerce and Industry (PCCI), raised the issue during a Senate Committee on Trade, Commerce and Entrepreneurship hearing, saying alleged extortion by some BIR examiners continues despite reforms aimed at cleaning up the tax audit system.
Dela Cruz said her company received a Letter of Authority (LOA) shortly after it started operating. She alleged that an examiner initially demanded ₱6 million.
She said she negotiated the amount down to ₱600,000, provided that the payment was properly receipted and remitted to the government.
But Dela Cruz said succeeding examiners allegedly demanded their own separate shares.
“What the BIR does, which I think everybody is experiencing, is they get more from under-the-table schemes than the one that we are paying to the BIR,” she told lawmakers.
The allegations have not been established as findings of wrongdoing against specific BIR personnel.
Local businesses wary
Although Dela Cruz's testimony involved a company in Metro Manila, the issue is directly relevant to businesses in Northern Mindanao, where entrepreneurs also deal with BIR audits and compliance requirements.
An Oro Chamber official, who asked not to be named because of concerns that speaking publicly could affect a pending BIR application, said the business sector does not tolerate abusive practices.
“Matagal nang may ganitong mga alegasyon ng ‘kotong’ sa BIR. Mahirap paniwalaan na hindi ito alam ng mga kinauukulan,” said the Oro Chamber official.
“The issue appears systemic, but we do not tolerate it. Some taxpayers who are not fully compliant may be vulnerable to BIR personnel who take advantage of the situation and make improper demands,” he said.
The official also praised Dela Cruz for bringing the issue before lawmakers.
For local business owners, the basic expectation is clear: legitimate tax liabilities must be paid through official government channels, backed by proper assessments, documents, and receipts.
“Transparency is essential,” the Oro Chamber official said.
“Local MSMEs want to pay their correct taxes, but the audit process must be predictable so owners aren't left vulnerable to harassment.”
Are BIR reforms working in Northern Mindanao?
BIR Revenue Region 16 covers Northern Mindanao, with revenue district offices serving areas including Cagayan de Oro and Misamis Oriental, Bukidnon, Misamis Occidental and Lanao del Norte.
The Senate testimony comes months after the BIR suspended field audits nationwide amid concerns over the audit process.
The agency later resumed audits under a new framework designed to limit opportunities for abuse, including a one-LOA-per-taxpayer-per-year policy and tighter controls over the issuance and verification of Letters of Authority.
The reforms raise a key question for taxpayers in Region 16: Are these safeguards working on the ground?
The Senate inquiry is also looking into allegations of duplicate LOAs, inflated assessments and other practices that could pressure taxpayers into informal settlements.
These remain allegations under investigation and should not be treated as proof that such practices are occurring among BIR personnel in Northern Mindanao.
What can taxpayers do?
Taxpayers facing a BIR audit can take basic steps to protect themselves:
Verify the LOA. Check the authenticity of a Letter of Authority through official BIR channels before turning over financial records.
Pay only through official channels. Legitimate tax payments should be made through authorized banks or official BIR electronic payment facilities.
Taxpayers should be wary of requests for personal or unofficial payments.
Keep documents and receipts. Maintain copies of assessments, correspondence, payments, and other audit-related documents.
