THE Bureau of Internal Revenue (BIR) failed to hit its full-year revenue target last year amid institutional reform.
Preliminary data showed that the agency collected only P3.105 trillion in 2025, falling short of over P100 billion from the P3.232-trillion target set by the Development Budget Coordination Committee (DBCC).
This is, however, higher than the P2.83 trillion collection recorded in 2024. The agency is tasked to collect more this year at P3.579 trillion.
“The performance was widely seen as a strong outcome given the Bureau’s deliberate suspension of audit operations during a major institutional reform phase,” the agency said in a statement on Wednesday.
The BIR said that they started the year with double-digit growth. However, the momentum weakened in the second quarter, with revenue collections dropping to nearly 1.0 percent in October.
December collections reached P199.55 billion, which the agency said helped lift the fourth-quarter revenues to P782.68 billion.
“Even while audits were paused, taxpayers continued to pay. That tells us that predictability, fairness, and institutional trust are now driving compliance,” BIR Commissioner Charlito Martin Mendoza said.
To recall, the government instructed the agency to pause certain BIR field audits, as authorities reviewed internal processes and addressed concerns raised by the business community.
That halt highlighted long-standing issues surrounding audit practices, including overlapping investigations and the misuse of audit powers.
Finance Secretary Frederick Go previously said that reforms are being studied to reduce the number of BIR departments that can issue letters of authority (LOAs). Audits covering different taxes may also be consolidated instead of being handled separately by multiple offices.
“If a company is being investigated, we can probably combine the VAT (value-added tax) investigation and the income tax investigation as one rather than they having to deal with a separate group for VAT, a separate group for income tax,” he said.
The planned changes also include stricter controls before an LOA can be issued. Go said one of the first steps would be to require clear authority from the Office of the BIR Commissioner.
Another reform being considered is limiting how often a company can be audited within a year.
“For example, you can get a VAT LOA in the first half of the year and a VAT LOA in the second half of the year,” Go said. “So, we’re looking at once a year.”
He said the most critical reform would be the creation of a centralized digital record of all LOAs issued by the BIR, which will allow both tax authorities and taxpayers to verify whether an LOA is authentic.