News and Updates

BIR issued RMO No. 22-2026 consolidated audit framework. 

The RMO divides audit cases into two principal categories: A. Mandatory Cases and B. Priority Cases. 

Criteria for issuance of an eLA / audit:

A. For Mandatory Cases

Mandatory audit cases may be initiated when the taxpayer falls under any of these criteria:

1. Under declaration of sales/income or overstatement of expenses/deductions by at least 30%, constituting prima facie evidence of fraud

2. Intelligence information based on specific business knowledge, third-party data, or publicly available information

3. Mission Order findings showing a preliminary indication of understatement of sales by 30% or more

4. One-Time Transactions where review resulted in deficiency tax, or real-property transactions with findings in the eCAR system

5. Taxpayers enjoying tax exemptions or incentives. 

6. Non-compliance arising from Spontaneous Exchange of Information

7. Tax clearance applications where prior-year gross sales exceed ₱3 million or gross assets upon retirement exceed ₱8 million, involving death, retirement, merger, consolidation, split-up, spin-off, or similar reorganization

8. Failure to respond within the prescribed period to BIR requests for confirmation of third-party information/data matching

9. Validated discrepancies or material inconsistencies identified through system analytics, compliance verification, or authorized pre-audit validation

10. Claims for income tax refund or tax credit certificate under the specified Tax Code provisions

Note that taxpayers enjoying tax incentives and exemptions are not automatically audited. They will undergo risk-based evaluation and validation and an eLA should be issued only when there are applicable audit criteria, verifiable data or indicators of non-compliance. 

Certain refund/credit claims are instead covered by a Tax Verification Notice (TVN), including income tax refunds/credits, VAT refunds/credits, excise tax refunds/credits and erroneous or double-payment refund claims. 

B. Priority audit criteria

Priority cases are those electronically selected through the BIR system using the prescribed following risk-based criteria:

1. Drastic decrease in reported sales/VAT payments

2. Significant increase in exempt or zero-rated sales/revenues

3. Taxpayer has a Discrepancy Notice

4. Excess input VAT carried forward differs between successive VAT returns

5. Total input VAT claimed exceeds 75% of output VAT

6. Income tax due is less than 2% of gross sales/revenues

7. Percentage-tax filer whose gross sales/receipts exceed the VAT threshold

8. Substantial sales but taxpayer reports a net loss

9. In operation for more than 5 years but has never been audited

10. Assets increased by more than 50% from prior year while reporting a net loss

11. Claims for losses/damages due to calamity or inventory obsolescence

12. Revenue substantially or exclusively derived from parent, subsidiaries, or affiliates

13. Write-off of input VAT claimed as an income-tax deduction

14. Shared expenses or intercompany charges among related entities


To view the published RMC, you can go to https://bir-cdn.bir.gov.ph/BIR/pdf/RMO%20No.%2022-2026_redacted.pdf