Recently, the Bureau of Internal Revenue (BIR), in cooperation with the Department of Finance (DOF), announced a temporary suspension of the issuance of new Letters of Authority (LOA) and the execution of specific audit operations under RMC 107-2025. In our prior article, we discussed the background, rationale, and general implications.
Now, the issuance of RMC No. 109-2025 provides crucial clarifications to address the gray areas and operational concerns that arise after the initial announcement. Let us break these down and look at the important ones to consider.
Purpose of RMC No. 109-2025
Following the announcement of the audit suspension, various interpretations and misconceptions have arisen among taxpayers and practitioners, leading to confusion that BIR enforcement activities had been broadly suspended.
Therefore, RMC No. 109-2025 was issued to address these areas and clearly define the suspension, its exceptions, and how ongoing or future cases should be treated. The circular highlighted that the suspension is deemed procedural and temporary — not a form of relaxation of tax enforcement.
Cases Clearly Excluded from the Suspension
The BIR has reiterated and added specific cases that are not covered by the said audit suspension. Hence, this circular made it clear that the suspension primarily pertains to routine field audits and does not extend to the following situations:
- Criminal Tax Investigations – include cases involving fraud, tax evasion, or offenses that, if delayed, would result in prejudicing the government’s interests.
- One-Time Transactions (ONETT) – these require immediate processing for registration, tax clearance, or transfer-related purposes.
- Cases Nearing Prescription – this generally refers to those with less than 6 months remaining before the prescriptive period.
- Audit Verification of Tax Refund and Tax Credit Claims – an examination is a legal prerequisite for approval of such claims.
- Investigations supported by 3rd-party Information – these are cases that involve other government agencies doing data matching or verifying leads, which are treated as a separate matter from ordinary tax audit activities.
With these clarifications, it is essential to note that refusal to cooperate in these cases by just relying on the assumption that “all audits are suspended” may lead to exposure of taxpayers to enforcement actions.
No Suspension of Taxpayer Compliance Obligations
Furthermore, the circular explicitly stated that the suspension does not affect the obligation to pay taxes under the existing tax laws. Hence, taxpayers are still required to file all tax returns within the prescribed deadlines, pay all due taxes on time, and ultimately maintain complete, accurate books of account and supporting documents.
Any non-compliance incurred during the suspension period will remain subject to assessment, including penalties & interest, once audit activities resume. The suspension is deemed an administrative measure and is not to be interpreted as a compliance reprieve.
Other Gray Areas Clarified
Aside from the scope of suspended audits and stated case exempted, the circular also addressed some of the operational and legal concerns that are relevant for taxpayers preparing for future examinations:
- Ongoing Audits are not Cancelled or Restarted – covered examinations may be temporarily suspended, but they are not considered as absolutely dismissed or invalidated.
- Defects are not Cured by the Suspension – Any procedural issues, such as those related to authority, scope, or compliance with auditing rules, as they existed before the suspension, will remain to be challenged.
- Audit Procedures may Resume from the Last Completed Stage – Once the suspension is lifted, examinations may continue based on the work already performed, making record preservation and continued documentation essential.
- The Suspension covers Subpoenas – only those exempted cases will be required to submit documents or make a personal appearance.
- Prescription Periods Continue – except in cases legally interrupted, the suspension does not automatically equate to stopping prescriptive periods, which underscores the importance of timing-related cases.
- Stricter and More Centralized Audit Controls are Expected – after the audit suspension, the circular reiterated that enhanced oversight, tighter monitoring of audit timelines, clearer officer designations, and improved documentation standards will be implemented once operations resume.
Altogether, these points reinforce the essence of the suspension – that it should not be viewed as a protection from future assessment, but as a transitional phase towards a much disciplined and time-bound audit enforcement.
What this Means for Businesses and Taxpayers
The circular treated the audit suspension as a limited preparatory window, not a policy shift that favours relaxed enforcement of tax laws. Moreover, during this period, businesses are strongly encouraged to:
- Review and organize tax records and supporting documents
- Reconcile accounting and tax filings
- Address compliance gaps proactively
- Prepare for stricter, more standardized audit procedures in the future
As for taxpayers who took advantage of this period to improve internal controls, they are more likely to experience better audits and fewer disputes once full audit operations resume.
In Summary
The RMC No. 109-2025 provides crucial clarifications on the limits of the audit suspension. While specific procedures are temporarily paused, the BIR’s authority to enforce existing tax laws remains fully intact. For taxpayers, the means of this phase is clear: it is a time for preparation, not complacency. Better documentation, timely compliance, and proactive review remain the best line of defence against future assessments.
Here at Babylon2k, we help businesses translate regulatory matters into practical compliance strategies. In case you need assistance navigating post-suspension risks or preparing for future audits — just reach out to us, our team is always ready to help!
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