JV Ejercito: 70% of BIR’s LOA collections ‘pocketed’ in extort scheme

MANILA, Philippines — Officials of the Bureau of Internal Revenue (BIR) who allegedly run an extortion scheme by misusing tax audit documents pocket up to 70 percent of their collections and leave only 30 percent to the government, according to Sen. JV Ejercito.

“The target for revenue generation was [supposed to be] about P6 to P8 billion [by misusing] these LOAs (letters of authority),” Ejercito said in a news conference on Tuesday. He was referring to letters of authority (LOAs), which empower revenue officers to examine a taxpayer’s records supposedly to ensure tax compliance.

Ejercito said only P2 to P3 billion was raised by revenue collection. “[But] 70 percent of that amount collected went to the [agents’] pockets. Only 30 percent went to the government,” he said.

Another tax audit document prone to abuse, the mission orders (MOs) issued by the BIR’s regional directors authorize revenue officers to conduct surveillance on business establishments and apprehend violators of tax laws and regulations, among other functions.

On Monday, the BIR ordered the suspension of all tax audits to evaluate their current protocols and recommend safeguards for taxpayers, its chief, Commissioner Charlie Mendoza, said.

READ: BIR suspends tax audits following complaints of abuse, corruption

Foreigners also harassed

Ejercito also said he had received reports that even diplomats and foreign business groups like the American Chamber of Commerce and European Chamber of Commerce have been harassed by revenue officers through LOA extortion.

“They are weaponizing LOA for corruption,” he said, adding that this development must have reached former BIR Commissioner Romeo Lumagui Jr.

‘Accountability’

President Ferdinand Marcos Jr. on Nov. 13 appointed Mendoza as Lumagui’s replacement. The BIR subsequently issued a statement commending Lumagui’s “transformative and high-performing tenure.”

But on Monday, Sen. Erwin Tulfo filed a resolution urging the blue ribbon committee to conduct an inquiry into the BIR. He also said Lumagui should be invited to its hearings.

READ: Senate resolution seeks probe into alleged BIR money-making scheme

Ejercito said the extortion scheme is a matter of “accountability.”

“Whether resigned or replaced, I think they still have to be answerable for their actions or inaction,” he said.