SEN. Joseph Victor Ejercito disclosed that the Japanese government has expressed concern over the Japanese investors’ experience with alleged abusive Bureau of Internal Revenue (BIR) personnel. The senator made the revelation as the Blue Ribbon Committee (BRC) resumed its inquiry on the issuance of the letter of authority (LOA) and its alleged abuse by some BIR personnel. Ejercito earlier condemned what he called a “widening culture of corruption” within the BIR, warning that abusive tax enforcement hit ordinary Filipinos and small businesses who faced intimidation instead of fair audits. The Senate deputy majority leader said that some foreign chambers of commerce have raised similar concerns. “The sad thing about this was that, during the last state or working visit of our president to Japan, the bilateral talks [between the two countries mentioned that] foreign investors were subjected to abuse by our BIR,” Ejercito said in Filipino and English. He expressed hope that reforms in the issuance of the LOA by the BIR would lead to stronger revenue collection as government finances face mounting pressure. “We badly need revenues right now. We are already facing around a P200-billion shortfall early this year. That is a heavy burden on our fiscal position,” Ejercito said. He noted that the suspension of the old LOA system and the safeguards being put in place should help eliminate abuse and improve efficiency in tax collection. “Now that the old LOA process has been halted and reforms have been instituted, we expect a significant improvement in revenue collection,” he added. Ejercito raised the need for clear and fair audit processes at the BIR to protect both local businesses and foreign investors. He raised concerns over the issuance of multiple LOAs to small and medium enterprises, warning that abusive practices could drive investors to neighboring countries. “We really need to fix this because we’re losing investments. We are losing to our Association of Southeast Asian Nations neighbors like Vietnam, Thailand, and others because of what’s happening here,” he said. BIR Commissioner Charlito Martin Mendoza said that reforms under Revenue Memorandum Circulars 5-2024 and 38-2024 clarified how income from cross-border services and foreign companies should be taxed. “If this guideline is applied and an assessment is made based on that case, it is not enough to simply cite the circular. We must clearly specify and explain the facts and the basis for applying that case,” Mendoza said.