The Bureau of Internal Revenue’s pause on mandatory QR registration badges offers a test of how it responds to taxpayers—and how evenly it applies its enforcement powers. The immediate policy reversal matters, but the larger challenge is building public confidence through proportionate rules and credible audits.

Commissioner Charlito Mendoza suspended the requirement under Revenue Memorandum Circular No. 113-2026 before its October 31 deadline. Displaying the BIR Registration Seal Badge is now voluntary, and taxpayers won’t face penalties solely for not displaying it during the suspension. The BIR said more than 52,700 registration documents bearing badges had been secured by October 14.

That response acknowledges concerns, but the timing invites questions. Privacy, technical readiness and consultation with affected businesses could have been addressed before taxpayers were asked to comply. The BIR should also assess the time and cost businesses spent securing the documents.

Read about the suspension of the QR badge requirement.

Digital rules need a fair transition

The same question of who carries the cost applies to electronic invoicing. The TRAIN Law set a system-dependent framework in 2018; eight years later, RMC No. 98-2026 requires specified taxpayers to comply by December 31 and exempts micro e-commerce taxpayers. RMC No. 110-2026 adds accreditation requirements for third-party service providers.

Background on BIR e-invoicing rules and RMC No. 98-2026 and RMC No. 110-2026 set out the requirements. (READ: [Ask the Tax Whiz] Guidelines on VAT for Nonresident Digital Service Providers)

Digitalization can improve tax administration. But businesses shouldn’t bear disproportionate software costs, technical hurdles or penalties when the government itself took years to put the system in place. Provider accreditation should protect data while leaving room for Filipino technology firms to compete.

Businesses that struggle to meet new requirements aren’t automatically evading tax. Modernization should make compliance more manageable for taxpayers as well as easier to administer. That’s especially relevant for micro, small and medium enterprises, which made up 99.63% of Philippine establishments and 66.58% of employment in 2024, according to government statistics.

Philippine MSMEs need rules scaled to their capacity, with a transition that doesn’t turn government delays into taxpayer penalties.

Public trust depends on even enforcement

The BIR’s response to the badge requirement should set a standard for listening and adjusting. Yet trust also depends on whether tax enforcement can reach people with political power. The Philippines scored 32 out of 100 and ranked 120th among 182 countries in Transparency International’s 2025 Corruption Perceptions Index. That score doesn’t establish wrongdoing by any individual, but it reflects a broader challenge to confidence in public institutions.

Frustration can be seen in the online sentiment, “PAYING TAXES AT THIS POINT FEELS LIKE SPONSORING CRIMINALS.” It doesn’t justify tax evasion. It signals how accountability failures can weaken public willingness to comply.

The BIR should build on RMO No. 22-2026 with a nationwide, risk-based audit initiative focused on credible evidence of undeclared taxable income or unexplained wealth, including among politicians, political dynasties and public officials. Wealth or political connections alone aren’t evidence of wrongdoing; discrepancies between lawful income and accumulated assets can warrant investigation.

Where legally authorized, investigators can cross-check tax returns against Statements of Assets, Liabilities and Net Worth (SALNs), property records and beneficial ownership information, coordinating with the Ombudsman and the Anti-Money Laundering Council when warranted.

Protect smaller taxpayers and show results

Three steps could make that approach more credible. First, generally keep startups in their first three years and MSMEs with annual sales of no more than ₱100 million out of routine audits, while preserving action where credible tax risks arise. Second, lower the cost of transition through affordable e-invoicing and competitive provider accreditation. Third, publish anonymized data on high-risk investigations, final assessments, collections and taxpayer compliance costs.

The badge suspension shows the BIR can respond to legitimate concerns. Its larger test is whether it will investigate powerful taxpayers with the same determination it brings to ordinary compliance. Protecting smaller businesses while pursuing credible evidence of tax evasion is a practical way to rebuild trust.

Audit the powerful. Protect the small. Restore public trust.

– Rappler.com

Mon Abrea, CPA, MBA, MPA (Harvard), is a global tax policy expert and Chief Tax Advisor of Asian Consulting Group (ACGlobal). He advises governments, multinational enterprises and international organizations on tax policy, investment competitiveness and fiscal reform. He is the author of Reimagining the World Without Corruption and Why Invest in the Philippines? CREATE MORE Edition, and has represented the Philippines in policy dialogues at the OECD, World Bank and other international forums.

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