Form and manner of protesting matters

TAXWISE OR OTHERWISE

- RACHEL SISON

With the government's proposed national budget for 2026 pegged at P6.793 trillion — a 7.4% increase from the previous year’s budget — it is clear that the Bureau of Internal Revenue (BIR) will be intensifying its tax collection efforts to raise the much-needed funds.

Collections will largely come from income tax, withholding tax, value-added tax and other taxes; and from the BIR’s assessments for deficiency taxes as a result of examinations of taxpayers’ books of account and other accounting records.

Depending on the stage of the tax audit process, assessments for deficiency taxes may be contained in a Preliminary Assessment Notice (PAN) and/or Formal Letter of Demand and Final Assessment Notice (FLD/FAN).

A PAN is issued if the BIR finds sufficient basis to assess the taxpayer for deficiency taxes after a review and evaluation of the taxpayers’ explanation and supporting documents to the Notice of Discrepancy issued by the BIR. If the taxpayer does not agree with the findings in the PAN, it has 15 days from the date of receipt to respond. Otherwise, if no response is submitted, the taxpayer is considered in default, in which case, a FLD/FAN is issued by the BIR.