No collection of taxes in BIR’s ‘Oplan Kandado’
By: Atty. Keshia Daniell L. Valencia on October 8, 2026
“OPLAN Kandado” is a 2009 initiative of the Bureau of Internal Revenue (BIR) to strengthen compliance with essential requirements under the National Internal Revenue Code (Tax Code), such as issuing receipts/invoices, filing of returns, declaration of taxable transactions, registration with the BIR, and paying the correct amount of taxes.
The Oplan Kandado campaign is predicated under Section 115 of the Tax Code, as amended, which empowered the Commissioner of Internal Revenue to suspend the business operations of a taxpayer on grounds of (1) failure to issue receipts/invoices by a VAT-registered or registrable taxpayer, (2) failure to file VAT return, (3) understatement of taxable sales/receipts by thirty percent or more of the correct amount declared in the case of a VAT-registered or registrable taxpayer and (4) failure to register.
Under this program, surveillance activities on the business of the taxpayer shall be conducted and must be covered by a valid Mission Order. An overt surveillance shall be conducted for a minimum period of 10 days and a maximum of 30 days, unless otherwise extended in writing by the authorized signatory. Round-the-clock observation/monitoring may also be done on the target taxpayer’s business if the nature of the business so requires. Overt surveillance simply means that BIR employees will actually observe and closely monitor the business activities of the taxpayer.
If the surveillance reveals ground for closure, the authorized revenue official can issue a 48-hour notice requiring the taxpayer to explain under oath why administrative (by suspension of business or temporary closure of establishment) or criminal action should not be taken.
If the explanation is found unmeritorious and there is basis to pursue administrative or criminal action, a five-day VAT compliance notice shall be issued, which shall state the particular provisions of the Tax Code that were violated, and for which rectifications must be made. Thereafter, the taxpayer may again refute the findings of the BIR.
If the taxpayer fails or refuses to respond, submits an insufficient response, or does not comply with the five-day VAT compliance notice, the authorized revenue official shall recommend the closure of the establishment. Upon the commissioner’s approval, the recommendation becomes the basis for the issuance of a closure order. The execution of the closure order shall consist in the physical closing of the doors, or other means of ingress of the establishment, and the sealing thereof, with the appropriate security devices and the BIR’s official seal.
On June 30, 2026, the BIR launched its “Nationwide Oplan Kandado 2026” campaign. The operations covered approximately 400 cases involving an estimated P742 million in potential tax exposure based on the corresponding five-day VAT compliance notices. According to statistics issued by the BIR, 132 closure orders were implemented, while many other taxpayers had already complied by registering their businesses, filing the required tax returns, and settling their tax obligations before a closure order could be issued.
However, in a 2026 case decided by the Supreme Court, it was emphasized that an attempt to collect alleged deficiency VAT through the 48-hour notice and five-day VAT compliance notice in an Oplan Kandado initiative, without a formal assessment issued through a Letter of Authority (LOA), will be considered a violation of the due process rights of a taxpayer.
Section 228 of the Tax Code, as amended, governs the due process requirements for tax assessments. It expressly requires that the taxpayer be informed in writing of both the legal basis and factual grounds for any assessment, otherwise, the assessment is void.
Further, Revenue Memorandum Order 3-2009, which formalized Oplan Kandado, clearly states that, if after the surveillance, there is sufficient ground for the closure of establishment, a recommendation shall be made to that effect. However, if the taxpayer is deemed to have deficiency taxes, the commissioner or the regional director having jurisdiction of the taxpayer should go through the formal process of audit and assessment, and issue a LOA for the conduct of investigation. The revenue officer named in the LOA will then proceed with the tax audit. This is consistent with the principles of due process and in accordance with the requirements set out in Section 228 of the Tax Code.
Any assessment issued, even if pursuant to the BIR’s power to conduct Oplan Kandado, will be void if done in clear disregard of statutory requirements and due process.
Keshia Daniell L. Valencia is an Associate of Mata-Perez, Tamayo & Francisco (MTF Counsel). This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com.
The article was published at the More to Follow Column at The Manila Times on October 8, 2026. Please see this link.