The Bureau of Internal Revenue (BIR) has issued a circular simplifying the process for closing businesses and cancelling tax registration as part of the implementation of the Ease of Paying Taxes Act.
New Guidelines for Business Closure
Under Revenue Memorandum Circular 47-2026, issued on Tuesday, May 19, 2026, businesses that have stopped operations may apply for closure or cancellation of their registration either manually or electronically through the Revenue District Office where their head office or branch is registered.
“From improving the ease of doing business and the ease of paying taxes, this reform completes the BIR’s support for businesses through every stage of the business life cycle. If we make it easier to start and operate a business, then the government must also make it easier to properly close BIR registration once operations have already ceased,” said BIR Commissioner Charlito Martin Mendoza.
Documentary Requirements
Applicants need to submit the application form, surrender original BIR registration documents and permits previously issued to their business, a list of ending inventory of goods and supplies (including capital goods for VAT-registered taxpayers), and unused invoices, supplementary documents, and other unutilized accounting forms along with their inventory.
Under the new guidelines, penalties for non-filing of tax returns shall no longer accrue once the taxpayer submits the complete documentary requirements for closure or cancellation of registration. To prevent further accumulation of open cases, the taxpayer’s registered form types will be placed under “deregistered” status upon submission of complete requirements.
Audit and Tax Clearance
However, the BIR noted that filing an application for closure or cancellation does not preclude the Bureau from conducting an audit to determine any outstanding tax liabilities. Micro taxpayers—those with gross sales not exceeding P3 million in the preceding year or gross assets upon retirement not exceeding P8 million—shall not be subject to mandatory audit for closure or cancellation.
Tax clearances will be issued within three working days from submission of complete documentary requirements for those with no open cases or outstanding liabilities. For micro taxpayers with open cases, tax clearance will be issued within three working days from submission of complete requirements and payment of outstanding liabilities, including penalties.
Obligations for Ceasing Operations
The BIR reminded that taxpayers who cease business operations without submitting the documentary requirements for closure or cancellation of their business registration shall continue to be liable for all tax obligations until cancellation is completed.
