BIR eases rules on business closure, tax deregistration

The Bureau of Internal Revenue (BIR) on Wednesday said it has simplified the process for closing businesses and cancelling tax registration in a bid to ease tax compliance for taxpayers who have already ceased operations.

In a statement, the BIR said it issued Revenue Memorandum Circular (RMC) No. 47-2026 on May 19.

RMC 47-2026 prescribes the new guidelines streamlining the cancellation of tax registration for businesses that have closed, as part of the implementation of Republic Act No. 11976 or the Ease of Paying Taxes Act.

Internal Revenue Commissioner Charlito Mendoza urged taxpayers who have already ceased operations to avail themselves of the streamlined process to avoid the continued accumulation of penalties and to properly update their registration records with the BIR.

“This is our ‘Ease of Closing Business’ reform. In line with President Ferdinand R. Marcos Jr.’s directive to make government services faster, better, and more responsive, and Finance Secretary Frederick D. Go’s push to make tax administration more investor-friendly and business-friendly, the BIR is making it easier for taxpayers who have already ceased operations to properly close their business and cancel their registration,” Mendoza said.

The BIR chief said the new policy completes its efforts to streamline business processes by making it easier not only to start and operate a business, but also to properly close registration once operations have ceased.

“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," he said.

"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 ceased,” Mendoza added.

Under the circular, taxpayers who have ceased business operations may now apply for the closure or cancellation of registration either manually or electronically through the Revenue District Office (RDO) where their head office or branch is registered.

The guidelines also simplify and standardize documentary requirements.

In addition to the application form for closure or cancellation of registration and the surrender of original registration documents and permits previously issued to the business, taxpayers will only be required to submit two sets of documents:

• List of ending inventory of goods and supplies, including capital goods for value added tax-registered taxpayers
• Unused invoices, supplementary documents, and other unutilized accounting forms, together with their inventory

The new guidelines also state that penalties for non-filing of tax returns shall no longer accrue once the taxpayer submits complete documentary requirements for closure or cancellation of registration.

Moreover, to prevent the further accumulation of open cases, the taxpayer’s registered form types shall be placed under “deregistered” status upon submission of complete requirements.

The BIR, however, emphasized that filing an application for closure or cancellation of registration does not preclude it from conducting an audit to determine any outstanding tax liabilities.

The agency added that micro taxpayers shall not be subject to mandatory audit for closure and/or cancellation of business registration.

“Hence, tax clearances will be issued within three working days from submission of complete documentary requirements for those with no open cases or outstanding liabilities,” it said.

“For micro taxpayers with open cases, tax clearance will be issued within three working days from submission of complete documentary requirements and payment of outstanding liabilities, including penalties,” the BIR added.—MCG, GMA News