How to close a business in the Philippines

Why you cannot just shut the door

Your registrations stay open until you close them. BIR still expects returns, the city still expects renewal and business tax, and the DTI name stays registered to you. Closing properly stops new obligations and gets you the papers to prove it.

There is good news for small businesses. BIR's RMC 47-2026 says penalties for not filing tax returns do not accrue after you submit the complete closure documents. The sooner you file complete papers, the sooner the meter stops.^[4]

1. Retire the business at your city

Section 145 of the Local Government Code says a business, upon termination, shall submit a sworn statement of its gross sales or receipts for the current year. If the tax due on those sales is more than what you already paid, the difference shall be paid before the business is considered officially retired.^[1]

DTI notes that procedures on closing a business may vary between LGUs. Go to your city's business permits office, ask for its retirement checklist, and expect to surrender your mayor's permit.^[2]

Example: your city computed your business tax in January based on last year's sales, and you paid it. You close in June. You file a sworn statement of your January to June sales. If the tax on those sales is higher than what you paid, you pay the difference. If it is lower, ask the treasurer how they handle it.

2. Close your BIR registration

BIR's registration page says closure of a business is applied for with BIR Form 1905 (two originals), filed with the RDO that issued your Certificate of Registration. You submit a list of ending inventory of goods, supplies and capital goods, an inventory of unused invoices and supplementary invoices together with the unused forms themselves, and the original BIR notices and permits (such as your Authority to Print) and the original Certificate of Registration. A ₱30 documentary stamp tax goes on the Tax Clearance Certificate issued for the closure.^[3]

DTI's closing page also points to Form 1905 and says to file it at the RDO within 10 days from retirement of business. Treat that page's other BIR steps as older guidance, since it predates RMC 47-2026.^[2]

What changed in 2026: RMC 47-2026

RMC 47-2026, issued in May 2026, eased BIR's closure rules. You file for closure or cancellation with the RDO where your head office or branch is registered. You may send it by email to the RDO's official address, through ORUS, or in person. Your unused invoices and other accounting forms, and your original BIR permits such as the Certificate of Registration, must still be handed in manually.^[4]

Micro taxpayers are not subject to mandatory audit for closure. If your gross sales last year did not exceed ₱3,000,000, or your gross assets on retirement did not exceed ₱8,000,000, BIR issues your tax clearance within three working days of complete documents, as long as you have no open cases or unpaid liabilities, penalties included. If you already have an audit under a Letter of Authority, or you are above those limits, the clearance comes only after the audit ends.^[4]

Who counts as micro? BIR's RR 8-2024 classifies taxpayers with gross sales under ₱3,000,000 as micro. Example: a sari-sari store that sold ₱900,000 last year is a micro taxpayer. Under RMC 47-2026 it would not face a mandatory closure audit, and with no open cases it would get its tax clearance within three working days.^[5,4]

BIR's own registration page still says taxpayers closing a business, except branches, are subject to immediate investigation. The page has not been updated to match the 2026 rules for micro taxpayers in RMC 47-2026, so ask your RDO which applies to you.^[3,4]

3. Cancel your DTI business name, and tell SSS

DTI says you must apply for cancellation of your registered business name. You need a declaration under oath that the cancellation is not intended to defraud creditors, and one valid ID of the owner. Cancellation is filed at selected DTI offices. See DTI cancellation.^[2,6]

If you had employees, report the change too. SSS says changes in employer data or business status are reported on SSS Form R-8, the Employer Data Change Request.^[7]

Closing checklist by office

Questions people ask

Which do I close first, the city or BIR?

Start with the city, because you need proof that the business is retired. DTI's closing page gives a 10-day window to file Form 1905 from retirement of business.

Can I close my BIR registration online?

Yes. RMC 47-2026 lets you file with the RDO where your head office or branch is registered, by email to the RDO's official address or through ORUS. Unused invoices and your original BIR permits still have to be handed in manually.

What happens to my unused invoices?

You surrender them to BIR with an inventory of them. BIR lists unused invoices, supplementary invoices and other unused accounting forms among the closure requirements.

Will BIR still audit me?

Micro taxpayers are not subject to mandatory audit for closure under RMC 47-2026. If BIR already opened an audit under a Letter of Authority, your clearance comes only after that audit ends.