Not renewing in 2027? How to close your business properly

Closing checklist by office

Step 1: retire the business with your city

City retirement is a regular BPLO service. Pasig's Business Permit and Licensing Department lists retirement alongside new registration and renewal. In Angeles, retirement applications go through the same compliance check as renewals from January 2026.^[7,8]

Retirement can share the renewal calendar. When Davao extended its 2024 deadline to 5 February, the extension covered both renewal and retirement applications.^[6]

The law sets what you declare and pay. Section 145 of RA 7160 covers the sworn statement of gross sales and the payment of any difference before retirement.^[1]

1. Go to the BPLOAsk for the business retirement process. DTI notes that closing procedures vary between LGUs.
2. Declare this year's gross salesSection 145 asks for a sworn statement of gross sales or receipts for the current year.
3. Settle the differenceIf the tax due on those sales is more than what you paid, you pay the difference before the business is officially retired.
4. Get proof of retirementAsk for the city's certificate or other written proof. BIR and DTI may ask what date you stopped.

Step 2: cancel your DTI business name

DTI says you must apply to cancel your registered business name when you close. You submit a sworn declaration that the cancellation is not meant to defraud creditors, and present one valid ID of the owner. Cancellation is filed at selected DTI offices.^[2,3]

If you might reopen under the same name later, ask DTI what cancelling means for that name before you file.

Step 3: close your BIR registration

File BIR Form 1905 (two originals) with the RDO that issued your Certificate of Registration. Attach a list of your ending inventory of goods and supplies, and surrender your unused invoices with an inventory of them, your original COR, and BIR permits such as your Authority to Print. A ₱30 documentary stamp goes on the tax clearance issued for closure.^[4]

File BIR Form 1905 after you retire the business. RMC 47-2026 lets you file with the RDO where your head office or branch is registered, by email to the RDO, through ORUS, or in person. Unused invoices and original BIR certificates and permits must still be handed in at the RDO.^[2,5]

RMC 47-2026 says penalties for not filing tax returns do not accrue after you submit the complete closure documents. Keep filing until you have submitted everything.^[5]

What changed in 2026 for small closures

BIR's registration FAQ still says taxpayers who cancel because of closure, except branches, are subject to immediate investigation. RMC 47-2026, issued in May 2026, sets a lighter path: micro taxpayers are not subject to mandatory audit, and taxpayers under the ₱3,000,000 sales or ₱8,000,000 asset line get clearance within three working days if they have no open cases or liabilities.^[4,5]

Manila Bulletin defined micro taxpayers as those with under ₱3 million in annual gross sales. Filing for closure does not stop BIR from auditing later, so keep your books.^[5]

Questions people ask

What happens if I just stop and do not renew?

Your registrations stay open. Under RMC 47-2026, penalties for non-filing stop accruing only after you submit complete closure documents to BIR. The city's Section 145 process is how a business becomes officially retired.

Do I pay business tax for the year I close?

Section 145 asks for a sworn statement of your gross sales for the current year, and any difference in tax is paid before the business is considered officially retired.

Will BIR audit my small business if I close?

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

How much does it cost to close with BIR?

BIR lists a ₱30 loose documentary stamp affixed to the tax clearance issued for closure. Settle any unpaid taxes and penalties first.