BIR Close Business Step-by-Step Guide
Detailed overview of the requirements, process, and typical fees when closing a business with the Bureau of Internal Revenue (BIR) in the Philippines.
What you’ll learn in this BIR close business guide
This guide explains how to close a business with the BIR in the Philippines, from preparing your records to filing the right forms, settling taxes and penalties, and getting a BIR tax clearance for business closure.
For a complete shutdown plan, also check our How to Close or Cancel Your DTI Business Name, Barangay Business Permit Guide, and How to Check for Open BIR Cases so you don’t miss any LGU or BIR requirements.
To make closure easier, you can use our free BIR Book of Accounts Tool to organize your books before audit, and our Budget Calculator to plan cash for final taxes, fees, and penalties.
Prepare for Closure
Before filing for BIR closure, make sure your records and returns are complete up to your last day of business.
- Finalize your cessation date (last day of operations).
- File and pay all due tax returns (income tax, VAT or percentage tax, and withholding taxes) up to this date.
- Update your books of accounts and prepare ending inventory lists of assets, supplies, OR/SI booklets, and equipment.
- Obtain preliminary clearances such as LGU Certificate of Closure and SEC/DTI papers if already available.
Reference: guides such as "How to Apply for BIR Business Closure in the Philippines" by tax practitioners.
Prepare Documentary Requirements
Typical requirements include:
- Accomplished BIR Form 1905 (Application for Registration Information Update) – tick "Closure/Cessation".
- Letter of request for business deregistration or closure addressed to the RDO.
- Original Certificate of Registration (BIR Form 2303), Authority to Print, unused official receipts/sales invoices, and any permit-to-use POS/CRM – all for surrender.
- Affidavit of Closure, Board Resolution, or Special Power of Attorney (for corporations/partnerships), plus a valid government-issued ID of the authorized representative.
- Updated books of accounts, inventory list, and fixed asset schedule.
- LGU Certificate of Closure, SEC Order of Dissolution, or DTI cancellation certificate, if already obtained.
References: BIR Form 1905 and practical guides on "How to Apply for BIR Business Closure in the Philippines".
Submit Packet at Your RDO
- File accomplished Form 1905 and all supporting documents at your registered Revenue District Office.
- Surrender your BIR Form 2303, Authority to Print, unused OR/SI, and POS/CRM permits (if any).
- The RDO will evaluate your application and may conduct a closure audit or verification.
- Be ready to respond to any requests for additional documents or explanations.
- Settle any deficiencies, penalties, or outstanding returns identified by the RDO.
Reference: "How to Close a Business with the BIR: Steps, Requirements, and Tax Clearance".
Pay Fees and Settle Penalties
Typical fees and charges:
- BIR Certification/Clearance Fee: around ₱100.
- Documentary Stamp Tax (DST): around ₱30 per certificate or document.
- Notarial fees: about ₱200–₱700 per document.
- Annual Registration Fee (₱500) if not yet paid for the current year at the time of closure.
- Penalties for late or missed filings can be substantial: 25% surcharge, 20% interest per annum, and compromise penalties that may range from around ₱1,000 to ₱50,000 or more.
- Settle all due taxes, including VAT on deemed sale of remaining assets if you are VAT registered.
Reference: cost breakdowns from guides on "Costs for Closing BIR Registration in the Philippines".
Receive BIR Tax Clearance
After validation and, if applicable, completion of any audit findings and payments, the BIR will issue a Tax Clearance for Business Closure.
- This clearance is often required to finalize closure with SEC/DTI and your Local Government Unit (LGU).
- Keep all closure-related documents and clearances for at least 10 years.
Reference: "How to Close a Business in the Philippines: A Step-by-Step Guide" and similar resources.
💰 Summary of Typical BIR Closure-Related Fees
Actual amounts may vary by RDO, type of business, and the number of documents or past non-compliance issues.
| Fee Type | Indicative Amount (₱) | Notes |
|---|---|---|
| BIR Certification / Clearance Fee | ~100 | Paid at RDO when requesting closure / tax clearance. |
| Documentary Stamp Tax (DST) | ~30–60 per document | Applied to certificates, affidavits, and inventory lists. |
| Notarial Fees | ~200–700 per document | Varies by notary and location. |
| Annual Registration Fee (ARF) | 500 | Due if not yet paid for the current year at time of closure. |
| Penalties for Late / Unfiled Returns | Variable | 25% surcharge, 20% interest per annum, and compromise penalties that can reach tens of thousands of pesos depending on tax type and amount. |
Note: These figures are for guidance only. Always confirm the latest rates and requirements with your Revenue District Office or a trusted tax advisor.
Key Takeaway
Closing a business with the BIR is not just filing a single form. It involves cleaning up past returns, surrendering all BIR-issued documents, and securing a tax clearance. Preparing early and keeping records organized will make the process faster and less stressful.