Closing a business made easier by RMC No. 47-2026

Closing a business in the Philippines may no longer be as complicated as it once was, after the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 47-2026 on May 19.

The circular introduces revised guidelines that make it easier for businesses to process their applications for closure and/or cancellation of taxpayer’s business registration with the Bureau of Internal Revenue. The RMC was issued under the authority of the Ease of Paying Taxes Act, which seeks to streamline the process and reduce bureaucratic hurdles.

RMC No. 47-2026 allows taxpayers to file their application for closure either manually with the Revenue District Office (RDO) where their head office or branch is registered, or electronically. Electronic filing may be done through RDO’s official e-mail address, or through the BIR’s electronic registration facilities, i.e., the Taxpayer Registration-Related Application (TRRA) Portal, and Online Registration and Update System (ORUS).

Notably, taxpayers must submit an application form with all required documents. In addition, they need to manually submit to their RDO: a) the list of ending inventory of goods and supplies, including capital goods for VAT-registered taxpayers, the unused invoices, supplementary documents, and other unutilized accounting forms, together with the inventory thereof; b) original BIR registration documents and permits.

Another key feature of the circular is the immediate relief from the requirement to file tax returns as soon as the taxpayer submits complete requirements for closure. Prior to the RMC, the taxpayer had to go through various compliance stages before the BIR tags the taxpayer as a “stop filer.” During this process, taxpayers are subject to penalties for failing to file tax returns.

The RMC stipulates that the taxpayer’s registered form types must be tagged as “deregistered” upon submission of the complete documentary requirements to ensure that no open cases are generated. Hence, penalties for non-filing of returns will no longer accrue thereafter.

The RMC also introduced faster processing timelines. Micro taxpayers — generally those with annual gross sales not exceeding P3 million or whose gross assets upon retirement do not exceed P8 million — can receive their tax clearance within three working days, provided they have no open cases or outstanding obligations. More importantly, they will no longer be subject to mandatory audits as part of the closure process.

For other taxpayers, the Tax Clearance will be issued and the closure or business registration cancellation process completed only after the termination of the audit.

Taxpayers who stop operations without formally closing their BIR registration remain liable for all tax obligations, including return filing, tax payments, and penalties, until the closure or cancellation of their business registration is completed.

For micro, small, and medium enterprises (MSMEs) in particular, the reform could have a meaningful impact. Many small entrepreneurs who were forced to shut down — especially following economic disruptions in recent years — have struggled to formally close their registrations, leaving them exposed to penalties and administrative complications.

With the new guidelines in place, more taxpayers are expected to regularize their records without facing unnecessary delays or additional financial burden.

Overall, the RMC reflects a pragmatic shift toward a more responsive and taxpayer-friendly regulatory environment. By streamlining procedures without compromising audit safeguards, the BIR strikes a balanced approach of promoting both compliance and administrative efficiency.

Moving forward, this reform is expected to encourage greater voluntary compliance, reduce lingering inactive registrations, and strengthen the integrity of the tax system. Ultimately, it signals a welcome recognition that ease of doing business should extend not only to entry but also to exit, fostering a more dynamic and resilient entrepreneurial landscape.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

Patricia Ann M. Tamba is an associate from the Tax Advisory & Compliance practice area of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com