Business should be closed in the following government agencies/offices.

• Department of Trade and Industry (DTI) office

• The local City/Municipal Office, where the business is registered
• Department of Labor and Employment (DOLE) office, if the company has employees
• Bureau of Internal Revenue (BIR) office
• Bangko Sentral ng Pilipinas (BSP), if the business is registered with the office
• Securities and Exchange Commission (SEC) for partnership and corporation
• Other agencies or offices where the business is registered, such as SSS, PHIC and
HDMF

To guide you on the formal cessation of your business, here are some of the basic
steps, procedures and requirements on how to close a business in the Philippines.

1. Closing a business at DTI

According to the DTI, we still have to inform the office when we voluntarily close our
business, and apply for cancellation of our registered business name (BN).

For Corporation and Partners, the following are the requirements for
Voluntary Cancellation.
If dissolved at the Securities and Exchange Commission (SEC),
• Letter request signed by the authorized signatory (Board Resolution for the authorized
signatory)
• Certified photocopy of the SEC certificates of dissolution of the
corporation/partnership
• Original copy of the business name certificate of registration and the duplicate copy of
the application form. (Affidavit of loss if either the business name certificate and/or the
duplicate copy of the application form was lost)

2. Closing a business at the local City/Municipal Office

The procedures and requirements on closing a business may vary among different LGUs
(Local Government Units). This means that the requirements for business cessation in
Makati City can be different in Manila or Pasay City. The typical requirements for
business closure at the LGUs are the following:
• Affidavit of Gross (reason for and date of closure)
• Mayor’s Permit
• Business Plate
• Financial Statement/ ITR
• Sketch
• Latest Payment
• Certificate of Closure from the Barangay Captain indicating date of closure
For more complete and accurate procedures and requirements, you may visit and
inquire the City or Municipal Office where your business is registered.
 3. Closing a business at DOLE
If your business has employees or was required to be registered with the DOLE, you
also have to ensure that you notify the DOLE office and comply with the labor
requirements to avoid labor relation liabilities. The following are the basic requirements
in closing a business and be cleared at the DOLE office:
• Service of a written notice to the employees and the DOLE at least one (1) month
before the intended date of closure/cessation
• The closure or cessation of business operations is bona fide in character.
• Payment to the employees of termination pay amounting to at least one-half (1/2)
month pay for every year of service, or one (1) month pay whichever is higher, per
Philippine Labor Code mandate.

4. Closing a business at the BIR

The process of business cessation at the BIR is perhaps the most tedious one among
others. And if you have unpaid tax liabilities or delinquencies due to the government,
the process could even get more problematic. Among the government offices, where
your business is registered, the BIR is the one which records and monitors your internal
revenue taxes, such as income and business taxes (Value Added Tax or Percentage
Tax). And to formally close and clear your business with the BIR, the bureau has to
ensure that you have already paid all your tax obligations.

BIR Form 1905 (Application for Registration Information Update) is the tax form used in
applying for closure of a business. The following are the requirements and procedures
for closure of business at the BIR.

Documentary Requirements
1) Letter of request stating reason for termination of business
2) Original Certificate of Registration
3) Books of Accounts
4) Inventory List of Unused Receipts and Invoices
5) Unused Receipts and Invoices for cancellation
6) Board Resolution / Notice of Dissolution (if Corporation / Partnership)

Additional Requirements in Case of Death of Individual Taxpayer:

1) Death Certificate
2) Payment of Estate Tax, if any
Procedures

1) Taxpayer applicant files BIR Form 1905, together with the attachments at the RDO
where they are registered within ten (10) days from retirement of business.
2) Taxpayer files short period return for income tax purposes.
3) RDO verifies if taxpayer has open cases reflected in the Integrated Tax System (ITS).
If YES, ask taxpayer to submit required returns and pay the corresponding tax due/s
and penalties if any.
4) RDO verifies if taxpayer has delinquent cases at the Assessment, Collection, and
Legal Divisions of the Region;
5) RDO verifies if taxpayer has delinquent cases at the Collection Enforcement Division,
BIR National Office
6) RDO requests for Letter of Authority to investigate internal revenue taxes for all un-
audited taxable years prior to cancellation of business.
7) Assigned Case officer conducts investigations for period/s covered in the issued
Letter of Authority.
8) Taxpayer complies with requirements of audit and pays corresponding deficiency
taxes resulting from audit using Form 0605.
9) RDO issues tax clearance for closure of business.
10) RDO updates ITS and cancels TIN of taxpayer (for non-individual taxpayer).

5. Closing a business at SEC

For corporations and partnerships, they cannot process closure of business with the SEC
if they are not yet done in securing tax clearance from the BIR and endorsements or
certificate of registration cancellation from other government offices, if applicable. Thus,
even though the business is already non-operating, it still remains as a registered
business. Though, the business owners, partners, or shareholders can already start the
liquidation process of its assets, subject to applicable taxes.

For corporations, corporate dissolution can be voluntary or involuntary. In this

discussion, we assume that we are voluntarily dissolving a corporation. Moreover,
voluntary dissolution of a corporation may have different procedures, depending on
whether the dissolution will affect creditors or not. One way to voluntarily dissolve a
corporation with the SEC is by shortening its corporate term. The following are the
requirements for corporate dissolution by shortening its term.

1. Directors’ Certificate – A Notarized document signed by majority of the directors and

corporate secretary certifying the amendment of the articles of incorporation shortening
the corporate term, the votes of the directors and stockholders thereto, and the date
and place of the stockholders meeting
2. Amended Articles of Incorporation
3. Audited financial statements as of date of the stockholders meeting approving
dissolution or any date thereafter
4. List of creditors, if any, and their consent, or certification as to non- existence of
creditors
5. BIR Tax Clearance
6. Publisher’s affidavit of the publication of the dissolution of the corporation
(once a week for three (3) consecutive weeks)
7. Endorsements/clearances from other government agencies, if applicable
Take note that if there are creditors and their consent was not secured, the application
should be in the form of a petition to be filed with Office of General Counsel of the SEC.
Other notes to remember
When closing a business in the Philippines, we have to formally close the business in
the government agencies where it is registered. We have to notify those offices and
comply with their requirements to get a clearance or certificate of termination
(cancellation of registration) of our business. Thus, a business owner has to ensure that
his or her business is cleared in every government agency it is registered aside from the
ones discussed above.

For businesses registered and regulated by the Bangko Sentral ng Pilipinas (BSP), such
as pawnshops, money changers, banks, and financing companies, they have to comply
with the closure requirements of the office. For cooperatives, instead of closure at the
SEC, it should comply with the CDA (Cooperative Development Authority) Office for
cessation or dissolution.

Furthermore, if your business employs people and is contributing to SSS (Social Security
System), PHIC (Philippine Health Insurance Corporation) and HDMF (Home
Development Mutual Fund) for employees as mandated by our laws, then you also have
to apply for cancellation of your business or employer’s registration when you close
your business to stop your obligation as a contributing employer.