Costs for Closing BIR Registration in the Philippines
(A practitioner-oriented guide as of 2025)
Scope & intent – This article focuses exclusively on the monetary outlays—both official and incidental—incurred when a taxpayer (individual or juridical) cancels or retires a Bureau of Internal Revenue (BIR) registration under the National Internal Revenue Code of 1997 (Tax Code) and its implementing revenue issuances. It does not cover barangay or LGU closure fees, PEZA/BOI deregistration, SEC dissolution expenses, or asset-liquidation taxes (e.g., capital-gains tax on real property sales).
1. Legal Basis for Cancellation
| Instrument | Key Sections Relevant to Costs |
|---|---|
| Tax Code, as amended | §236(F) (cancellation of registration); §248-249 (surcharge & interest); §173-183 (Documentary Stamp Tax) |
| Revenue Regulations (RR) | RR 7-2012 (Update of Registration Info), RR 11-2004 (DST), RR 7-2022 (enhanced penalties & compromise schedule) |
| Revenue Memorandum Orders (RMO) | RMO 17-2023 (streamlined closure), RMO 1-2016 (issuance fees for certifications) |
| Revenue Memorandum Circulars (RMC) | RMC 57-2020 (eTIN cancellation rules) |
2. Categorising the Costs
| Cost Bucket | Typical Amount (₱) | Notes & Triggers |
|---|---|---|
| A. Statutory Filing / Certification Fees | ₱100 certification fee + ₱30 DST per certificate | For the Certificate of No Outstanding Liability (CONOL) or Tax Clearance for Business Closure issued by the Revenue District Office (RDO). |
| B. Documentary Stamp Tax (DST) on sworn statements & inventory lists | ₱30 per document | DST is charged under Sec. 188 (affidavits) and Sec. 189 (certifications). Multiple pages but single notarisation → one DST. |
| C. Notarial Fees | ₱200–₱700 | Sworn declaration of closure, board resolution, or partnership dissolution. Rates vary by notary & location. |
| D. Annual Registration Fee (ARF) “catch-up” | ₱500 | Payable only if the entity has not yet paid the ARF for the calendar year and the closure application is filed after 31 January. |
| E. Open-Case Penalties (surcharge & interest) | Variable; can dwarf all other costs | 25 % surcharge on the basic tax plus 20 % interest per annum (or the prevailing legal rate set by Bangko Sentral) until fully paid. Applies to any unfiled or under-paid returns (income tax, VAT/percentage, withholding, DST, excise). |
| F. Compromise Penalties for late filing/non-filing | ₱1,000 – ₱50,000 per return | As per updated Compromise Penalty Matrix (RR 7-2022). Computed per delinquent return; multiplicative for multi-taxpayers. |
| G. Books-of-Accounts Retirement Fee | None | No BIR fee to stamp books “closed,” but unused invoices/receipts must be inventoried and surrendered. |
| H. Professional & Liaison Fees | ₱5,000 – ₱50,000 | Charged by CPAs, tax agents, or law offices for preparing computations, securing clearances, and appearing at the RDO. |
| I. Opportunity & Logistical Costs | Photocopying, courier, transport, staff time | Often overlooked but material for MSMEs operating outside the RDO’s city. |
3. Walk-Through of Each Cost Element
3.1 Statutory Filing & Certification Fees
- BIR Form 1905 (Application for Registration Information Update) is free, but the issuance of the CONOL attracts a ₱100 certification fee under Sec. 21 of RR 7-2012.
- Each certificate requires a ₱30 DST strip (Sec. 188, Tax Code). Attach BIR Form 2000-OT as proof of DST payment.
3.2 Documentary Stamp Tax on Affidavits
Every sworn declaration—board resolution, partnership dissolution, closure affidavit, or sworn inventory—must carry a DST stamp. Even when executed abroad and apostilled, DST is still due upon use in the Philippines.
3.3 Notarial Fees
Not governed by BIR but indispensable; rates are set by notarising lawyers and typically tiered:
- Simple affidavit: ₱200–₱300
- Board resolution with multiple signatories: ₱400–₱700
3.4 Annual Registration Fee (ARF) Catch-Up
If closure occurs after the statutory deadline (31 January) and the ARF was not yet paid, the taxpayer must still settle the ₱500 ARF before cancellation.
3.5 Open-Case & Compromise Penalties
All outstanding returns must be filed through eBIRForms/eFPS up to the date of cessation. Failure invokes:
- 25 % surcharge (Sec. 248[A])
- 20 % p.a. interest (Sec. 249[B])
- Compromise penalty per RR 7-2022 (graded by gross sales/income).
Example: A VAT-registered sole proprietor with ₱100,000 unpaid VAT for Q2 2024 who files in Aug 2025 pays: – Basic tax: ₱100,000 – Surcharge (25 %): ₱25,000 – Interest (20 % × 1.25 yrs): ≈ ₱25,000 – Total: ₱150,000 (plus ₱5,000 compromise penalty)
3.6 Retirement of Books & Unused Invoices
No fee, but you must:
- Submit an Inventory List of unused BIR-printed receipts.
- Present your Books of Accounts for “cancellation” stamping.
- Physically surrender unused receipts for destruction or secure a permit to destroy.
3.7 Professional Fees
Many taxpayers engage accredited tax agents because:
- RDOs often require on-site appearance during tax audit.
- The agent computes settlement and reconciles ledgers versus returns. Rates depend on complexity—single proprietor (₱5,000–₱15,000); corporation with multiple tax types (₱30,000–₱50,000+).
4. Hidden & Inefficiency Costs
- Multiple RDO visits – average of 3–5 appearances for assessment, payment, and release of CONOL.
- Suspended eFPS account – premature de-registration can block filing of “catch-up” returns, forcing manual amendments (with additional penalties).
- Overlap with LGU Closure – City Treasurer may withhold business permit cancellation until BIR CONOL is shown, effectively extending lease/rent obligations.
5. Strategies to Minimise Outlay
| Strategy | Impact |
|---|---|
| File a “zero-activity” return for dormant periods | Avoids compromise penalties even if tax is nil. |
| Time the closure application to Q4 | Allows full-year tax compliance in ordinary course; avoids ARF for succeeding year. |
| Settle open liabilities through BIR’s Voluntary Assessment and Payment Program (VAPP) (when available) | Discounts surcharges & interest; accelerates issuance of CONOL. |
| Batch notarise documents | One notarial act can cover multiple annexes, thus one DST strip. |
| Engage an agent with RDO familiarity | Cuts liaison time; may reduce professional hours billed. |
6. Illustrative Cost Scenarios (2025 pesos)
| Profile | Government Fees & DST | Penalties & Interest | Professional Fees | Total |
|---|---|---|---|---|
| Dormant sole prop. – no sales for 2 yrs, timely zero returns | ₱160 (cert.+DST+notary) | ₱0 | ₱5,000 | ≈ ₱5,160 |
| Active VAT entity – up-to-date returns | ₱160 | ₱0 | ₱10,000 | ≈ ₱10,160 |
| Active VAT entity – 3 late VAT/WT returns | ₱160 | ₱90,000 (ex. above) | ₱20,000 | ≈ ₱110,160 |
| Medium corporation – multiple deficiencies | ₱160 | ₱500,000+ | ₱40,000 | ₱540k+ |
7. Compliance Roadmap
- Pre-closure audit – Reconcile ledgers to returns.
- Settle deficiencies – Pay via eFPS/eBIRForms, output validated form.
- Prepare documents – Form 1905, sworn affidavit, inventory list, tax clearance request.
- Pay certification fee & DST – BIR Form 0605 for ₱100; Form 2000-OT for ₱30.
- Submit to RDO – Obtain claim stub.
- Receive CONOL & cancellation-stamped COR – Final proof of BIR closure.
8. Conclusion
The visible “fees” for closing a BIR registration—₱100 certification, ₱30 DST, and notarial charges—are modest. The real financial exposure lies in unresolved tax liabilities, statutory penalties, and professional services. Pro-active compliance, timely filing, and strategic timing of the closure application can keep total costs to a minimum-thousands rather than hundreds-of-thousands of pesos.
Disclaimer: This guide is for general informational purposes as of August 7 2025 and is not a substitute for personalised legal or tax advice. Always verify current BIR revenue issuances and consult a qualified Philippine tax professional before acting.