Updated for general practice and prevailing BIR procedures. Always check your Revenue District Office (RDO) for any local implementing variations.

1) Why BIR closure matters

Shutting down operations does not automatically stop your BIR obligations. Until you formally cancel your BIR business registration and secure a Tax Clearance for Business Cessation, you remain on the hook for:

Continuing return filings (which create “open cases” and penalties if missed),
Annual Registration Fee (unless properly cancelled),
VAT/percentage tax and withholding-agent duties,
Possible audit assessments covering your last taxable periods.

Your TIN is permanent (it is not “deleted”). What you cancel is the business registration/branch codes, tax types, permits, and authorities tied to that TIN.

2) Legal bases you’ll see cited by BIR officers

National Internal Revenue Code (NIRC) provisions on registration (Sec. 236), VAT deemed sale on retirement/cessation (Sec. 106(C)), inventory/asset “deemed sale” rules, filing/payment obligations, and penalties.
BIR issuances on registration updates/cancellation, VAT deregistration, Authority to Print (ATP) controls, Books of Accounts, PTU (Permit to Use) for CRM/POS/AIS, and eFPS/eBIRForms enrollment/exit procedures.
SEC/DTI/LGU rules: corporations/partnerships generally need BIR tax clearance to complete SEC dissolution; sole proprietors coordinate with DTI and the LGU.

(Exact circular numbers vary by period and RDO practice; the process below reflects the standard nationwide flow.)

3) The big picture: two tracks you run in parallel

BIR Track – cancel your tax registration, stop return obligations, undergo an exit audit, and obtain the BIR Tax Clearance for Business Cessation.
Entity Track – complete SEC dissolution (corporations/partnerships) or DTI business name cancellation (sole proprietors), and LGU closure (mayor’s permit, barangay, etc.).

In practice, the SEC will usually require the BIR tax clearance before it finalizes dissolution; LGUs may also ask for BIR proof of closure. Start both tracks, but expect the BIR clearance to be a gating item.

4) Timeline and key deadlines (rule of thumb)

Within 30 days from actual cessation/sale/transfer of business: file your BIR registration update to cancel the business registration/tax types.
Continue filing all periodic returns (VAT/percentage, withholding, excise if any) through the last period of actual operations.
File short-period income tax returns covering operations up to the cessation date (deadline follows the normal rule for annual/quarterly returns counting from that short period’s year-end).
Final employee compliance: withhold on final pay; issue BIR Form 2316; submit alphalists and annual information returns on their original due dates.
Loose-leaf/AIS: submit final transcripts/extracts shortly after deactivation (many RDOs require within 15 days from system deactivation—confirm with your RDO).

Missed filings create open cases that block clearance.

5) Step-by-step BIR closure process

Step 1: Prepare your compliance position

Cut-off date of cessation (last day you transacted).
Up-to-date filings: file and pay through the last required VAT/percentage, withholding, and income tax returns.
Books of Accounts written up to cessation date (manual/loose-leaf/AIS as applicable).
Inventory and fixed-asset lists as of cessation, including serial numbers and acquisition/accumulated depreciation.
Proof of LGU/SEC/DTI actions initiated (e.g., board resolutions to dissolve; LGU closure application).

Step 2: File registration update to cancel business/tax types

Submit BIR Form 1905 (Application for Registration Information Update) to your RDO to:
- Cancel the business registration,
- Cancel VAT/percentage tax type and other tax types no longer applicable,
- Cancel ATP and PTU (POS/CRM),
- Cancel additional branch codes if any.
Attach:
- Original BIR Certificate of Registration (COR / Form 2303),
- Inventory of unused official receipts/sales invoices (OR/SI) and the physical surrender of these unused forms stamped “Cancelled”,
- Latest returns and proof of payment,
- Books of accounts (manual ledgers/journals or loose-leaf/AIS printouts and CD/USB if required),
- PTU/Permit and end-of-day Z-Readings and final tapes (if using POS/CRM),
- Loose-leaf/AIS permit and final submissions (if applicable),
- Board resolution/affidavit of cessation (corps/partnerships) or affidavit for sole proprietors,
- IDs/SPA if via representative.

For VAT taxpayers, cancellation requires meeting the VAT deregistration grounds; otherwise you remain VAT-registered and must keep filing.

Step 3: Compute and report “deemed sale” (VAT only)

On retirement or cessation, unsold inventories, supplies, and depreciable capital goods may be treated as “deemed sold” subject to output VAT at fair market value or book value, as applicable.
Declare the deemed sale in your final VAT return (and pay output VAT). Keep the inventory valuation working papers.

Step 4: Final filings and stop-filing request

File the last period VAT/percentage and withholding returns (and pay balances).
For income tax (corporations/partnerships), file the short-period annual return up to the cessation date (plus any required quarterly ITRs up to that date). For individuals, include the income up to cessation in the annual ITR.
Submit alpha lists (compensation and payees) and annual information returns (e.g., 1604 series) covering your last taxable year.
The RDO will open a closure docket, mark returns as up to date, and tag your tax types for stoppage once clearance is granted.

Step 5: Surrender evidences of authority

COR (2303) original,
ATP and unused OR/SI (physically surrendered and inventoried),
PTU and device memory reports/Z-Readings; request PTU deactivation,
Loose-leaf/AIS: submit final hardbound printouts or electronic extracts plus sworn statement, as your permit requires.

Step 6: Exit audit / verification by BIR

Expect either a Compliance Verification or a formal audit via Letter of Authority (LOA) for the last 2–3 years (practice varies).
Provide:
- General ledger/trial balance, subsidiary ledgers, sales/purchase books, bank statements and bank certifications,
- Proof of withholding and remittances,
- Inventory and asset disposal documents (sales invoices, delivery/transfer documents, appraisals if any),
- Payroll records and final pay computations,
- Reconciliation of financial statements to returns.
Settle any deficiency assessments (tax, surcharge, interest, compromise) identified.

Step 7: Issuance of Tax Clearance for Business Cessation

Once the RDO confirms:
- All returns are filed,
- All open cases are cleared,
- All permits/authorities are surrendered and cancelled,
- Deficiencies (if any) are fully paid,
The BIR issues the Tax Clearance (sometimes called “Closed Business Tax Clearance” or similar). Keep originals and copies; you’ll need this for SEC dissolution and LGU closure finalization.

6) Entity-track wrap-up (outside BIR but related)

Corporations/Partnerships (SEC):
- Board/partners’ resolution to dissolve and name a liquidator.
- Publish notices if required, settle creditors, distribute assets after taxes.
- File dissolution papers with BIR tax clearance attached.
- SEC issuance of the Order of Dissolution.
Sole Proprietors (DTI & LGU):
- Apply for DTI business name cancellation (if still within validity) and LGU closure (mayor’s permit/occupancy clearances).
- LGU may ask for the BIR tax clearance and proof of BIR cancellation.

7) Special topics and tricky points

(A) VAT deregistration and input tax

Deemed sale output VAT usually applies on remaining goods/capital goods at cessation.
Unamortized input VAT on capital goods: follow prevailing rules on recognition/offset; many RDOs will expect reconciliation showing why unamortized input can or cannot be claimed, and the final position in the last VAT return.

(B) Percentage tax taxpayers

File your final percentage tax return for the last month/quarter. Ensure gross receipts cut-off matches your books and bank deposits.

(C) Withholding obligations

Withhold and remit on final pay (separation pay rules may apply).
Issue Form 2316 to employees and include them in the alphalist for the final year.
For expanded withholding, reconcile 2307 certificates issued to suppliers with your 1601-EQ/1604-E filings.

(D) Books of accounts

Make sure entries are posted up to the cessation date and balanced.
Manual books should be presented for stamping “closed” if your RDO still does this.
Loose-leaf/AIS: deliver final printouts/exports and the sworn statement required by your permit.

(E) POS/CRM/AIS deactivation

Secure deactivation/cancellation of PTU and provide Z-Readings and memory reports. Retain a copy for your files.

(F) Unused invoices/receipts

Prepare a detailed inventory (booklet numbers/serial ranges) and physically surrender the unused sets stamped “Cancelled.”
Keep acknowledgment/stamping proof from the RDO.

(G) Annual Registration Fee (ARF)

ARF (previously paid via 0605) stops accruing once the COR is cancelled. If you fail to cancel, you may still be flagged and billed administratively.

(H) Branches and closures by location

Close each branch code with its own 1905 and surrender branch OR/SI and PTU. Ensure interbranch transactions are reconciled in the books.

(I) Mergers, conversions, and asset transfers

Even if business “continues” under a new entity, the old entity’s cessation at its RDO typically requires the same closure steps, plus attention to VAT on deemed sale for transferred assets unless covered by specific tax-free transfers.

(J) Estates and deaths of sole proprietors

The estate or heirs handle the closure filings for the decedent’s business and file the decedent’s final ITR. Estate tax rules apply to transferred assets; business tax closure still runs through the RDO.

8) Practical checklists

For Sole Proprietors

BIR Form 1905 (cancel business/tax types/ATP/PTU)
Original COR (2303)
Books of Accounts (posted to cessation)
Unused OR/SI + inventory list (stamped “Cancelled”)
Last VAT/percentage/withholding and annual ITR filings with proof of payment
POS/CRM PTU deactivation docs and Z-Readings (if any)
Affidavit of cessation; DTI cancellation and LGU closure app/permits
Bank certifications (if required by RDO)

For Corporations/Partnerships

Board/Partners’ Resolution to dissolve; appointment of liquidator
BIR Form 1905 and original COR (2303)
Books and subsidiary ledgers; FS and TB to cessation
Unused OR/SI + inventory; ATP/PTU surrender
Final VAT/percentage/withholding returns; short-period ITR
Alpha lists and 2316s; 2307 reconciliations
Bank certifications, inventory/asset disposal docs
SEC dissolution papers (expect BIR tax clearance as prerequisite)
LGU closure applications for each site/branch

9) How long does BIR clearance take?

It depends on your RDO workload, completeness of your docket, and whether an audit uncovers issues. A clean file (no open cases, complete surrender of authorities, reconciled ledgers) moves materially faster than one with missing filings or inventory mismatches.

10) Common pitfalls (and how to avoid them)

Unfiled “final” returns → file everything through the cessation period, including zero returns.
Open cases on long-closed tax types → proactively request your integrated open cases list from the RDO and close them.
Unreconciled VAT (deemed sale not reported) → prepare a solid inventory valuation and final VAT computation.
Failure to surrender ATP/PTU/unused receipts → this alone can block clearance.
Loose-leaf/AIS final submissions missing → deliver the required hardbound/exports with sworn statement.
Branch closures ignored → each branch must be independently cancelled.
Employee final pay/alphalist gaps → fix before exit; BIR matches these to returns.

11) Records retention after closure

Even after closure, keep complete records (books, invoices, bank statements, contracts, payroll, working papers) for at least the prescriptive periods under the NIRC (generally 3–10 years, depending on circumstances). Audits can still occur for prior years.

12) Model wording you can reuse (board/affidavit snippets)

Affidavit of Cessation (Sole Proprietor)

I, [Name], TIN [], owner of [Business Name], registered under RDO [], do hereby declare that business operations ceased effective [Date]. I request cancellation of my BIR business registration and related tax types, surrender unused invoices/receipts and permits, and undertake to file and pay all applicable final returns and taxes.

Board Resolution (Corporation/Partnership)

Resolved, that the Corporation/Partnership hereby ceases operations effective [Date] and authorizes [Officer/Representative] to process with the BIR all requirements for cancellation of registration, VAT deregistration (if applicable), surrender of authorities, and issuance of a Tax Clearance for Business Cessation, and thereafter to complete SEC dissolution.

13) Quick FAQs

Q: Do I keep my TIN after closure? A: Yes. The TIN is permanent. Only your business registration and tax types are cancelled.

Q: Can I stop filing right after I stop operating? A: Not until the last required returns are filed and your tax types are cancelled. Otherwise, missed returns become open cases.

Q: Is VAT “deemed sale” always required? A: If you are VAT-registered and you retire/cease with remaining inventories/capital goods, yes—subject to specific valuation rules.

Q: Do I need BIR clearance for SEC dissolution? A: As a rule, yes. SEC will usually require the BIR tax clearance.

Q: What happens to unused OR/SI? A: You must inventory, stamp “Cancelled,” and surrender them to the RDO together with the ATP.

14) Action plan you can follow today

Fix a cessation date and close your books to that date.
File all returns up to the last period; compute VAT deemed sale if applicable.
Prepare Form 1905, surrender COR/ATP/PTU, and unused OR/SI.
Assemble a closure docket (books, ledgers, FS/TB, bank certs, inventory/asset papers, employee final pay proofs).
Submit to your RDO and cooperate with verification/audit.
Pay any deficiencies; obtain the Tax Clearance.
Use the clearance to complete SEC/DTI/LGU closure steps.
Retain records for the prescriptive period.

If you want, tell me your tax types (VAT/percentage, withholding), entity form, and RDO, and I’ll tailor this into a one-page checklist with a filing calendar and a documents pack list.