Operating a business in the Philippines without proper registration is not merely an administrative oversight; it is a violation of National Internal Revenue Laws and local government ordinances. Under Philippine law, all entities engaged in trade or commerce must register with the Department of Trade and Industry (DTI) or the Securities and Exchange Commission (SEC), and more critically, with the Bureau of Internal Revenue (BIR).
Failure to do so constitutes "Tax Evasion" or "Failure to Register," both of which carry heavy fines and potential imprisonment.
1. Identifying an Unregistered Business
Before filing a formal report, it is essential to determine if a business is truly unregistered. Legally compliant businesses are required by law to:
- Display the BIR Certificate of Registration (Form 2303) in a conspicuous place within the establishment.
- Issue Official Receipts (OR) or Sales Invoices for every transaction exceeding ₱100.00 (or as updated by the TRAIN Law).
- Display a valid Mayor’s/Business Permit for the current year.
If a business fails to provide a receipt or cannot produce these documents upon request, they are likely operating "underground."
2. Reporting to the Bureau of Internal Revenue (BIR)
The BIR is the primary agency concerned with unregistered businesses because non-registration is synonymous with non-payment of taxes.
The "Rat Plan" (Run After Tax Evaders) The BIR encourages citizens to report tax-related violations through their "Oplan Kandado" program or the "Rat Plan."
Steps to Report:
- Identify the RDO: Determine the Revenue District Office (RDO) that has jurisdiction over the location of the business.
- Gather Evidence: Collect proof of transactions, such as informal acknowledgments, screenshots of online conversations (for e-commerce), or photos of the establishment.
- File the Complaint:
- In-Person: Visit the RDO’s Legal Division or the Prosecution Division.
- Online: Use the BIR’s eComplaint System or the e-Link portal on the official BIR website.
- Hotline: Call the BIR Customer Assistance Division or the 8888 Citizens' Complaint Center.
Legal Basis: Section 258 of the National Internal Revenue Code (NIRC) penalizes the failure to register with a fine of not less than ₱5,000 but not more than ₱20,000 and imprisonment of six months to two years.
3. Reporting to the Department of Trade and Industry (DTI)
While the DTI handles business name registration rather than tax collection, they regulate consumer protection and trade standards.
When to report to DTI:
- If the business is using a "Trade Name" without registration.
- If the business is engaging in deceptive, unfair, or unconscionable sales acts.
Steps to Report:
- Filing the Letter of Complaint: Address the complaint to the Fair Trade Enforcement Bureau (FTEB).
- Required Information: Provide the name of the owner, the business address, and a detailed narration of the violation.
- Contact: You may email
consumercare@dti.gov.phor visit the nearest DTI Provincial Office.
4. The Role of the Local Government Unit (LGU)
Under the Local Government Code of 1991, Mayors have the power to summarily close businesses operating without a Mayor's Permit. This is often the fastest route for enforcement.
- Visit the BPLO: Go to the Business Permits and Licensing Office (BPLO) of the city or municipality where the business is located.
- Report the Lack of Permit: The BPLO can dispatch inspectors to conduct a spot check. If the business cannot produce a permit, they will be issued a "Notice of Violation" and may face immediate closure.
5. Reporting Online/E-commerce Businesses
The Ease of Doing Business Act and recent BIR circulars (e.g., Revenue Memorandum Circular No. 60-2020) explicitly require online sellers to register.
If an online seller refuses to issue a receipt or is not registered, the same reporting channels apply. For digital platforms (Lazada, Shopee, Facebook Marketplace), the DTI’s FTEB specifically handles complaints regarding the lack of legitimate business credentials of sellers.
Summary Table: Where to File
| Violation Type | Primary Agency | Remedy/Action |
|---|---|---|
| No Official Receipts / Tax Evasion | BIR | Oplan Kandado / Fine & Imprisonment |
| No Business Name Registration | DTI | Administrative Fines / Cease & Desist |
| No Mayor's/Business Permit | LGU (BPLO) | Immediate Closure of Business |
| Consumer Fraud/Deception | DTI | Mediation / Formal Adjudication |
Legal Protection for Whistleblowers
Reports can generally be made anonymously through the 8888 Hotline or the Civil Service Commission (CSC) Contact Center ng Bayan. However, for a formal case to proceed (especially if seeking a rewards-based incentive for large-scale tax evasion), a sworn affidavit and physical evidence may be required. Under the NIRC, informers may be entitled to a reward equivalent to 10% of the revenues, surcharges, or fees recovered, or ₱1,000,000 per case, whichever is lower.