Procedure to Close a BIR Registration for Self-Employed Professionals

(Philippine context – updated to June 2025)

Scope. This guide covers sole-practitioner professionals—e.g., doctors, lawyers, accountants, engineers—who registered with the Bureau of Internal Revenue (BIR) under Form 1901 and now wish to permanently cease their practice. It does not address partnerships or corporations.

1. Legal Anchors & Foundational Rules

Source	Key Provision	Practical Meaning
§ 236(C), National Internal Revenue Code (NIRC)	Taxpayers may “deregister” upon cessation of business.	Establishes the right to cancel a TIN’s “active” status.
Revenue Regulations (RR) No. 7-2012	Requires filing of BIR Form 1905 for any registration updates, including cancellation.
Revenue Memorandum Order (RMO) 37-2019	Standard workflow for “cessation, cancellation or closure” cases, including tax clearance and destruction of unused receipts.
RR No. 16-2005, RMO 20-2014	Rules on securing a Tax Clearance for Cessation (TCC).
RR No. 18-2021	Books of account inventory & preservation after closure.

(Later circulars merely fine-tune timelines; none have repealed the core steps summarised below.)

2. Who May Apply

Applicant	Notes
Registered professionals who:
• File under BIR Form 1701 or 1701A	Whether on 8 % income tax, graduated rates, VAT or Percentage Tax.
• Hold a Certificate of Registration (BIR Form 2303)	Including those with Authority to Print (ATP) official receipts.
• Wish to permanently stop practising in the Philippines	Temporary suspension is not covered; you stay active and simply file zero returns.

3. Documents Checklist

BIR Form 1905 – “Application for Registration Information Update”
Letter of Intent (LOI) – stating date of last professional income; signed under oath.
Original BIR Form 2303 (Certificate of Registration) – to be surrendered.
Unused Official Receipts (ORs) or Invoices + Inventory Listing (LOV No. & serial numbers). BIR will witness destruction or stamping “Cancelled”.
Final Income Tax Return (1701/1701A) covering the taxable period up to the date of cessation.
Compliance Proof for Other Taxes (e.g., last VAT/Percentage Tax return, withholding reports, Alpha-list).
Books of Account (Manual, CAS, or Loose-leaf) – posted up to the cessation date.
Barangay/Municipal Business Closure Certificate (if you had a Mayor’s Permit).
Valid government-issued ID of the registrant or authorised representative + SPA.
Payment Confirmation for any outstanding annual registration fee (Form 0605) and open assessments, if any.

4. Step-by-Step Process

Step	Where	Action	Tips & Timeframe*
1	Your office	Determine the date of last income-earning act. All returns after this become “final”.	Pick month-end for neat cut-offs.
2	Barangay / LGU	If you hold a Mayor’s Permit, process business closure first.	LGU may ask for BIR acknowledgement later—coordinate early.
3	BIR – Revenue District Office (RDO) of registration	File BIR Form 1905 + LOI + complete attachments.	File within 10 days from actual stoppage (best practice).
4	Same RDO	Surrender ORs/Invoices. BIR stamps each “Cancelled” or supervises shredding; you receive a Certificate of Destruction.	Bring documents in duplicate.
5	Same RDO	Present Books of Account for audit tagging.	Keep books for 10 years even after closure (§ 203, 222 NIRC).
6	Assessment Section	BIR conducts a “Short-Period Audit” (a mini-audit covering your final year).	Cooperate; typical lead time 30-60 days if no findings.
7	Collection Section	Settle any deficiency taxes, penalties, open cases.	You cannot skip this; TCC will not be issued otherwise.
8	RDO – Client Support	Receive Tax Clearance for Cessation (TCC) + “Cancelled” BIR Form 1905.	TCC is the proof your TIN is inactive for professional practice.
9	LGU / PRC	(Optional) Provide TCC to LGU, Professional Regulation Commission, or banks as proof of tax compliance.	Useful if you intend to work abroad.

*Timeframes are typical; delays depend on RDO workload or open-case complexity.

5. What Happens to Your TIN?

TIN stays alive – A person can only have one TIN for life. BIR “flags” the account as “INACTIVE – PROFESSIONAL” but you may still:
- Register as an employee (Form 1902) without issue.
- Re-activate as self-employed again (new 2303 & COR fees) later.

6. Tax & Compliance Implications

Final Returns – File short-period returns only up to the cessation date.
No need for future zero returns once TCC is issued; the eBIR portal will block you from filing as a non-VAT/non-withholding taxpayer.
Books retention – 10 years, counted from the year following the final return’s due date.
Withholding taxes – Ensure remittance of any creditable/expanded withholding you effected before closure. The Alpha-list must include the “date of cessation” note.

7. Common Pitfalls & How to Avoid Them

Pitfall	Result	Fix
Forgetting to file the last 0605 annual registration fee (₱500)	RDO will not release TCC	Pay via eFPS/GCash then bring the receipt
Unused ORs not inventoried correctly	Discrepancy memo; delays	Prepare a spreadsheet: booklet, series start–end, quantity
Open “Stop-Filers” in eBIR (missed returns)	Automatic audit trigger	File the missing returns even if zero
Moving to a different RDO without update	Jurisdiction conflict	Transfer (Form 1905) first, then request closure
Closing LGU permit but not BIR	LGU fines settle, BIR penalties accumulate	Do both closures concurrently

8. Frequently Asked Questions

Question	Answer (short)
Do I need a CPA/lawyer?	Not mandatory; but helpful if your books are complex or you expect deficiency tax issues.
Can I close online?	As of June 2025, no. 1905 for cancellation must be filed in person with physical surrender of ORs.
How much will this cost?	Aside from unpaid taxes and the ₱30 loose documentary stamp on the LOI, the process itself is free.
How long until my TCC is released?	Simple cases: 30 days; with audit findings: until fully paid + 10 days processing.
What if I restart practice?	File a new 1901 (reactivation), pay ₱500 registration, new ATP, new ORs.

9. Checklist-Style Summary

☐ Pay any outstanding Registration Fee (0605).
☐ File final VAT/Percentage and Withholding returns.
☐ File final Income Tax Return (short period).
☐ Prepare Letter of Intent to close.
☐ Fill and sign BIR Form 1905 (2 copies).
☐ Inventory & surrender unused ORs/invoices.
☐ Bring original 2303 and Books of Account.
☐ Submit at RDO; attend audit as required.
☐ Pay deficiency taxes (if assessed).
☐ Claim Tax Clearance for Cessation & stamped 1905.
☐ Update LGU (if any) and keep all docs for 10 years.

10. Final Notes & Disclaimer

This article reflects rules in force as of June 12 2025 and the author’s professional experience in dealing with multiple Metro Manila RDOs. Revenue Regulations and RMOs are periodically amended; always verify whether a newer issuance (e.g., post-2025) alters any step.

Not legal advice. For significant tax exposures or complicated withholding positions, consult a Philippine tax lawyer or accredited CPA to tailor the strategy to your facts.

Prepared by: ______________, Philippine tax practitioner