How to Close a Business in the Philippines


Due to the sensitive and unstable nature of a business, an entrepreneur like you may need to close a business. Just like processing of a permit when you started your business, closing a business also requires some processes and unfortunately, even if you are at a loss, you have to inform pertinent offices in the government that you are planning to close your business. This may even entail some fees to pay. Paying these fees will save you of a future trouble and the chance to open up a business again in the future when you are ready enough.

There are offices in the government that you need to inform when closing your business. You need to inform the Department of Trade and Industry, The Local City/Municipal Office, Department of Labor and Employment and Bureau of Internal Revenue. If a partnership or a corporation, you need to inform the Securities and Exchange Commission. Other offices necessary for sending information are SSS, PHIC and HDMF. Here are some details on how to do the closure.

1. Bureau of Internal Revenue

  • If you have tax obligations that are not paid in the BIR, you have to pay them first to permit closure of your business. After this, you can fill up the BIR form 1905 for the application of closure of your business. Documentary requirements are necessary for attachment.
  • Some papers necessary for this are letter of request stating reasons for termination of the business, Original Certificate of Registration, Books of Accounts, Inventory List of Unused Receipts and Invoices, Unused Receipts and invoices for cancellation, and Board Resolution/Notice of Dissolution (if Corporation/Partnership).
  • The Revenue District Officer will verify some information of the taxpayer like the Integrated Tax System, delinquent cases, and requests for Letter of Authority to investigate internal revenue taxes for all un-audited taxable year.
  • Taxpayer shall pay all that is required on the reported fees to pay by RDO and Letter of Authority.
  • RDO issues clearance for closure of business. RDO updates ITS and cancels TIN.

2. The Local City/Municipal Office

Applying for closure in this office is not so tedious unlike the BIR but certain documents are needed for filing. These documents are Affidavit of Gross (reason for and date of closure), Mayor’s Permit, Business Plate, Financial Statement/ITR, Sketch, Latest Payment and Certificate of Closure from the Barangay Captain indicating the date of closure.

3. Department of Trade and Industry (DTI)

DTI requirements include Letter request signed by the owner, Affidavit of cancellation of the Business Name stating the reason for cancellation and that the owner has no outstanding obligation, and the original copy of the BN certificate.

4. Department of Labor and Employment

DOLE requires a written notice of at least one month prior to the closure and also to inform the employees ahead of time for the intended closure. The employer is also required to pay termination fees to the employees amounting to ½ month pay for every year of service or 1 month pay whichever is higher as mandated by the Labor Code.

Other requirements may be needed depending of the nature of business that you have. Remember to process your closure to avoid complication.

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1 thought on “How to Close a Business in the Philippines”

  1. I am closing our 5 month old business due to the covid situation. I was surprised that we were asked by our city hall to pay for the 2nd, 3rd and 4th quarter permits for the year. Is that true?


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