Revenue Memorandum Circular (RMC) No. 47-2026 was issued by the Bureau of Internal Revenue (BIR) to simplify and ease the process for closing a business or cancelling a taxpayer’s business registration with the BIR. It applies to businesses that have permanently stopped operations or have otherwise become subject to closure or cancellation of registration.
This circular is important because closing a business should not be more difficult than starting one. Many taxpayers, especially small business owners, stop operating but fail to formally close their BIR registration since the process was costly, time-consuming, and fraught with uncertainty. Taxpayers were required to submit numerous forms and supporting documents, undergo mandatory audits regardless of business size or outstanding liabilities, and wait weeks or even months for tax clearance certificates. These discouraged many business owners from formally closing their registration. As a result, taxpayers could unintentionally remain liable for ongoing tax obligations, including filing returns and paying penalties, even after they had ceased operations.
Who Are Covered
RMC No. 47-2026 covers business taxpayers registered with the BIR, whether domestic or foreign, resident or non-resident, that have permanently ceased operations. This includes individuals engaged in business or profession, corporations, partnerships, cooperatives, estates and trusts, government-owned or controlled corporations, government agencies, and taxpayers classified as micro, small, medium, or large.
How to File the Application
Under the circular, taxpayers may file their application for closure or cancellation with the Revenue District Office where the head office or branch is registered. The application may be submitted manually or electronically, including through the taxpayer’s official email address or BIR electronic registration facilities.
This is a relevant change from the previous process, where taxpayers generally had to deal directly with the concerned RDO through manual submission. For taxpayers who had already stopped operations, relocated, or no longer maintained administrative personnel, a purely manual process could make closure more burdensome. By allowing electronic submission, RMC No. 47-2026 helps close this accessibility gap and makes the process more practical, especially for small businesses, professionals, and taxpayers with limited resources.
Basic Requirements
The circular limits the documents needed for closure. These include:
- BIR Form No. 1905;
- List of ending inventory for VAT-registered taxpayers;
- Unused invoices and accounting forms with inventory;
- Original BIR registration documents and permits such as the
- Certificate of Registration,
- Authority to Print,
- Notice to Issue Invoice,
- Other applicable permits; and
- Valid authorization documents for taxpayers filing through a representative
This is one of the key areas where RMC No. 47-2026 addresses a gap in the prior closure process. Previously, taxpayers often faced uncertainty as to the exact documents required to support closure or cancellation of registration. In practice, requirements could become extensive, repetitive, or dependent on the circumstances of the taxpayer and the handling RDO. This made closure difficult to prepare for and sometimes resulted in repeated submissions or delays.
By identifying the basic documentary requirements, the circular provides a more standardized and predictable process. This reduces administrative burden and allows taxpayers to better assess, at the outset, what must be prepared to complete the closure application.
Filing of Final Returns
RMC No. 47‑2026 reiterates that taxpayers must still file all final or short‑period tax returns covering the period up to the date of closure. This requirement mirrors existing tax law—closure does not nullify a taxpayer’s obligation to account for every taxable period, even if there was no business activity; zero or short‑period returns must still be filed. The circular clarifies that the period for filing and payment of these returns aligns with the closure process to ensure that all tax liabilities are properly accounted for before deregistration.
Change of Status in the BIR’s Records
Upon submission of the complete documentary package, the BIR will update the taxpayer’s account to “deregistered” status, effectively halting the automatic accrual of penalties for non‑filing that historically plagued taxpayers during prolonged processing. This provision helps prevent new open cases from multiplying while processing continues and brings much‑needed predictability to taxpayers who previously faced ever‑increasing penalties during closure.
Release of Tax Clearance
For Micro Taxpayers
One of the most important features of RMC No. 47-2026 is that micro taxpayers are not subject to mandatory audit for business closure or cancellation of registration. For micro taxpayers with no open cases or outstanding liabilities, tax clearance may be issued within three (3) working days from submission of complete requirements.
This is a major relief for small business owners because it directly addresses one of the main burdens under the prior process. Previously, even small taxpayers could be subjected to audit procedures as part of business closure, regardless of the scale of their operations or the amount of possible tax exposure. This made closure costly, intimidating, and disproportionate for micro businesses.
For taxpayers with a pending Letter of Authority (LOA), those whose gross sales in the preceding year exceeded ₱3,000,000, or those whose gross assets upon retirement exceeded ₱8,000,000
The issuance of a Tax Clearance and the corresponding closure or cancellation of business registration shall not be granted immediately. Instead, these processes will only be completed once the audit has been fully terminated. This requirement ensures that the BIR has the opportunity to verify the accuracy of reported transactions and financial positions before allowing the taxpayer to formally close or cancel their registration.
Release of Tax Clearance
Taxpayers who stop operations but do not formally close their BIR registration may continue to be liable for tax obligations, including filing tax returns and paying penalties, until the closure or cancellation is completed with the BIR.
This means that simply stopping business operations is not enough. A taxpayer must properly notify and complete the closure process with the BIR to avoid future penalties and open cases.
Conclusion
With RMC No. 47-2026, the BIR addresses these gaps by standardizing the , allowing more flexible modes of filing, updating taxpayer registration status upon submission of complete requirements, and providing simplified treatment for qualified micro taxpayers. The circular aims to helps taxpayers properly end their business registration while still preserving accountability for any outstanding tax liabilities.
Article written by: Rhea Pelayo, CPA
