What this is For:

BIR Form 1905 BIR Form 1905 Application for Registration Information Update
Where to File:
RDO where taxpayer is registered
How to File:
How/ Procedure
1) Taxpayer applicant files BIR Form 1905, together with the attachments at the
RDO where they are registered within ten (10) days from retirement of business.
2) Taxpayer files short period return for income tax purposes.
3) RDO verifies if taxpayer has open cases reflected in the Integrated Tax System
(ITS). If YES, ask taxpayer to submit required returns and pay the corresponding tax
due/s and penalties if any.
4) RDO verifies if taxpayer has delinquent cases at the Assessment, Collection, and
Legal Divisions of the Region;
5) RDO verifies if taxpayer has delinquent cases at the Collection Enforcement
Division, BIR National Office
6) RDO requests for Letter of Authority to investigate internal revenue taxes for all
un-audited taxable years prior to cancellation of business.
7) Assigned Case officer conducts investigations for period/s covered in the issued
Letter of Authority.
8) Taxpayer complies with requirements of audit and pays corresponding deficiency
taxes resulting from audit using Form 0605.
9) RDO issues tax clearance for closure of business.
10) RDO updates ITS and cancels TIN of taxpayer (for non-individual taxpayer).
Other Documentary Requirements:
1) Letter of request stating reason for termination of business
2) Original Certificate of Registration
3) Books of Accounts
4) Inventory List of Unused Receipts and Invoices
5) Unused Receipts and Invoices for cancellation
6) Board Resolution / Notice of Dissolution (if Corporation / Partnership)
Additional Requirements in Case of Death of Individual Taxpayer:
1) Death Certificate

3) Payment of Estate Tax, if any

So how do we close a sole proprietorship business in the Philippines? The rule of the
thumb for closing a business is to formally or compliantly close the business in the
government agencies or offices where it was registered.
A sole proprietorship business is usually required to register with the following
offices:
Local Barangay Office for barangay clearance.
Department of Trade and Industry (DTI) for business trade name registration.
City or Municipal Office for its Mayors license or permit to operate.
Bureau of Internal Revenue (BIR) for getting official receipts (invoices) and filing
tax returns.
Social Security System (SSS) for complying with the Social Security (SS) Law.
Philippine Health Insurance Corporation or PHIC (Philhealth) for complying with
the National Health Insurance Act (RA 7875 / RA 9241).
Home Development Mutual Fund or HDMF (Pag-IBIG Fund) for complying with the
RA 7742.
Department of Labor and Employment (DOLE) for employers with 5 or more
employees.
Other offices that a sole proprietorship business is required to register to get
special license to operate, such as the Bangko Sentral ng Pilipinas (BSP) for
pawnshops and money changer businesses.
Unlike corporations and partnerships, proprietorship businesses dont need to be
closed with the SEC office since they are not registered with the commission in the
first place. Thus, we can basically say that proprietorship businesses are easier to
close than dissolving partnerships and corporations.
To voluntarily close or cancel the registration of your proprietorship business, you
can start by getting a clearance from the Barangay Office, where your business is
located. Then you can voluntarily cancel your business name registration with the
DTI and with the other offices, where your business is registered.
Among the government offices to comply, the BIR is probably the most difficult,
especially if you have delinquent taxes or unpaid tax obligations that must be
settled with the Bureau. Before the BIR issues clearance, the bureau conducts an
audit to the business to assess and ensure that such business has paid all its
internal revenue taxes and other fees due to the government.
The business should also be cleared with its obligations with other offices. For
example, the City Office has to ensure that the business has paid all its local
business taxes or licensing fees due to the city. The SSS, Philhealth or Pag-ibig also
have to make sure that you have fulfilled your obligation as an employer who is
mandated to remit benefits or contributions for your employees.
To check the list of requirements for business closure with the different government
offices, please read our post on how to close a business in the Philippines.

Usually a business should be closed in the following government agencies/offices.

Department of Trade and Industry (DTI) office
The local City/Municipal Office, where the business is registered
Department of Labor and Employment (DOLE) office, if the company has
employees
Bureau of Internal Revenue (BIR) office
Bangko Sentral ng Pilipinas (BSP), if the business is registered with the office
Securities and Exchange Commission (SEC) for partnership and corporation
Other agencies or offices where the business is registered, such as SSS, PHIC and
HDMF
To guide you on the formal cessation of your business, here are some of the basic
steps, procedures and requirements on how to close a business in the Philippines.

Closing a business at DTI

According to the DTI, we still have to inform the office when we voluntarily close our
business, and apply for cancellation of our registered business name (BN).
For Sole Proprietor, the following are the requirement for Voluntary
Cancellation.
Letter request signed by the owner
Affidavit of cancellation of the registered BN, stating the reason/s for the
cancellation and that the registered owner has no outstanding financial obligation at
the time of closure of establishment
Original copy of the BN certificate and the duplicate copy of the application form
(affidavit of loss if either the business name certificate and/or the duplicate copy of
the application form was lost)
For Corporation and Partners, the following are the requirements for
Voluntary Cancellation.
If dissolved at the Securities and Exchange Commission (SEC),
Letter request signed by the authorized signatory (Board Resolution for the
authorized signatory)
Certified photocopy of the SEC certificates of dissolution of the
corporation/partnership
Original copy of the business name certificate of registration and the duplicate
copy of the application form. (Affidavit of loss if either the business name certificate
and/or the duplicate copy of the application form was lost)
If BN Registration Only,
a. Corporate Name:
Letter request signed by the authorized signatory (Board Resolution for the
authorized signatory)
Board resolution/partnership agreement for the cancellation of the registered

business name stating that the Corporation/Partnership is retiring from business;

surrendering the business name certificate for cancellation and that at the time of
closure of establishment the business has no outstanding financial obligation, or a
certified copy of the Certificate of Dissolution (if applicable)
Original copy of the business name certificate and the duplicate copy of the
application form (Affidavit of loss if either the business name certificate and/or the
duplicate copy of the application form was lost)
b. Adopted Name:
Letter request signed by the authorized signatory (Board Resolution for the
authorized signatory)
Board Resolution/Partnership agreement for the cancellation of the registered
business name, stating the reason/s for the cancellation that the
corporation/partnership has no outstanding financial obligation at the time of
closure in connection with the operation of the said business and if there were
creditors copy of notice to them
Original copy of the business name certificate and the duplicate copy of the
application form (Affidavit of loss if either the business name certificate and/or the
duplicate copy of the application form was lost)

Closing a business at the local City/Municipal Office

The procedures and requirements on closing a business may vary among different
LGUs (Local Government Units). This means that the requirements for business
cessation in Makati City can be different in Manila or Pasay City. The typical
requirements for business closure at the LGUs are the following:

Affidavit of Gross (reason for and date of closure)

Mayors Permit
Business Plate
Financial Statement/ ITR
Sketch
Latest Payment
Certificate of Closure from the Barangay Captain indicating date of closure

For more complete and accurate procedures and requirements, you may visit and
inquire the City or Municipal Office where your business is registered.

Closing a business at DOLE

If your business has employees or was required to be registered with the DOLE, you
also have to ensure that you notify the DOLE office and comply with the labor
requirements to avoid labor relation liabilities. The following are the basic
requirements in closing a business and be cleared at the DOLE office:
Service of a written notice to the employees and the DOLE at least one (1) month
before the intended date of closure/cessation

 The closure or cessation of business operations is bona fide in character.

Payment to the employees of termination pay amounting to at least one-half (1/2)
month pay for every year of service, or one (1) month pay whichever is higher, per
Philippine Labor Code mandate.

Closing a business at the BIR

The process of business cessation at the BIR is perhaps the most tedious one
among others. And if you have unpaid tax liabilities or delinquencies due to the
government, the process could even get more problematic. Among the government
offices, where your business is registered, the BIR is the one which records and
monitors your internal revenue taxes, such as income and business taxes (Value
Added Tax or Percentage Tax). And to formally close and clear your business with
the BIR, the bureau has to ensure that you have already paid all your tax
obligations.
BIR Form 1905 (Application for Registration Information Update) is the tax form used
in applying for closure of a business. The following are the requirements and
procedures for closure of business at the BIR.
Documentary Requirements
1) Letter of request stating reason for termination of business
2) Original Certificate of Registration
3) Books of Accounts
4) Inventory List of Unused Receipts and Invoices
5) Unused Receipts and Invoices for cancellation
6) Board Resolution / Notice of Dissolution (if Corporation / Partnership)
Additional Requirements in Case of Death of Individual Taxpayer:
1) Death Certificate
2) Payment of Estate Tax, if any
Procedures
1) Taxpayer applicant files BIR Form 1905, together with the attachments at the
RDO where they are registered within ten (10) days from retirement of business.
2) Taxpayer files short period return for income tax purposes.
3) RDO verifies if taxpayer has open cases reflected in the Integrated Tax System
(ITS). If YES, ask taxpayer to submit required returns and pay the corresponding tax
due/s and penalties if any.
4) RDO verifies if taxpayer has delinquent cases at the Assessment, Collection, and
Legal Divisions of the Region;
5) RDO verifies if taxpayer has delinquent cases at the Collection Enforcement
Division, BIR National Office
6) RDO requests for Letter of Authority to investigate internal revenue taxes for all
un-audited taxable years prior to cancellation of business.
7) Assigned Case officer conducts investigations for period/s covered in the issued
Letter of Authority.

8) Taxpayer complies with requirements of audit and pays corresponding deficiency

taxes resulting from audit using Form 0605.
9) RDO issues tax clearance for closure of business.
10) RDO updates ITS and cancels TIN of taxpayer (for non-individual taxpayer).

Closing a business at SEC

For corporations and partnerships, they cannot process closure of business with the
SEC if they are not yet done in securing tax clearance from the BIR and
endorsements or certificate of registration cancellation from other government
offices, if applicable. Thus, even though the business is already non-operating, it
still remains as a registered business. Though, the business owners, partners, or
shareholders can already start the liquidation process of its assets, subject to
applicable taxes.
For corporations, corporate dissolution can be voluntary or involuntary. In this
discussion, we assume that we are voluntarily dissolving a corporation. Moreover,
voluntary dissolution of a corporation may have different procedures, depending on
whether the dissolution will affect creditors or not. One way to voluntarily dissolve a
corporation with the SEC is by shortening its corporate term. The following are the
requirements for corporate dissolution by shortening its term.
1. Directors Certificate A Notarized document signed by majority of the directors
and corporate secretary certifying the amendment of the articles of incorporation
shortening the corporate term, the votes of the directors and stockholders thereto,
and the date and place of the stockholders meeting
2. Amended Articles of Incorporation
3. Audited financial statements as of date of the stockholders meeting approving
dissolution or any date thereafter
4. List of creditors, if any, and their consent, or certification as to non- existence of
creditors
5. BIR Tax Clearance
6. Publishers affidavit of the publication of the dissolution of the corporation (once a
week for three (3) consecutive weeks)
7. Endorsements/clearances from other government agencies, if applicable
Take note that if there are creditors and their consent was not secured, the
application should be in the form of a petition to be filed with Office of General
Counsel of the SEC.
Other notes to remember
When closing a business in the Philippines, we have to formally close the business in
the government agencies where it is registered. We have to notify those offices and
comply with their requirements to get a clearance or certificate of termination
(cancellation of registration) of our business. Thus, a business owner has to ensure
that his or her business is cleared in every government agency it is registered aside
from the ones discussed above.

For businesses registered and regulated by the Bangko Sentral ng Pilipinas (BSP),
such as pawnshops, money changers, banks, and financing companies, they have to
comply with the closure requirements of the office. For cooperatives, instead of
closure at the SEC, it should comply with the CDA (Cooperative Development
Authority) Office for cessation or dissolution.
Furthermore, if your business employs people and is contributing to SSS (Social
Security System), PHIC (Philippine Health Insurance Corporation) and HDMF (Home
Development Mutual Fund) for employees as mandated by our laws, then you also
have to apply for cancellation of your business or employers registration when you
close your business to stop your obligation as a contributing employer.