What is the Tax Aspect of Closing a Branch or Department of a Company?


Additional Compliance outside of the Department of Labor and Employment

Apart from notifying the Department of Labor and Employment of the company’s intention to close or cease operations of its branch/department, the company has to likewise inform the Bureau of Internal Revenue (BIR) of the said company decision. The procedure is as follows:

(1) The company should fill out a BIR Form 1905[1] or the Application for the Registration Information Update.

(2) The company should prepare documents necessary to support the change, i.e. closure of a branch/department, being applied for. The BIR may ask the following documents[2]:

a. Notice of closure or cessation of business addressed to the BIR and indicating the effective date of closure;

b. List of ending inventory of goods, supplies, including capital goods;

c. Inventory of unused sales invoices/official receipts (SI/OR);

d. Unused sales invoices/official receipts and all other unutilized accounting forms (e.g., vouchers, debit/credit memos, delivery receipts, purchase orders, etc.). The same, if required, shall be physically submitted to the RDO where the Head Office is registered or where the Authority to Print (ATP) was secured;

e. All business notices and permits as well as the Certificate of Registration;

f. Other documents, as may be required by BIR.

(3) The company should also submit a form called Verification Sheet/Routing Slip[3]. In this form, several BIR signatories would check the company’s records, and in turn, they would sign to indicate that the company is cleared of any cases, suspensions, or bad marks with the BIR.

(4) The company should send an authorized representative to BIR Revenue District Office (RDO) having jurisdiction over the place where the company’s Tax Identification Number (TIN) is registered. The representative should submit the foregoing documents before the Client Support Section of the RDO. In addition, he shall seek the signatures of the BIR authorities concerned for the routing slip.

(5) In any event, the company may ask the BIR officer-of-the-day to confirm from which departments to acquire the aforementioned signatures.

About Nicolas and De Vega Law Offices

If you need assistance in Philippine tax law, or have any concerns in local or international taxation, including tax assessment or collection disputes, tax refunds, or tax cases involving Philippine taxes, we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website www.ndvlaw.com.

[1] A copy of BIR Form 1905 may be access in the BIR’s website.

[2] Requirements are listed in the BIR website, accessed at https://www.bir.gov.ph/index.php/registration-requirements/primary-registration/application-for-registration-update.html#afcob

[3] A copy of a Verification Sheet/Routing Slip may be access in the BIR’s website.