Getting your business off the ground is very important, and keeping your permits up-to-date is also essential.
Companies must have valid and renewed business permits in the Philippines to continue operating. Doing so will minimize the penalties associated with it.
This article will walk you through the process and the deadline for the Philippines’ annual renewal of business permits. It will also discuss the penalties businesses can face if they fail to comply.
What is a business permit?
Business permits are requirements in the Philippines to keep track of all businesses that operate and do business in the country. Business permits are annual compliance that companies must comply with to continue their operations within the city or municipality.
It also helps companies pay their taxes and other dues. This process ensures that all businesses follow proper regulations and are operating responsibly.
A business permit can also help a company establish a strong and credible presence in the local government unit (LGU). It can also help customers develop confidence in your company since you get the necessary permit to operate within the locality.
The business permit is also a requirement that you would ask when you apply for additional licenses and with banks and other financial institutions.
Requirements and process for business permit renewal
As shown below, there are several documents and certifications that businesses need to secure to complete the business permit renewal procedure.
These certificates would come from local regulatory agencies for sanitation, fire safety, and environmental compliance. Indirectly, business permit renewal is a way for LGUs to ensure that businesses comply with the standards expected of companies operating in their locality.
The list below are the specific requirements for business renewal in the Philippines:
Barangay permit renewal
- Completed application form (2 copies)
- Previous year’s barangay permit (original copy and photocopy)
- Payment receipt of the previous barangay permit (original copy and photocopy)
- Primary registration documents, i.e., Securities and Exchange Commission (SEC) certificates for corporations and partnerships or Department of Trade and Industry (DTI) for sole proprietorships.
- One (1) day
- Go to the barangay where your business is located.
- Fill out the application form for the renewal of the barangay certificate.
- Submit the application form together with last year’s barangay certificate for assessment.
- After approval, pay the corresponding fees.
- Get the official receipt (OR) for the barangay clearance. Present to the officer the OR to claim the permit. Some barangays can issue it immediately, while some might need to go back the next day to claim.
Mayor’s/business permit renewal
- New barangay permit for the current year
- Last year’s lease contract
- Local insurance (either from a private insurance company or from City Hall)
- Income statement from the previous year (unaudited or audited)
- Community tax certificate (CTC), otherwise known as cedula
- Previous business permit (original copy and photocopy)
- Payment receipt of the last permit business (original copy and photocopy)
- One (1) to three (3) weeks
- Go to the business bureau of the City or Municipal Hall where your business operates.
- Fill out the application form for the business renewal.
- Submit the application form and the documentary requirements for assessing fees and local taxes.
- After the approval, go to the City Treasurer’s Office to pay the business permit renewal fees and the local taxes assessed.
- Keep the official receipt (OR) and the claim stub with your renewed business permit issuance date.
- Return to the business bureau on the date indicated in the claim stub and get the Mayor’s permit.
BIR registration renewal
- You must complete form BIR Form No. 0605 to renew the BIR registration. You will have to submit all requirements in person.
- One (1) day
- Go to the Revenue District Office (RDO), having jurisdiction over your business location. To check which RDO you belong to, click it here.
- Submit the accomplished BIR Form 0605 with the supporting documents asked the “Officer of the Day” for assessment.
- After getting approval, pay the annual registration fee of Php500 with the authorized agent bank of the respective RDO.
Penalties for late business renewal
In the Philippines, you must renew your business permit every year between January 1 and January 20. Doing so will allow you to keep working and operating legally until December 31, which is usually the end of the calendar year.
It’s best to start the process as early as possible to ensure you don’t have to wait for the permit to expire. You must ensure that you follow this timeline so your business operations can continue smoothly and avoid costly penalties.
Ensure that you renew your company licenses within this timeframe to avoid the following fines:
- Any unpaid taxes, fees, and charges will be subject to a 25% surcharge.
- Any outstanding obligations, including the surcharge, will accrue a 2% monthly interest rate until paid in full.
- Property and asset seizure and closure (for extremely delinquent accounts)
Also, according to Section 258 of the National Internal Revenue Code (NIRC) of the Philippines, violators may be fined no less than five thousand pesos (P5,000) and no more than twenty thousand pesos (P20,000); and imprisoned for no less than six months but no more than two years.
The documentary requirements a business must submit as part of its renewal process can vary from one LGU to another. It means it is essential to confirm the requirements from the respective LGU ahead of the deadline to give a sufficient preparation period.
Suppose you have any issues or concerns regarding the renewal process of your business registration or tax filing in the Philippines. In that case, you may seek the assistance of a reputable counsel expert in business registration in the Philippines.
We specifically cater to the Davao City area. Our associates can help you comply with the annual permits ahead of deadlines.