Penalties for Late (or Non-) Business Registration with the BIR

(Philippine legal perspective, updated to 23 April 2025)

1. Why registration matters

Every person “subject to any internal-revenue tax” must register once with the Bureau of Internal Revenue (BIR)—either before commencing business, within ten days from employment, or before paying any tax or filing any return. This mandate (a) creates the taxpayer’s account (TIN, Certificate of Registration/“COR”) and (b) triggers the ancillary duties to pay the annual ₱500 registration fee, have books stamped, print official receipts/invoices, and keep the COR conspicuously posted. citeturn18view0

Failing to register on time automatically exposes the enterprise (and its responsible officers) to administrative, civil and criminal sanctions under the National Internal Revenue Code (NIRC) and recent BIR issuances.

2. Statutory & regulatory basis

Source	Key content
Sec. 236, NIRC	Registration requirement and ₱500 annual fee. citeturn18view0
Sec. 258, NIRC	Unlawful pursuit of business—running a business without paying the annual registration fee (i.e., unregistered). Fine ₱5 000-20 000 plus 6 mos.–2 yrs. imprisonment (higher for excise-tax goods). citeturn18view0
Sec. 275, NIRC	Catch-all penalty when no specific penalty exists: fine up to ₱1 000 or up to 6 mos. jail. Frequently invoked for late-registration compromise cases. citeturn10view0
Sec. 115(b), NIRC	Empowers the Commissioner to suspend operations / close the establishment for failure to register. Closure lasts at least five (5) days and is lifted only after full compliance. citeturn20view0
Secs. 248-249, NIRC	Civil additions: 25 % surcharge (50 % if willful); 12 % p.a. interest on any tax that became due while unregistered. citeturn19view0
Sec. 253 NIRC	Officers of corporations/partnerships are personally liable for the penalties. citeturn21view0
Revenue Memo Order (RMO) 7-2015	Schedule of compromise penalties—late or voluntary registration: ₱1 000; failure to register a branch / business name: ₱1 000 each. citeturn17search0
Revenue Regulations (RR) 15-2024	Modern “mandatory registration” rules for both brick-and-mortar and online sellers; introduces Closure/Take-Down Orders and a stiffer compromise matrix by taxpayer size (₱5 000 – ₱50 000). citeturn16search1turn13view0
Online Registration & Update System (ORUS)	BIR’s portal allowing 100 % e-registration, relevant because lapses are now easily traceable. citeturn22search1

3. The penalty menu in practice

Violation (typical scenario)	Governing provision	Usual BIR treatment*
Voluntary late registration (taxpayer walks in before discovery)	Sec. 275 ↔ RMO 7-2015	Compromise fine ₱1 000 + pay all un-remitted annual registration fees (₱500/yr.) + DST on COR (₱30) + print receipts, etc.
Failure to register a branch / trade name	Sec. 275, RMO 7-2015	₱1 000 per branch/name.
Failure discovered by BIR (TCVD, third-party match, digital platform audit)	Sec. 258; RR 15-2024	Compromise: ₱5 000 (micro) / 15 000 (small) / 20 000 (medium-large) / 50 000 (excise-tax businesses); BIR may still prosecute criminally. citeturn13view0
Operating while unregistered	Sec. 258	Criminal fine ₱5 000-20 000 and/or 6 mos.–2 yrs. jail; closure order under Sec. 115. citeturn18view0turn20view0
Non-payment of the ₱500 annual fee	Sec. 236-A; treated as “failure to pay tax”	25 % surcharge + 12 % interest + possible ₱1 000 compromise.
Failure to display COR / eCOR	Sec. 275, RR 15-2024	₱1 000 per violation (each store or web page). citeturn13view0

*The BIR almost always settles administratively first through a “Payment Form 0605” and an Assessment Notice quoting the compromise matrix. Criminal cases are reserved for willful or high-profile offenders (under the RATE program).

4. What actually happens when you register late

Initial interview / TCVD visit – the Revenue Officer (RO) notes start-of-operations date (self-declaration, lease contract, website launch, delivery receipts, social-media posts, etc.).
Computation sheet – RO computes:
- unpaid registration fees (₱500 per calendar year);
- documentary stamp tax on each COR issued retrospectively (₱30);
- compromise penalty per RMO 7-2015 or RR 15-2024;
- any surcharge/interest if unfiled returns exist.
Payment – via BIR Form 0605 (for registration-related payments) and 0613 (penalty form for special violations). citeturn0search5
Issuance of COR & ATP – after payment and submission of documentary requirements (DTI/SEC, mayor’s permit, IDs).
Post-registration compliance – print receipts/invoices within 30 days; register books of account; enroll in ORUS to avoid future lapses. citeturn22search9

5. Digital-business spotlight

RR 15-2024 extended the same penalty structure to online stores, social-media content creators and e-marketplace operators. Platforms (e.g., Lazada, Shopee, TikTok) and commercial lessors must ensure that merchants/tenants have BIR CORs; otherwise the platform/lessor faces a separate ₱20 000 penalty per non-compliant seller and the risk of takedown orders. citeturn16search1turn13view0

6. Civil additions to tax

If the unregistered status meant returns were never filed, the BIR will assess:

25 % surcharge on the unfiled return’s tax due (50 % if willful) citeturn19view0
Interest at twice the prevailing legal interest (currently 6 % p.a., so 12 %) from original due date until paid. citeturn19view0

These additions very quickly dwarf the compromise fines and are the real financial bite for late registrants.

7. Criminal exposure & personal liability

Sec. 258 cases are filed with the DOJ; conviction carries imprisonment.
In corporate settings, partners, presidents, treasurers, branch managers, and other “responsible officers” are personally charged (Sec. 253). citeturn21view0
Conviction does not disappear even if the taxes are later paid (payment is not a defense).

8. Prescription

Violations under Title X prescribe after five (5) years from commission or discovery, whichever is later (Sec. 281). But any assessment issued within that window interrupts prescription, so lying low rarely works.

9. Practical tips

Register before the first sale or even a single social-media post announcing prices.
If you missed the deadline, voluntarily register—the compromise penalty (₱1 000) is cheaper than discovery-based fines and the specter of closure.
Keep proof of actual start date (e.g., first official receipt) because the BIR will otherwise default to lease date or business-name registration date.
Pay annual registration fee every January via ORUS/0605 to avoid automatic penalties.
Digitize records and enrol in ORUS; the system now timestamps every update and lessens accidental lapses. citeturn22search1

10. Frequently-asked questions

Question	Short answer
Does BIR back-assess income/VAT just because I register late?	Yes, if sales occurred while unregistered; expect a full audit for unreported taxes, plus surcharge & interest.
Can I register retroactively to “erase” the violation?	No. You may register, but the compromise penalty and back-tax exposure remain.
Is imprisonment common?	Rare for small cases. RATE program focuses on large or fraudulent offenders.
Will LGU (mayor’s permit) be affected?	Most LGUs require the BIR COR before issuing business permits; late BIR registration can delay local renewal and may trigger separate city fines.

Bottom line

Late or non-registration is not a mere formality: the BIR has layered ₱1 000–₱50 000 administrative fines, surcharge/interest, closure orders, and even jail time to ensure compliance. Because the entire process is now digitized (ORUS; cross-checks with platforms, LGUs and SEC), detection is faster and inevitable. Register early, pay the modest annual fee, and keep the Certificate of Registration on display—those five pieces of paper are still the cheapest insurance a Philippine business can buy.