Dear Attorney,

I hope this letter finds you well. I am reaching out because I have a concern about how to properly obtain the necessary permit or registration from the Bureau of Internal Revenue (BIR) in the Philippines. I want to ensure full compliance with all relevant legal requirements and regulations, but I am uncertain about the process, documentation, timelines, and potential penalties if I fail to secure the correct permits.

Could you kindly guide me through the steps, legal considerations, and best practices for getting a BIR registration (sometimes referred to as a “Permit to Operate,” or simply the registration certificate)? I want to avoid any pitfalls or oversights, and your expert advice would be invaluable.

I appreciate your time and expertise, and I look forward to your counsel.

Sincerely,

A Concerned Entrepreneur

LEGAL ARTICLE: EVERYTHING YOU NEED TO KNOW ABOUT OBTAINING THE APPROPRIATE BIR PERMIT/REGISTRATION IN THE PHILIPPINES

Disclaimer: The information provided herein is for educational and informational purposes only. It does not constitute legal advice, nor does it create an attorney-client relationship. For specific issues, please consult your lawyer or a legal professional.

In the Philippines, the Bureau of Internal Revenue (BIR) is the government agency primarily tasked with assessing and collecting all national internal revenue taxes, fees, and charges. One of the first and most crucial steps for any entity—be it an individual professional, a single proprietor, a partnership, or a corporation—is to secure the appropriate BIR registration or “Permit to Operate” before commencing business operations. This article provides a meticulous and comprehensive examination of the requirements, processes, legal bases, and best practices in obtaining the necessary BIR permit or registration.

I. UNDERSTANDING THE LEGAL FRAMEWORK

National Internal Revenue Code (NIRC) of 1997, as amended
The NIRC is the primary law that governs taxation in the Philippines. This includes registration requirements for taxpayers, modes of tax payment, issuance of official receipts, books of accounts, and potential penalties for non-compliance.
BIR Rules and Regulations
The BIR periodically issues Revenue Regulations (RR), Revenue Memorandum Orders (RMO), Revenue Memorandum Circulars (RMC), and other issuances that clarify existing rules under the NIRC, highlight new procedures, or provide interpretative notes on tax matters. It is essential to be updated on these issuances to remain compliant.
Local Government Unit (LGU) Concerns
While the primary focus here is the BIR registration, always remember that starting or operating a business in the Philippines often requires securing a Mayor’s Permit from the LGU where the principal office is located. Typically, businesses are advised to secure an LGU permit first or at least concurrently while processing BIR registration.
Legal Obligation to Register
Section 236 of the NIRC mandates that every person subject to any internal revenue tax—whether an individual or a juridical entity—must register with the BIR. This applies to professionals (e.g., doctors, lawyers, accountants, consultants), single proprietors, partnerships, and corporations.

II. WHO IS REQUIRED TO REGISTER WITH THE BIR

Individual Taxpayers
a) Self-employed individuals: This category includes single proprietors, freelancers, professionals, and those engaged in any trade, business, or profession.
b) Mixed income earners: Individuals who derive both compensation income (i.e., from employment) and income from a sole proprietorship or professional practice.
c) Employees (compensation income earners): They generally register with the BIR through their employer. However, if they have other sources of income, they must register separately for that activity.
Non-Individual Taxpayers
a) Partnerships: Regardless of the size or purpose, all partnerships must secure their own Taxpayer Identification Number (TIN) and BIR Certificate of Registration.
b) Corporations: This includes stock and non-stock corporations, as well as domestic and foreign corporations licensed to do business in the Philippines.
c) Cooperatives: Although cooperatives may have certain tax exemptions, they are still required to register with the BIR to avail themselves of these exemptions.
d) Associations and Other Juridical Entities: Any juridical person formed or organized under the laws of the Philippines or foreign laws authorized to do business in the Philippines must secure BIR registration.
Estates and Trusts
In certain circumstances, estates and trusts must also be registered, especially if they engage in taxable transactions or derive income subject to tax.

III. PRE-REGISTRATION REQUIREMENTS

Before heading to the BIR, it is advisable to prepare certain preliminary documents:

Legal Personality Documents
- For single proprietors: Department of Trade and Industry (DTI) Certificate of Business Name Registration (or proof of business name registration).
- For partnerships and corporations: Securities and Exchange Commission (SEC) Certificate of Incorporation or Certificate of Partnership and Articles of Incorporation/Partnership.
- For cooperatives: Cooperative Development Authority (CDA) Registration.
Local Government Permit
- Although not always mandatory prior to BIR registration, it is prudent to secure or at least apply for a Mayor’s Permit, Barangay Clearance, and other clearances as required by your LGU. In some BIR Revenue District Offices (RDOs), they will ask for a copy of the Mayor’s Permit or the official receipt of payment for that permit.
Proof of Address
- Contract of Lease, if the office or business premises are rented.
- Certificate of Land Title or Deed of Sale if owned.
- Barangay Certificate confirming business address if necessary.
Valid Identification
- Government-issued IDs (e.g., driver’s license, passport, Unified Multi-Purpose ID, etc.) to prove identity of the registrant or the authorized representative (in case of non-individual taxpayers).
Appointment of an Authorized Representative (if applicable)
- If you, as a taxpayer, cannot process the registration yourself, secure a Special Power of Attorney (SPA) for an individual or Board Resolution for a corporate officer to act on behalf of the business entity.

IV. THE BIR REGISTRATION PROCESS

The most common steps to obtain the BIR Certificate of Registration (COR) or the “Permit to Operate” are outlined below. Although the BIR might vary in approach from one RDO to another, these steps are generally required:

Determine the Applicable Form
- BIR Form 1901: For self-employed individuals, single proprietors, professionals, and mixed income earners.
- BIR Form 1902: For employees (compensation earners) registering for the first time.
- BIR Form 1903: For corporations, partnerships, cooperatives, associations, and other non-individual entities.
- BIR Form 1904: For one-time taxpayers, persons registering under Executive Order (EO) 98 (e.g., securing a TIN to apply for a driver’s license or passport), or those who need a TIN for certain transactions but are not otherwise engaged in business.
Payment of Annual Registration Fee (ARF)
- Using BIR Form 0605, the registrant pays an annual registration fee of PHP 500.00. This is usually done at an Authorized Agent Bank (AAB) within the jurisdiction of the RDO. In some instances, payment can also be made electronically through the eBIR or eFPS system.
Submission of Documentary Requirements
- File the applicable BIR registration form along with the required attachments (DTI Certificate, SEC Certificate, proof of address, identification, etc.).
- Submit the duly accomplished registration form and attachments to the RDO that has jurisdiction over the place of business or residence.
- Present the proof of payment for the ARF.
Approval and Issuance of the Certificate of Registration (BIR Form 2303)
- Upon submission and verification of documents, the BIR will issue the Certificate of Registration (COR) or BIR Form 2303, which indicates the taxpayer’s TIN, the tax types (e.g., Value-Added Tax (VAT) or Percentage Tax, Income Tax, Withholding Tax), and other registration details.
Secure Authority to Print (ATP) and Official Receipts
- If you will issue official receipts or sales invoices, you need to apply for an Authority to Print (ATP) using BIR Form 1906.
- Once the ATP is approved, the taxpayer can have official receipts and sales invoices printed by a BIR-accredited printer.
- Alternatively, you can apply for BIR’s Computerized Accounting System (CAS) if you wish to print receipts or invoices electronically, subject to BIR approval procedures.
Stamping of Books of Accounts
- Taxpayers are required to maintain books of accounts (e.g., Journal, General Ledger, Cash Receipts Book, Cash Disbursements Book).
- These books must be registered with the BIR for stamping.
- In some RDOs, the BIR stamps the books at the same time it issues the COR; in others, the taxpayer is advised to go to a separate counter or return on a different day to have the books stamped.
Post-Registration Seminars
- Certain BIR offices conduct a mandatory briefing or seminar for new registrants on tax compliance, filing deadlines, and other obligations.

V. SPECIFIC CONSIDERATIONS

Value-Added Tax (VAT) vs. Percentage Tax
- Businesses with gross annual sales or receipts that exceed PHP 3,000,000 (or such threshold as may be updated by law or regulation) are generally required to register as VAT taxpayers.
- Those below the threshold may opt to be non-VAT (i.e., Percentage Tax) payers unless they choose to register voluntarily as a VAT entity for input tax credit benefits or other strategic reasons.
- An application to change tax type from non-VAT to VAT (or vice versa) is a separate process which requires updating the COR through BIR Form 1905.
Penalties for Late Registration
- Failure to register or secure the permit from the BIR before commencing operations can lead to hefty penalties, surcharges, and interest under the NIRC.
- There is a penalty for late registration of at least PHP 1,000, depending on the circumstances, plus a surcharge of 25% of the tax due, if any, plus interest and compromise penalties if applicable.
Branch Registration
- Businesses that operate in multiple locations must register each branch or facility with the RDO having jurisdiction over that branch’s location.
- Each branch is issued a separate COR and Authority to Print for its official receipts or invoices.
Updating of Registration Information
- If there are changes such as a new business address, change of trade name, or additional tax types, the taxpayer must file BIR Form 1905 to update the registration details.
Closing of Business or Cessation of Operations
- It is crucial to properly close the business with the BIR to avoid continued assessment of taxes and penalties.
- This involves filing BIR Form 1905, submitting the COR, unused receipts, and settling outstanding tax liabilities.

VI. BEST PRACTICES FOR BIR REGISTRATION AND COMPLIANCE

Seek Professional Advice Early
- Engaging with a lawyer or a certified public accountant (CPA) early in the process can save time and resources. They can ensure your chosen business structure is optimal and that you comply with both LGU and BIR requirements.
Diligent Record-Keeping
- Sound bookkeeping practices and maintenance of accurate financial records not only fulfill legal requirements but also help you monitor the performance of your business.
- Keep copies of all documents filed with the BIR, including payment confirmations and official receipts from the Authorized Agent Banks or online payment portals.
Monitor Regulatory Updates
- The BIR regularly issues new guidelines and rules. Subscribing to official BIR updates, consulting the BIR website, or staying in touch with your lawyer/CPA ensures that you remain compliant with any changes or clarifications.
Utilize Digital Tools Where Possible
- The BIR has introduced online platforms (eFPS, eBIRForms, TIN application, etc.) to streamline certain processes. Familiarize yourself with these systems to save time and effort.
Timely Filing and Payment of Taxes
- After registration, your obligations do not end. You must religiously file tax returns and pay the corresponding taxes (monthly, quarterly, or annually). Missing deadlines can result in penalties and interest charges that can be detrimental to cash flow.
Maintain Good Standing with the BIR
- Issuing valid official receipts for every transaction, filing correct information returns, maintaining up-to-date books of accounts, and cooperating with BIR audits (when required) will solidify your position as a compliant taxpayer.

VII. COMMON PITFALLS AND HOW TO AVOID THEM

Delaying Registration
- Some individuals or businesses commence operations informally before securing BIR registration. This can result in back taxes, surcharges, penalties, and even closure orders in extreme cases.
Using Unregistered or Expired Receipts
- The BIR is strict about the use of authorized receipts and invoices. If you use unregistered or expired official receipts, you may be penalized. Always check the validity of your Authority to Print and the receipts issued.
Incorrect Tax Type Registration
- Some taxpayers mistakenly register as VAT when they are not required, or vice versa. If you are unsure, consult a tax professional to ensure you register under the correct tax type.
Neglecting the Annual Registration Fee
- Even if you have already registered with the BIR in prior years, you must continue paying the ARF of PHP 500.00 before January 31 of each year to avoid penalties.
Failure to Update Registration Information
- If your business moves to a new address, changes name, or modifies its corporate structure, be sure to file BIR Form 1905 promptly. Failing to do so might lead to mismatches in the BIR’s database and complications during audits or renewals.
Not Returning Unused Receipts Upon Closure
- When businesses close or cease operations, they must surrender any unused invoices and official receipts to the BIR, along with the original COR. Failure to do so can result in further penalties and complications.

VIII. FREQUENTLY ASKED QUESTIONS

How long does the BIR registration process usually take?
- The timeline varies depending on the RDO’s efficiency and volume of applicants. Generally, if all documents are in order, it can take anywhere from one day to one week. Some RDOs may require follow-up visits.
Can I register a business even if I am not yet fully operational?
- Yes. In fact, it is recommended to register with the BIR prior to commencing business operations to avoid penalties and ensure you are compliant from the start.
Do I need a separate TIN if I am an individual starting a business?
- Generally, if you already have a TIN from previous employment, you will use the same TIN for your sole proprietorship. You just need to update your registration details using BIR Form 1901. Non-individual entities, such as corporations, partnerships, or cooperatives, will receive a different TIN.
Is an inspection or site visit required by the BIR?
- In some cases, the BIR may conduct ocular inspections or require proof of business existence. This usually occurs if there is a discrepancy in the documents submitted or as part of random checks.
What if I am registering a freelancer activity (e.g., as an online consultant or content creator)?
- Freelancers typically register as self-employed individuals using BIR Form 1901. Ensure you declare the nature of your freelance activity accurately. If you are earning from multiple sources, you may need to declare all sources accordingly.
Can I apply for the ATP before securing the COR?
- No. You generally need the COR (BIR Form 2303) first because the COR indicates the tax types and TIN, which must match the ATP application.
What are the consequences of not issuing official receipts?
- Failure to issue official receipts or invoices is a violation of the NIRC and can lead to penalties, especially during a BIR audit.

IX. RECENT DEVELOPMENTS

Online TIN Application
- The BIR has been testing and implementing online platforms for TIN issuance to simplify the application process. However, these systems often have limitations, and you may still need to appear physically at the RDO for certain steps.
E-Invoicing and E-Reporting
- Under the TRAIN Law (Republic Act No. 10963), the BIR is rolling out e-invoicing and e-receipting systems for certain taxpayers. Although initially mandatory for large taxpayers, the BIR aims to expand coverage in the future.
Relaxed Requirements for Small Businesses
- In some instances, the BIR has streamlined requirements for micro-businesses, but these reforms are implemented gradually. Always verify current regulations with your RDO or a trusted legal/tax advisor.
Simplification of Forms
- There have been attempts to simplify certain BIR forms and reduce duplications in documentary requirements. Nevertheless, it remains the taxpayer’s responsibility to keep abreast of these changes.

X. CONSEQUENCES OF NON-COMPLIANCE

The penalties for failure to comply with BIR registration requirements and ongoing obligations can be severe:

Administrative Penalties
- These include fines, surcharges, and interests that can accumulate over time. For example, failing to pay taxes on time results in a 25% surcharge plus 12% interest per annum on the basic tax due.
Criminal Penalties
- Evasion of taxes or willful failure to register and file correct tax returns can lead to criminal charges. Under certain provisions of the NIRC, the taxpayer may face imprisonment if convicted.
Closure of the Business
- The BIR, in coordination with the local government, may issue a closure order against businesses operating without proper BIR registration. This measure is usually invoked only in blatant or repeated violations.
Reputational Damage
- Non-compliance can tarnish a taxpayer’s reputation, affecting relationships with clients, suppliers, and potential investors.

XI. STEP-BY-STEP SUMMARY

Below is a simplified checklist for those wondering about “Paano po kumuha ng BIR PO (permit/registration)?”:

Secure Relevant Government Registrations
- DTI for single proprietorship or SEC for corporations/partnerships.
- LGU permits (Mayor’s Permit, Barangay Clearance, etc.) if possible.
Obtain the Correct BIR Forms
- Identify which BIR Form (1901, 1902, 1903, 1904) applies.
Fill Out the Forms Carefully
- Ensure accuracy of personal or corporate information, business address, contact details, and tax types.
Pay the Annual Registration Fee (ARF)
- Use BIR Form 0605 and bring it to an Authorized Agent Bank, or pay online.
Submit Documents to the RDO
- Include required attachments (IDs, DTI/SEC Certificates, proof of address, etc.).
Await Issuance of BIR Certificate of Registration
- Keep your receiving copy of forms and payment to track the process.
Apply for an Authority to Print (ATP)
- Use BIR Form 1906 if you need official receipts or invoices.
Register Books of Accounts
- Have them stamped at the BIR.
Comply with Post-Registration Requirements
- Attend seminars, if required, and start filing taxes on time.
Maintain Ongoing Compliance

Renew annual registration fee every January, file taxes regularly, and update your registration information if needed.

XII. CONCLUSION

Securing the correct BIR permit or registration is a foundational step for any individual or entity engaging in business or professional activity in the Philippines. The process, while detailed, can be navigated smoothly with proper preparation, accurate documentation, and adherence to legal requirements. By keeping yourself informed of the latest regulations, engaging professional assistance when necessary, and ensuring timely filing of taxes and renewal of permits, you lay the groundwork for a compliant and successful operation.

Remember that the benefits of proper registration and compliance go beyond simply avoiding penalties: it fosters credibility, protects your business’s reputation, and positions you for growth in the Philippine market. If you have specific concerns or encounter unusual circumstances (e.g., special tax incentives, cross-border transactions, or unique forms of organization), it is prudent to consult a lawyer or a CPA who is well-versed in Philippine taxation.

By following the guidelines in this article, you take a significant step toward fulfilling your obligations under Philippine law and securing the stability and legitimacy of your venture. May your experience with the BIR registration process be seamless, and may your business or professional practice thrive under a robust compliance framework.

This concludes the comprehensive guide on how to obtain the appropriate BIR registration or permit to operate in the Philippines. Always remember that each taxpayer’s situation may vary, and consulting a legal or tax professional is advisable for specific advice.