A permit to operate is a license required for all enterprises to run legitimately in the Philippines. This is an essential requirement before a company may pursue operations. Therefore, it must be renewed annually. Historically, business permits in the Philippines had to be reissued by January 20 each year.
Consequently, the year’s first month is a key moment for all owners of companies. Running with an outdated business permit may result in a closure order, penalties, and an interest rate of up to 2% each month for nonpayment, asset seizure, and other penalties imposed by your Local Government Unit (LGU). Here’s the essential knowledge you ought to know about business permit renewal in the Philippines.
What is a Business Permit in the Philippines?
As mentioned earlier, a business permit in the Philippines is an official document issued from your local government unit (LGU) that allows you to lawfully conduct your business in your jurisdiction. The municipality can also use licenses to guarantee your ability to pay company taxes and follow all health and safety standards.
A business permit is necessary for all types of businesses, whether they are sole proprietorships, partnerships, corporations, or cooperatives, and it has to be reissued yearly.
Are all businesses required to renew their Business Permits?
All firms, whether single private companies, limited liability companies, or enterprises, need to get a business permit and renew it annually. LGUs record the variety of enterprises throughout their purview based on the total amount of business permits issued each year. Furthermore, potential clients and partners may seek your company’s authorization to demonstrate your authenticity before engaging in business.
Is there a deadline for Business Permit Renewal in the Philippines?
To avoid fines, company permits and mayor’s permits are normally issued between January 1 and January 20 of every year. This due date is applicable irrespective of the date you registered your firm with the Department of Trade and Industry (DTI), Securities and Exchange Commission (SEC), or Cooperative Development Authority (CDA).
Business Permit Renewal Deadline: January 20, 2024
Are deadlines the same for all municipalities?
Some local governments could extend their due dates for unique circumstances, like calamities. You may consult with your local government and seek advice through their social media channels to find out if they have declared any due date extensions.
Requirements for Business Permit Renewal in the Philippines
Before heading to your local government’s Business Permit Licensing Office (BPLO), you must provide documented proof and pay any applicable costs, such as the PHP P500 yearly registration charge.
Procedures and requirements may also vary depending on your LGU; consequently, it is recommended that you visit your LGU’s website for an up-to-date list of business permit renewal specifications for your region. Following that, we’ve laid out an overview of the papers that are regularly requested by all local governments:
- The Barangay Business Permit is frequently referred to as the Barangay Clearance Certificate. This license must also be updated yearly on January 20.
Needed Documents
- Barangay Business Permit from the previous year
- Official receipt for payment of previous year’s Barangay Business Permit
- Two copies of the Renewal Application Form
Supplementary Requirements for Business Permit Renewal in the Philippines
- Business Permit from the previous year
- Certificate of Receipt of Community Tax
- Occupation and Zoning Clearance
- Sanitary Permit
- Fire Safety Inspection Certificate
- Comprehensive General Liability Insurance
- Certificate from the CENRO (Community Environment and Natural Resources Office)
- Lease Contract
- Previous year’s audited financial statements
Additional Requirements from Respective Municipalities
- DTI, SEC, or CDA Registration
- Employees’ SSS, Pag-IBIG, and PhilHealth registrations during renewal
- Last year’s quarterly VAT returns
- Gross Receipt Declaration
- Employee count upon renewal
- A notarized lease agreement
- Affidavit of No Operations if your firm did not operate or undertake financial transactions throughout the preceding fiscal year.
Common Fees for Business Permit Renewal in the Philippines
- Sanitary inspection fees
- Building inspection fees
- Garbage fee
- Local Business Tax (LBT)
- Mayor’s Permit Fee
Regulatory Implementations to Streamline Business Permit Renewal in the Philippines
Republic Act No. 11032
Republic Act No. 11032, also known as the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, is legislation aimed at streamlining present government service systems and procedures. The Duterte administration’s significant ordinance covers priority 3 of its 0+10 Point Socioeconomic Agenda. The program aims to improve the viability and convenience of business in the Philippines.
Enhancement of Business Procedures
The enhanced version of the legislation is ready to expedite or resolve all government processes efficiently. It covers each of the government agencies and offices in the Executive Division, which includes local government units (LGUs), government-controlled or owned businesses, and other forms of government entities, whether in the Philippines or overseas, offering services related to company and non-business operations stipulated in the Internal Revenue Regulation (IRR).
Penalties for Late Business Permit Renewal in the Philippines
Company license renewals take place from January 1 to January 20 of each year. Inability to timely renew your licenses and certifications, or late filings with the Bureau of Internal Revenue (BIR) and your specified Local Government Units (LGUs), might have a negative impact on your company’s activities. This will have a direct impact on your profitability and general success in the local sector.
Local Government Units (LGU) Penalties
- The LGU will apply a twenty-five percent (25%) premium on the evaluated tax, with an extra two percent (2%) penalty for each month that the company’s permit was not reissued;
- Property and asset closures and/or seizures (for severely overdue bills).
BIR Penalties
- A fine of at least five thousand pesos (P5,000) but no more than twenty thousand pesos (P20,000) and
- Imprisonment for no less than six months and no more than two years, according to the National Internal Revenue Code.
It is vital to know that operating without a legal license can result in not only the closing of your business but also severe offenses punishable by sanctions, asset seizure, and even jail under the Philippines’ Local Government Code. We propose beginning the year by addressing these needs as soon as possible to avoid concern during the remainder of the year.
Waived Fee
The Bureau of Internal Revenue announced on January 8, 2024, that taxpayers are no longer required to pay the PHP 500 annual registration fee. In line with the “Ease of Paying Taxes Act,” BIR Commissioner Romeo Lumagui reiterated that the Annual Registration Fee (ARF) is waived beginning on January 22, 2024.
Can you renew your business permit online?
Certain local governments allow you to renew your business permit via the Internet, while others require you to schedule a physical visit using a portal. Most LGUs still need you to come in person to present the paperwork and renew your business license.
Since the beginning of January 2024, the following local governments have had a web-based company permit renewal process (together with face-to-face renewals):
- Antipolo
- Cagayan de Oro
- Carigara, Leyte
- Cebu
- Davao
- Dumaguete
- General Trias, Cavite
- Imus, Cavite
- Malabon City
- Manila
- Muntinlupa City
- Navotas City
- Panglao
- Parañaque City
- Quezon City
- Taytay, Rizal
- Valenzuela City
Acquiring a business permit may be a lengthy and difficult procedure that often takes a while to complete. Nonetheless, it is vital for all firms to have one since it can protect them against potential legal, tax, and fiscal issues. Having a current business license also helps to build confidence and a great reputation with consumers, collaborators, and government agencies.
The Department of Trade and Industry (DTI) is urging both new and current firms to submit or renew company registrations and certificates. The government body advises entrepreneurs to plan ahead of time to prevent complications and fees. Before issuing business permits to new firms and single proprietorships, local government offices need DTI to register their company names.
Ensure to provide as much detail as possible when providing documents. Identify all of your assets, obligations, costs, equity, and taxes. This way, you can ensure that the process for your business permit renewal in the Philippines can be easier. With a renewed permit and with the complete government requirements, you’re good to go with reaching for success.
Update as of January 11, 2024.
