MODULE 1

Acquisition of Business Permit/Renewal

Week 3-5 (Jan 31-Feb 18, 2022)

Business Plan Implementation 2 Cristy D. Docdocos,MAMPA

2nd Semester SY 2021-2022` Instructor

Introduction

This module will help you to understand the importance of business permit renewals. This will
also help you to find out what are the various local government agencies that requires special
registration based on types of business. Further, this will guide you on how to engage with the local
government agencies.

Learning Objectives

After studying this topic, the students should be able to:

1. Aware on business public policy
2. Undertake necessary steps in handling business permit renewals
3. Engage to public agencies for business purposes

Pre-test

1. What is the importance of business permit renewal?

2. What are the legal procedures to acquire business permits and registration?
3. What local government agencies that requires special registration to a specific type of business?

Key Concepts

IMPORTANCE OF BUSINESS RENEWAL

Businesses in the Philippines need valid and up to date permits to continue operations. It is important to
stay on top of business permit renewal in the Philippines to avoid the corresponding penalties.

Which permits in the Philippines require annual renewal?

Of the documents obtained when you register a company in the Philippines, the following require
annual renewal:
1. Barangay (village) permit
2. Mayor’s permit (also known as the business permit)
3. Bureau of Internal Revenue (BIR) registration

What is the deadline for business permit renewal in the Philippines?

The deadline to renew the barangay permit and mayor’s permit is January 22. Note, however, that the
local government has the authority to change this date. The BIR registration renewal deadline is January
30.

Document Deadline for renewal

Barangay permit January 22
Mayor’s/Business permit January 22
BIR registration January 30

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All businesses that have been issued a permit last year must renew with the same local government unit
in the area where the business operates. All businesses in the Philippines should plan ahead to avoid
being inconvenienced by long lines, payment of potential penalties or the prohibition of business
operations.

REQUIREMENTS FOR BUSINESS PERMIT RENEWAL IN THE PHILIPPINES

A. Barangay Permit Renewal
The requirements for barangay permit renewal are the following:
1. Previous barangay permit (the original and a copy)
2. The receipt for the payment of the previous barangay permit (the original and a copy)
3. Completed application form

B. Mayor’s/Business Permit Renewal

An authorized representative must submit the following documents for business permit
renewal:
1. New barangay permit
2. Your previous business permit (the original and a copy)
3. The receipt for your payment of the previous business permit (the original and a copy)
4. Your income statement from the previous year
5. Lease contract covering your stay until next year
6. Local insurance
7. Community tax certificate (CTC) otherwise known as cedula
C. BIR Registration Renewal
To apply for BIR registration renewal, you must prepare BIR form No. 0605.
Note that all submissions must be in person. An authorized representative must go to each
government office to fulfill requirements. It is not possible to renew these documents online.
Aside from the renewal of business permits, business establishments are also required to pay
the annual registration fee of Php500.00 (ARF) on or before 31 January. Payment of the ARF
shall be made at the Revenue District Office of the Bureau of Internal Revenue (BIR) having
jurisdiction over the place of business of the establishment.

PENALTIES

It is important to note that the renewal of licenses not only affects a business’ operation, but can affect
its very existence and survival. Failure to secure renewal, or a late filing, not only calls for the payment
of its consequent penalties, but also the prohibition of actual business operation which affects
employment and the earning of profits during the period where no license has been renewed or applied
for.

To ensure business continuity and smooth operations, it is strongly recommended that a business renew
the licenses and pay the ARF on time. Failure to do so may result to the payment of government fines
and penalties.

1. BIR penalty
The law provides for a penalty for directors and officers who allows and tolerates the non-payment of
the ARF. According to Section 258 of the National Internal Revenue Code:

Any person who carries on any business for which an annual registration fee is imposed without paying
the tax as required by law shall, upon conviction for each act or omission, be punished by a fine of not

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less than Five thousand pesos (P5,000) but not more than Twenty thousand pesos (P20,000) and suffer
imprisonment of not less than six (6) months but not more than two (2) years.”

2. Local government penalties

Local Government Units (LGUs) also impose surcharges and penalties for failure to renew business
permits within the prescribed period. The LGU will impose a twenty-five percent (25%) surcharge on the
tax assessed, plus an additional two percent (2%) penalty for every month which the business permit
was not renewed. Therefore, it is important to be properly appraised of the penalties to be imposed for
late renewals.

In extreme cases of delinquency where a business has pursued its operations without renewing its
licence, the local government may issue an apprehension notice and order for the closure of the
business. On the other hand, in cases of failure to secure secondary permits, i.e., health, sanitation or a
fire safety inspection certificate and still has continuously operated the business despite the order to
cease, the local government may also order for the confiscation of property and assets held by the
business.

DTI BUSINESS NAME CANCELLATION

In DTI, you can apply for a cancellation of BN registration at any DTI office for any of the following
reasons:

1. Cessation of business operations prior to the expiry date of the existing registration;
2. Sale or transfer of the business to any other person;
3. Upon BN owner’s conclusive determination that a prior owner and lawful user of an identical or
confusingly similar BN exists;
4. Upon transfer of the business to another geographical location beyond or outside the registered BN's
territorial scope.

To know more about Business Name Cancellation, visit the link below:
https://www.formsphilippines.com/guide/209/cancel-business-name

Task 1
1. Apply for Barangay Business Clearance Renewal by preparing all the necessary documents as
mentioned above.
2. You may opt to renew your Barangay Business Clearance if you are planning to continue your
business name registration with the DTI and apply for BIR Registration but needs to bear with
the penalties or if you want to renew your business name registration, you may apply for
business name cancellation to the DTI by taking the necessary steps and requirements as
mentioned above. This will give you an advantage to finalize your business name registration
and avoid penalties. But you have to register 28 days after the business name registration to the
BIR to avoid penalties.
3. Follow the necessary steps which you think is best for your business.

References

A. Online References
 Business Permit Renewal in the Philippines. Published: October 29, 2020 by Emerhub.
https://emerhub.com/philippines/business-permit-renewal-in-the-philippines/

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  Philippines: How To Handle Business Permit Renewals In Philippines. 28 November 2018 by
Alexandra Gerardine E. Salud of TMF Group BV. https://www.mondaq.com/corporate-and-
company-law/759330/how-to-handle-business-permit-renewals-in-philippines

B. Book References
 Small Enterprises Research and Development Foundation.(2013). Windows to
Entrepreneurship; A Teaching Guide. SERDEF, UP Diliman,Quezon City, Philippines

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