How to Close a Company in the Philippines: BIR, SEC, and LGU Clearances

When foreign investors decide to exit the Philippine market, the process demands the same strategic foresight as entering it. Without securing the required clearances, companies may remain liable for unpaid taxes, penalties, and local obligations, exposing directors to risk and complicating future re-entry into the country.

The dissolution framework

Corporate closure under Philippine law can be voluntary, initiated by shareholders, or involuntary, initiated by regulators. Voluntary dissolution follows two tracks under the Revised Corporation Code: without creditors, which is more straightforward, and with creditors, which requires additional procedures to protect claims.

Three institutions govern the process. The Bureau of Internal Revenue (BIR) reviews national tax compliance, the Securities and Exchange Commission (SEC) oversees the corporate wind-up, and local government units (LGUs) ensure municipal obligations are settled. Statutory timelines suggest six to twelve months, but in practice, most dissolutions take twelve to eighteen months.

BIR clearance: The critical first step

The BIR acts as the gatekeeper of dissolution. Revenue Memorandum Circulars, including RMC 138-2020, require companies to file final tax returns, deregister their taxpayer identification number, and close VAT and withholding accounts.

Every case involves an audit to confirm that reported figures align with books of account and audited financial statements. On average, audits last four to eight months, though unresolved discrepancies can push them beyond a year.

Administrative filing fees are low, often under PHP 10,000 (US$180), but liabilities from reassessments can reach millions. Until clearance is issued, the SEC will not move forward, making BIR the determinant of the overall timeline.

SEC dissolution: corporate winding up

With tax clearance secured, the company petitions the SEC for dissolution. If there are no creditors, approval may be issued within ninety to one hundred twenty working days. Where creditors exist, the law requires publication of the planned closure, formal notification, and appointment of a liquidator to distribute assets.

Typical costs include PHP 20,000–40,000 (US$350–700) for publication, plus legal and professional fees for managing the process. Only once these steps are completed does the SEC issue a Certificate of Dissolution, which is the legal endpoint of corporate existence.

LGU clearance: local obligations settled

Before final closure, companies must also secure clearance from the LGU where they operate. This covers settlement of business permits, real property taxes, and barangay dues. Requirements differ by city — for example, Manila requires clearance from both the City Treasurer’s Office and the barangay, while Makati may add zoning sign-offs. Processing typically takes one to two months, provided obligations are already paid.

Financial and strategic considerations for foreign investors

Foreign-owned subsidiaries, branches, and representative offices face additional dimensions in closure. Branches and rep offices coordinate with the SEC’s Company Registration and Monitoring Department, while subsidiaries follow the standard corporate path. Where cross-border loans exist, the Bangko Sentral ng Pilipinas (BSP) may require reporting to ensure foreign exchange compliance.

Dissolution also affects repatriation. Until the process is complete, capital and dividends may remain trapped in Philippine accounts, delaying redeployment at the group level. Boards should weigh the opportunity costs of capital held up against the benefits of a clean exit.

Example cases

A European manufacturer began planning its exit eighteen months ahead, reconciling BIR filings, settling local taxes, and appointing a liquidator before approaching the SEC. The result was closure in ten months, significantly faster than average.

By contrast, a Singaporean investor ceased operations without filing VAT returns for two years. The BIR audit uncovered discrepancies, delaying clearance by nine months and stretching the total timeline past two years. Funds earmarked for repatriation remained tied up during this period, creating opportunity losses abroad.

Managing delays and risks

The most common delays arise from conflicting data across agencies, backlogs at the SEC, and premature relocation of directors abroad, leaving no one on the ground to coordinate. To mitigate these risks, foreign investors should prepare an exit strategy twelve to eighteen months before operations end. This allows time to reconcile accounts, gather documentation, and sequence clearances. Professional advisors can help manage the workload and ensure no liabilities are overlooked.

Ensuring a Clean Exit from the Philippines

Closing a company in the Philippines requires clearance from tax, corporate, and local authorities, each with distinct procedures.

With early planning, accurate documentation, and professional guidance, the process can be kept within predictable timelines. Boards that treat closure as a structured project — with clear milestones and accountability — preserve capital, protect reputation, and leave open the option of returning to the Philippine market in the future.

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