BIR eyes tax relief expansion after PHP 266.79M abatement

MANILA — The Bureau of Internal Revenue (BIR) is considering expanding its one-time tax abatement program to small businesses after nearly 4,000 micro taxpayers benefited from PHP 266.79 million in waived taxes and penalties within four months.

The proposed expansion would extend relief to businesses with annual gross sales of PHP 3 million to below PHP 20 million, potentially allowing more entrepreneurs to settle outstanding tax obligations and resolve long-pending cases at a reduced cost.

For micro and small businesses struggling with accumulated tax liabilities, the program offers an opportunity to clear old obligations without paying the full amount of covered taxes and penalties.

The initiative could also help businesses restore their tax compliance status, reduce administrative burdens, and redirect limited financial resources toward operations, employment, and business expansion.

BIR Commissioner Charlito Martin R. Mendoza said the response to the One-Time Abatement Program for Micro Taxpayers demonstrates the potential of targeted tax relief to encourage voluntary compliance.

“At present, the program covers micro taxpayers with annual gross sales below P3 million. We have seen from the level of availment that this relief is helping taxpayers settle covered obligations and clean up their tax records,” Mendoza said.

“We are now looking at expanding the one-time tax abatement to include small taxpayers, or those with annual gross sales of P3 million to below P20 million. This can extend the same relief to more small businesses, while also helping the BIR close long-pending open cases,” he added.

As of Oct. 24, 2026, the BIR recorded 3,929 beneficiaries of the program, which was introduced in June under Revenue Regulations No. 4-2026.

The agency received 17,101 applications, of which 15,050 had been approved, representing approximately 88% of all applications filed.

The approved applications covered 45,341 tax and penalty items, according to government figures.

Of the PHP 266.79 million in taxes and penalties abated, PHP 42.05 million represented basic taxes, while PHP 224.74 million involved compromise penalties.

The substantial share of penalties in the total relief illustrates how accumulated charges can become a significant financial burden for smaller businesses with unresolved tax cases.

For the BIR, settling these cases also means reducing the number of outstanding assessments and administrative records that require continued monitoring.

Under the existing program, qualified micro taxpayers with covered basic taxes and penalties totaling not more than PHP 80,000 for a taxable year may apply for abatement by paying a PHP 5,000 fee, subject to prescribed conditions.

The relief is available to taxpayers whose annual gross sales fall below PHP 3 million.

Eligible cases include delinquent accounts, preliminary or final tax assessments, whether disputed or undisputed, and open stop-filer cases existing as of Dec. 31, 2025.

The program also covers qualified micro taxpayers who have ceased business operations but still have unresolved obligations with the BIR.

Stop-filer cases generally involve taxpayers registered with the BIR who have failed to submit required tax returns, potentially leaving unresolved compliance issues even when a business is no longer operating.

Such cases can prevent entrepreneurs from formally closing their tax registrations or resolving outstanding matters with the agency.

By allowing eligible taxpayers to settle covered obligations through a fixed abatement fee, the program provides an alternative to prolonged administrative proceedings and the continued accumulation of unresolved tax liabilities.

However, the relief is not automatic and applies only to cases meeting the conditions established under the BIR’s regulations.

Revenue Regulations No. 4-2026 requires eligible taxpayers to submit an application for each taxable year to the Revenue District Office (RDO) with jurisdiction over their registration.

Applicants must identify the relevant tax types and basic amounts due for each covered case.

The regulations require payment of the PHP 5,000 abatement fee within five working days after filing the application.

Proof of payment must then be submitted to the RDO within five working days from the payment date.

Failure to comply with the payment documentation requirements can invalidate an application, although taxpayers may reapply within the prescribed availment period.

The regulations also provide that an abatement fee is nonrefundable if an application is denied or withdrawn, but the amount will be credited as partial payment of the taxes or penalties involved.

For small enterprises, these procedures make proper documentation and coordination with local BIR offices important to securing the relief.

The proposed expansion could broaden the program’s reach to a larger segment of Philippine businesses, including small retailers, service providers, food establishments, and other enterprises whose annual sales exceed the current micro taxpayer threshold.

However, the BIR has not announced final eligibility rules or an implementation date for including small taxpayers.

Until new guidelines are issued, the existing abatement program remains limited to qualified micro taxpayers.

The initiative forms part of the government’s broader effort to make tax administration more responsive to smaller businesses while improving compliance.

President Ferdinand Marcos Jr. highlighted the One-Time Abatement Program for Micro Taxpayers during his 2026 State of the Nation Address as one of the administration’s relief measures for micro-entrepreneurs.

The program also supports the Department of Finance’s policy direction under Finance Secretary Frederick D. Go to provide targeted taxpayer assistance and improve the efficiency of revenue administration.

Beyond reducing financial obligations, the initiative could help entrepreneurs address unresolved tax issues that complicate business registration, closure, and compliance.

This is particularly relevant to former business owners who stopped operating but remained registered with the BIR and continued to face unresolved filing requirements.

The BIR has also introduced improvements to make abatement payments more convenient.

The agency updated its Offline eBIRForms Package to accommodate payments under the program using BIR Form No. 0605.

The electronic payment facility is intended to simplify compliance and reduce some of the administrative difficulties faced by taxpayers seeking relief.

Taxpayers must still comply with the applicable filing, payment, and documentation requirements to complete the process.

For microentrepreneurs in Western Visayas, including those operating small stores, food businesses, market stalls, and other local enterprises, the program offers a means of addressing eligible tax obligations without immediately paying the full assessed amounts.

Its usefulness will depend on whether qualified business owners are aware of the program, understand the requirements, and can access assistance from their respective revenue district offices.

The BIR said its regional and district offices would continue conducting information campaigns and assisting taxpayers with their applications.

“Our Revenue Regions and Revenue District Offices will continue reaching out to qualified micro taxpayers and assisting them with availment. We want to make sure that those who qualify for this relief know that it is available and know where to go for assistance,” Mendoza said.

The current One-Time Abatement Program for Micro Taxpayers remains available until Dec. 31, 2026, unless extended by the finance secretary upon the recommendation of the internal revenue commissioner.

With the deadline approaching, qualified taxpayers are encouraged to verify their eligibility and resolve covered tax cases through their respective BIR offices.

The program’s longer-term significance for the government lies in whether targeted tax relief can encourage more businesses to maintain accurate records, comply with tax requirements, and participate in the formal economy.

For entrepreneurs, the immediate benefit is the opportunity to put long-standing tax problems behind them and concentrate on sustaining their livelihoods.