What to Prepare: Business Permit Renewal for Philippine Business

What to Prepare: Business Permit Renewal for Philippine Business

This pandemic has brought many opportunities for Filipinos to be creative in setting up various businesses. From coffee shops to eateries, many people have become successful being bosses of their enterprises.


However, you should know that you first need to secure a business permit from the city or municipality where you desire to register and set up your place of business.


A Business Permit is issued to regulate any business or undertaking within the jurisdiction of the Local Government Unit (LGU). This is a valid exercise of the police power of the state, pursuant to the general welfare clause of the Local Government Code:


SECTION 16. General Welfare. – Every local government unit shall exercise the powers expressly granted, those necessarily implied there from, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare.


Who should apply for a business permit?

a) an individual, partnership, corporation or cooperative regularly engaged in trade or commercial activity as a means of livelihood or with a view to profit in the city or municipality;


b) persons legally authorized to practice their profession (professionals) and maintain or operate a clinic or office, exclusively for the exercise of their profession, at no cost from the concerned LGU, during the registration of office/clinic and renewal thereof, subject to a duly enacted local ordinance.


Who are exempted to apply for a business permit?

a) professionals who, in the practice of their profession, have paid professional taxes in the provinces, city or the lone municipality within the Metropolitan Manila Area where he/she practices her profession. However, as stipulated under the provisions of DOF-LFC No. 001-2019 dated 12 June 2021, the professional who maintains an office or clinic for his/her practice shall be issued a business permit at no cost;


b) individuals or those registered in the Securities and Exchange Commission (SEC) as a One Person Corporation (OPC) who provides personal services that does not fall under the exercise of a profession; provided further, that the individual does not occupy a permanent work or retail space, whether inside the residence or in any commercial space;


c) service contractors providing temporary or outsourced services outside the LGU where it registered its principal office or branch; and


d) Barangay Micro Business Enterprises pursuant to RA 9178 and RA 10644.


Note: Under letter b, it is still unclear how an OPC, who is registered with an SEC, should not occupy a permanent work or retail space to be exempt, as it is always needed under the SEC to have a permanent place of work to be registered.


General Requirements (may vary per city or municipality):

LGUs shall limit the documentary requirements for business permit applications to be submitted together with the UAF to those listed below:


New Business Permit Applications

a) Proof of registration, i.e., Certificate of Registration:

  1. Issued by the SEC for all kinds of corporations;
  2. Issued by the Cooperative Development Authority for cooperatives;
  3. Issued by DTI for sole proprietor;


b) Proof of right of applicant to use location as business address, which may include any of the following:

  1. if owned, proof of ownership — Transfer Certificate of Title or Tax Declaration
  2. if not owned by the applicant — Contract of Lease, Memorandum of Agreement, or written consent of property owner


c) Location plan or sketch of the location, clearly showing where business premises is located


d) Fire Safety Inspection Certificate for Occupancy, valid in the last 9 months (requirement of BFP)


e) For applicants with valid FSIC for occupancy, Affidavit of Undertaking that there had been no substantial changes made on the building/establishment given the FSIC (requirement of BFP)


Business Permit Renewal Applications

a) Proof of annual gross receipts which may include:

  1. audited financial statements (“AFS”) or unaudited AFS for those who are not required to file AFS with the BIR; or
  2. sworn declaration of gross sales or receipts; or
  3. income tax returns.


8.2.2 In addition to those listed in 8.2.1, LGUs may require clearances, permits, authorizations and certifications secured from NGAs in compliance to certain laws as listed in Annex 4.


8.2.3 LGUs are reminded of the following:
a) Barangay clearances related to business permit applications shall be integrated and processed by the BPLO and such need not be secured separately in the barangays where the establishment is located.


b) On Locational Clearance, ARTA circular 2020-01 mandates that: D

  1. Establishments located in malls and in the central business districts (CBD) are no longer required to get a locational clearance following ARTA Circular 2020-01 during the initial application for a Business Permit: Provided that the mall where the business activity will be established is in conformance with the zoning regulations of LGUs; and
  2. LGUs shall not require applicants to get a Locational Clearance during the renewal of the Business Permit since compliance with zoning regulations has already been established during the initial application for Business Permit.


c) The Community Tax Certificate (“CTC”) or Cedula shall not be required to be separately secured by the applicant as part of the documentary requirement for business registration but shall be integrated in the tax bill for the Business Permit and issued together with said Business Permit. It shall be secured in the place of residence of the individual or in the place where the principal office of a juridical entity is located.


d) LGUs shall require a Sanitary Permit only for businesses covered in the Sanitation Code of the Philippines which are listed in Annex 5.


e) LGUs shall not require the Health Certificate of employees for the issuance of the Sanitary Permit of a business establishment unless such are required in the Sanitation Code of the Philippines.


f) LGUs shall not require the physical or electronic submission of documents that are available or have been issued by other departments/offices of the same LGU, such as but not limited to, Tax Declaration, Certificate of Occupancy, copies of previous years’ Business Permit, Locational Clearance, Sanitary Permit, Official Receipts or Tax Bills and Barangay Business Clearance.


9.2.1 Except for new businesses of printing and publication and those enjoying a franchise, newly started businesses shall not be liable for the payment of initial local business tax based on capital investment.


For further information, please refer to the Joint Memorandum Circular providing for the Guidelines for Processing Business Permits, Related Clearances and Licenses in All Cities and Municipalities.


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