Opening A Business for Foreigners Part 2: Barangay, Mayor’s Permit and BIR

We’ve discussed previously the steps on how to obtain an SEC certificate. In this article, we will tackle about the next steps, focusing on the Local Government Units (LGU), particularly the Barangay clearance requirements, Mayor’s permit and the Certificate of Registration from Bureau of Internal Revenue.

 

What is Barangay Clearance:

Barangay is a Filipino word for “barrio” in Spanish or “town” in English. It is the smallest administrative division in the Philippines. Currently, there are 42,036 numbers of barangay in the country. Barangays are classified into zones with their corresponding numbers, you can check the list here to determine which barangay number your business is.

 

Barangay Clearance or Barangay business permit is essential since it is one of the requirements to obtain a Mayor’s permit. The fees vary, depending on the district. Example, the barangay clearance in Makati, which is one of the prominent business districts in the country costs around Php 1200, whereas in Pasay, it is Php 500. The process usually takes 1 -2 days.

 

What are the Requirements:

1. Photocopy of SEC certificate.
2. Photocopy of Articles of Incorporation and By-laws.
3. Contract of lease of the business establishment.
4. Filled out Barangay clearance form

 

Mayor’s Permit / Business Permit

After the Barangay clearance, the next step is to get a Mayor’s or Business Permit. This permit is processed in the City Hall that has the jurisdiction of your business. All businesses and companies are mandated by laws to secure the necessary permits before they start the operations. The validity of this permit lasts for 1 year and must be renewed on or before January 20^th of the following year.

 

What are the Requirements:

 

1. SEC registration (Articles, By-Laws, and certificate).
2. Contract of Lease.
3. Barangay clearance.
4. Notarized application form.
5. Community tax certificate.
6. Authorization of business owner with ID.
7. Company Insurance (there are accredited insurance agents inside the city hall.

 

Steps to process the Mayor’s Permit

 

The lack of a streamlined process for obtaining a business permit is the usual issue which causes delay to thousands of hopeful business owners. The duration to secure a business permit varies from 2 days to one month, depending on the requirements. Currently, the President of the Philippines signed Republic Act 11032, or otherwise known as the “Ease of Doing Business Act” which mandates government agencies will have “simplified requirements and streamlined procedures that will finally spare our people from the intolerable waiting time and long lines in frontline government agencies.” It is also stated that all agencies should respond on applications within 3 days for simple, 7 days for complex and 20 days for technical transactions. We are still keeping our fingers crossed.

 

Going back, here are the steps in processing Mayor’s Permit:

1. Once the Barangay Clearance is released, you may proceed to City Hall to start the Mayor’s Permit application. Ask for an application form and have it notarized once it is completed.
2. Ask for a Company Community Tax certificate. The fee will be based on the declared business capital.
3. Submit all the requirements and application form to the front desk of Business Registration division.
4. Pay fees at the city treasurer’s office after assessment.
5. Show the receipt to the Business Registration Division.
6. Purchase insurance (just ask around, there are insurance agents in the business registration division).
7. Proceed to the city treasurer’s office for another assessment.
8. Pay all the necessary fees.
9. Submit all documents to the claim’s division. The certificate will be released on the next day.

 

Bureau of Internal Revenue (BIR)

The Bureau of Internal Revenue (BIR) is the arm of the Department of Finance in charge of the tax collections in the country. It is also responsible for the enforcement of all forfeitures, penalties, and fines.

Similar to the Mayor’s Permit, the certificate of registration from BIR should be processed within 30 days after receiving the Certificate from the SEC. Otherwise, there will be corresponding penalties.

 

What are the Requirements:

 

1.   Application to Register (1903 form), filled out in triplicate.
2.   Photocopy of SEC certificate or License to do business in the Philippines (in case of a foreign corporation).
3.    Articles of Incorporation and By-Laws.
4.    Photocopy of Mayor’s permit or duly received application form for mayor’s permit if the former is still in process with LGU.
5.    Proof of payment for annual registration fee (form 0605 in triplicate).
6.    BIR form 1906 filled out in triplicate.
7.    The final and clear sample of Principal receipts/OR.
8.    New sets of permanently bound books of account:
9.    1 Journal book
10.    1 cash disbursement book
11.    1 ledger
12.    1 cash book
13.    1 Subsidiary purchase journal (14 columns)
14.    1 subsidiary sales journal (12 columns)
15.     Minimum of 10 booklets for Original Receipts. These should be printed with an accredited printer’s office only.
16.     2 documentary stamps (purchased in BIR)
17.     Board Resolution indicating the name of the authorized representative and Secretary’s Certificate in case of authorized representative who will transact with the Bureau.

 

What are the steps in Processing a BIR Certificate of Registration?

 

1. Fill out BIR 1903 form in triplicate.
2. Submit all requirements to the receiving / Officer of the Day desk.
3. Pay all necessary fees together with the correct forms at Landbank. Take note that you can only pay at the designated bank of the Revenue District Office in your area.
4. Submit proof of payment to the officer in charge.
5. Bring Journals for signing.
6. Purchase Doc Stamps in BIR office.
7. The Certificate of Registration will be released after 2 – 5 days.
8. Fill out Authority to Print form in triplicate. Include a print out of a sample receipt.
9. Submit it to the Printer’s office (they usually have a contact inside the office).

 

Again, in dealing with government agencies here in the Philippines, patience is indeed a virtue. On a final note, make sure to ask the designated offices for the requirements from time to time since the policy can sometimes change after a few months.

For those who would be like to be spared from the inconveniences and would like to receive their Business Permits fast, get in touch with our Consulting Team now so you can focus on the other aspects of your business!

Stay tuned for part 3!