BIR Offers One-Time Tax Abatement for Qualified Micro Taxpayer

DV Consulting Tax and Compliance Update | July 2026

The Bureau of Internal Revenue has introduced a one-time tax abatement program that gives qualified micro taxpayers an opportunity to settle certain outstanding tax accounts, assessments, penalties and open stop-filer cases for a fixed abatement fee.

Issued through Revenue Regulations No. 4-2026, the program is intended to help small businesses regularize their BIR records and resolve accumulated tax liabilities without carrying the full burden of applicable surcharges, interest and penalties. It also covers qualified micro taxpayers that have already stopped their business operations. :contentReference[oaicite:0]{index=0}

Who Is Considered a Micro Taxpayer?

For purposes of the program, a micro taxpayer is a taxpayer whose annual gross sales are below ₱3 million.

For mixed-income earners, only income from business activities is considered in determining gross sales. Compensation income earned from an employer-employee relationship is excluded.

The program may be availed of by qualified individual or non-individual taxpayers, either personally or through their duly authorized representative.

What Tax Liabilities Are Covered?

The abatement applies to the following accounts or cases existing as of December 31, 2025:

Delinquent tax accounts;

Preliminary or final tax assessments, whether disputed or undisputed;

Open stop-filer cases;

• Cases involving micro taxpayers that have ceased business operations; and

• Cases where no basic tax remains due but unpaid penalties are still outstanding.

To qualify, the total basic tax liability and/or penalties must not exceed ₱80,000 for each taxable year. The ₱80,000 limit covers the total liabilities arising from all covered violations for the applicable taxable year—not ₱80,000 for each tax type or case.

Other Cases That May Qualify

Subject to the conditions under RR No. 4-2026, the program may also cover:

• Cases with an administrative protest pending before the BIR;

• Tax collection cases already filed with the courts;

• Tax cases under dispute before the Department of Justice or the courts, provided the decision is not yet final and executory;

• Pending applications for compromise settlement;

• Pending requests for abatement under RR No. 13-2001;

• Certain criminal violations and tax fraud cases that have not yet been filed in court, subject to approval by the Commissioner of Internal Revenue or an authorized representative;

• Amounts recorded or acknowledged as accounts payable or due to the BIR in the taxpayer’s books; and

• Cases involving penalties with no remaining basic tax due.

Because eligibility depends on the nature, amount and status of the taxpayer’s case, businesses should review their BIR records before filing an application.

How Much Is the Abatement Fee?

A qualified taxpayer whose application is accepted must pay a fixed ₱5,000 abatement fee using BIR Form No. 0605.

The payment may be made electronically or manually and must be completed within five working days from the filing of the application.

The taxpayer must also submit proof of payment to the Revenue District Office having jurisdiction over the business within five working days from the date of payment.

Failure to submit proof of payment within the required period automatically voids the application. However, the taxpayer may refile, provided the application is submitted within the prescribed availment period.

Where and How Should the Application Be Filed?

Applications must be filed manually with the Revenue District Office that has jurisdiction over the taxpayer.

A separate application must be prepared for each taxable year using the official One-Time Abatement for Micro Taxpayers Application Form.

The taxpayer must clearly indicate:

• The applicable taxable year;

• The tax type or types involved;

• The basic tax amount due, excluding interest; and

• The relevant assessment, delinquent account or stop-filer case.

Failure to properly specify the tax types and basic amounts involved may result in the denial of the application.

What Happens After Payment?

After the RDO receives and verifies the taxpayer’s proof of payment, it must issue a Certificate of Availment within five working days.

The certificate serves as evidence that the taxpayer has successfully availed of the program, complied with its requirements and obtained closure of the case covered by the approved application.

Important Conditions to Remember

The ₱5,000 abatement fee is non-refundable if the taxpayer withdraws the application or if the application is denied. In such cases, the amount will instead be applied as partial payment of the taxes or penalties sought to be abated.

Payments already made on covered accounts before the effectivity of RR No. 4-2026 are likewise not refundable.

This means taxpayers should carefully evaluate their eligibility and prepare complete records before filing.

Until When Can Micro Taxpayers Apply?

Qualified taxpayers may avail themselves of the one-time abatement program until December 31, 2026, unless the deadline is extended by the Secretary of Finance upon the recommendation of the Commissioner of Internal Revenue.

RR No. 4-2026 takes effect 15 days after its publication in the Official Gazette or on the BIR’s official website, whichever occurs first. The reported effectivity date is July 7, 2026.

What Should Qualified Taxpayers Do?

Micro taxpayers with outstanding BIR obligations should take the following steps as early as possible:

1. Review their BIR registration and filing records.

2. Identify unfiled tax returns and open stop-filer cases.

3. Confirm whether their tax liabilities existed as of December 31, 2025.

4. Determine whether the total liability for each taxable year is within the ₱80,000 limit.

5. Gather assessment notices, tax returns, payment records and other supporting documents.

6. Prepare a separate application for every covered taxable year.

7. Pay the ₱5,000 fee within five working days after filing.

8. Submit proof of payment within the prescribed period.

9. Secure and retain the Certificate of Availment issued by the RDO.

Taxpayers should not wait until the final months of 2026, as the review and reconciliation of old BIR records may require additional documents or coordination with the concerned Revenue District Office.

Why This Matters for Small Businesses

Unresolved tax cases can affect the closure, transfer, updating or continued operation of a business. They may also result in additional penalties, collection notices and difficulty obtaining BIR clearances.

The one-time tax abatement program provides qualified micro taxpayers with a more manageable way to settle eligible obligations and correct their compliance status for a fixed fee.

However, the payment of the abatement fee does not automatically resolve every outstanding BIR concern. Taxpayers must still comply with the application procedures, properly disclose the covered liabilities and obtain approval from the concerned RDO.

Need Assistance with Your Tax Abatement Application?

DV Consulting Inc. assists micro businesses and self-employed taxpayers with:

• Review of BIR open cases and outstanding liabilities;

• Verification of eligibility for the one-time abatement program;

• Reconciliation of unfiled returns and tax assessments;

• Preparation of the required abatement application;

• Assistance with BIR Form No. 0605;

• Coordination with the appropriate Revenue District Office;

• Business closure and cancellation of BIR registration; and

• Continuing bookkeeping and tax compliance support.

Addressing outstanding tax obligations early can help protect your business from additional penalties and future compliance issues.

DV Consulting Inc.  

Email: sales@dvconsultingph.com  

Contact Number: 0917 170 6734  

Website: www.dvconsultingph.com  

This article is intended for general information only and should not be considered a substitute for professional tax, accounting or legal advice. Eligibility and approval remain subject to the BIR’s verification and evaluation of each taxpayer’s circumstances.