For many small business owners, keeping up with tax compliance can be challenging. Beyond the demands of running a business, unresolved tax obligations may accumulate over time, with penalties and other charges making it increasingly difficult for taxpayers to put their records in order.
Recognizing the need to provide an avenue for qualified taxpayers to address their outstanding tax liabilities, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) 4-2026, giving qualified micro taxpayers a one-time opportunity to avail themselves of the abatement of delinquent accounts and assessments covered by the regulation.
The regulation applies to any natural or judicial person, or its duly authorized representative, who is classified as a micro taxpayer.
Under RR 4-2026, a micro taxpayer refers to a taxpayer whose gross sales are less than P3 million. For mixed-income earners, only business income is considered in determining whether the taxpayer falls within the threshold.
The regulation covers qualified cases existing as of Dec. 31, 2025. These include delinquent accounts, preliminary or final assessments, disputed or not, as well as open stop-filer cases. It may also benefit taxpayers who have ceased business operations. An important limitation, however, is the P80,000 threshold. The total basic tax liabilities and/or penalties covered by the abatement must not exceed P80,000 for a taxable year.
Qualified taxpayers who wish to avail themselves of the benefits must manually file an application for abatement with the Revenue District Office (RDO) that has jurisdiction over them. The application is made on a per-taxable-year basis and should identify the tax types and corresponding basic amounts sought to be abated. Failure to comply with these requirements will result in the denial of the application.
A P5,000 abatement fee must also be paid within five days from the filing of the application, with proof of payment submitted to the respective RDO. Failure to submit the proof of payment within the prescribed period will void the application, although the taxpayer may refile within the prescribed availment period. The fee is non-refundable even if the application is denied, although it may be credited against the taxes sought to be abated.
Once the requirements have been satisfied and the application approved, the BIR will issue a Certificate of Availment. The certificate serves as proof of the taxpayer’s successful availment of the abatement and results in the closure of the case covered by the application.
One of the more significant aspects of RR 4-2026 is its potential benefit to taxpayers who have already stopped doing business. It is not uncommon for small businesses to cease operations without completing all their tax compliance and registration requirements. Years later, taxpayers may discover that their BIR records still contain open cases or unresolved obligations.
For qualified taxpayers, the abatement program provides a practical avenue to address these lingering matters and bring their tax records into order. At the same time, taxpayers should exercise caution before filing an application. Being classified as a micro taxpayer does not automatically mean that every outstanding BIR liability qualifies for abatement. The specific case, taxable year, amount involved and other conditions under RR 4-2026 must still be examined.
Taxpayers may avail themselves of the abatement until Dec. 31, 2026, unless the availment period is extended by the Secretary of Finance upon recommendation of the Commissioner of Internal Revenue.
For qualified micro taxpayers, RR 4-2026 is therefore more than an opportunity to reduce the financial burden of old tax obligations. It can also provide a means to address lingering cases, update tax records and move forward with greater certainty. With the deadline approaching, taxpayers who believe they may qualify should review their BIR records and assess their eligibility as soon as possible. For a small business, resolving an old tax issue today may prevent a much larger compliance problem tomorrow.
Carla Mea Ravelo is a tax supervisor under the Tax Group of R.G. Manabat & Co. (KPMG in the Philippines), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The firm has been recognized as a Tier 1 in Transfer Pricing Practice and in General Corporate Tax Practice by the International Tax Review. For more information, you may reach out to Carla Mea Ravelo or Mary Karen Quizon-Sakkam through ph-kpmgmla@kpmg.com, social media or visit https://kpmg.com/ph/en.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.