BIR One-Time Tax Abatement 2026 — A Complete Guide for Micro Taxpayers Before the December 31 Deadline
BIR ONE-TIME TAX ABATEMENT 2026 – If you run a micro business with old tax cases or unpaid penalties, here is a guide on how the Bureau of Internal Revenue’s one-time abatement program works, who can apply, and what the ₱5,000 fee covers before the December 31, 2026 deadline.
The Philippine Chamber of Commerce and Industry (PCCI) on November 4, 2026 backed the Bureau of Internal Revenue’s (BIR) tax abatement program, saying it gives micro enterprises a practical way to settle old tax liabilities and close pending cases. Citing BIR data, PCCI said about 3,929 micro businesses had already availed of the program, canceling a total of ₱266.79 million in taxes and penalties as of October 24, 2026, according to a Philippine News Agency report dated November 5, 2026.
BIR has received around 17,101 applications, and some 15,050 of these have been approved, PCCI said. The group also supports expanding the program later to small taxpayers with annual gross sales of ₱3 million to below ₱20 million.
Who Qualifies as a Micro Taxpayer?
Under Revenue Regulations (RR) No. 04-2026, the one-time abatement is available to micro taxpayers — those with gross sales of less than ₱3,000,000 for the taxable year, as defined under RR No. 08-2024. For mixed income earners, “gross sales” covers business income only and excludes compensation income from employment, as summarized by Grant Thornton’s tax alert on RR No. 04-2026.
Your micro taxpayer classification is based on BIR registration records as of December 31, 2025. You can check this through the BIR Online Registration and Update System (ORUS) or by coordinating with your Revenue District Office (RDO), according to clarifications in RMC No. 84-2026.
What Tax Cases Can Be Abated?
The program covers liabilities existing as of December 31, 2025, including:
- All delinquent accounts as of December 31, 2025 (self-assessed taxes or final deficiency assessments left unpaid)
- Assessments — preliminary or final, disputed or not — issued on or before December 31, 2025 that have not yet become final and executory
- All open stop-filer cases as of December 31, 2025, including micro taxpayers who have already closed their business
For each taxable year, the total basic tax and/or penalties covered must not exceed ₱80,000. Interest and surcharges are excluded from that ₱80,000 threshold, but once a case is approved for abatement, the related interest and surcharges may also be cancelled.
How Much Do You Pay?
Qualified micro taxpayers pay a one-time abatement fee of ₱5,000 using BIR Form No. 0605. That fee is what settles the covered basic taxes and/or penalties approved under the program — not a partial payment on top of the full liability.
| Item | Amount / Rule |
|---|---|
| Maximum basic tax/penalties per taxable year | ₱80,000 (interest/surcharges excluded from threshold) |
| Abatement fee | ₱5,000 via BIR Form 0605 |
| Payment deadline after filing | Within 5 working days |
| Submit proof of payment to RDO | Within 5 working days from payment |
| Certificate of Availment | Issued within 5 working days from verified proof of payment |
| Last day to avail | December 31, 2026 (unless extended) |
If you withdraw the application or it is denied, the ₱5,000 fee is non-refundable but may be applied as partial payment of the taxes or penalties you tried to abate. Payments you already made on covered cases before RR No. 04-2026 took effect are not refundable.
How To Apply — Step by Step
- Step 1: Confirm you are classified as a micro taxpayer (gross sales below ₱3 million) and that your covered liability per taxable year is within the ₱80,000 threshold.
- Step 2: Secure a Certificate of Existence of Outstanding Tax Liability/ies (CEOTL) from the BIR office that has jurisdiction over the covered case. This shows your outstanding liabilities as of December 31, 2025.
- Step 3: Manually file the One-Time Abatement application (BIR Form No. 2121) on a per taxable year basis at the RDO where you are registered. Taxpayers with multiple branches file at the RDO of the Head Office.
- Step 4: Attach required documents — CEOTL, valid ID, assessment notices if any, and authorization papers if a representative files for you. Incomplete applications will not be processed.
- Step 5: After the RDO accepts the application, pay the ₱5,000 abatement fee within five working days using BIR Form No. 0605 (electronic or manual).
- Step 6: Submit proof of payment to the same RDO within five working days from the payment date. Missing this step automatically voids the application, though you may re-file before the deadline.
- Step 7: Wait for the Certificate of Availment, which the RDO should issue within five working days after verifying payment. That certificate is the basis for cancelling the covered liabilities and issuing the Authority to Cancel Assessment (ATCA).
Important: Failure to specify the tax types and basic amount due (excluding interest) for each covered case in the application can result in denial.
Deadline and Why It Matters
Qualified micro taxpayers may avail of the program until December 31, 2026, unless the Secretary of Finance extends it upon the recommendation of the Commissioner of Internal Revenue. With more than two months left before the cutoff and thousands of micro businesses already cleared through the program, owners with old open cases still have a window to settle for a fixed ₱5,000 fee instead of carrying years of unresolved liabilities.
MSMEs make up over 99% of business enterprises in the country and employ around 66% of workers, government data cited by PCCI showed. Clearing old BIR cases can remove a major source of financial pressure for small operators still recovering and expanding.
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