Philippines MSME Requirements: Staying Compliant in 2025

The Micro, Small, and Medium Enterprise (MSME) sector forms the core of the Philippine economy. In 2023, MSMEs made up 99.6% of all business establishments, generated 67% of total employment, and contributed 40% to national GDP.¹

If you’re registering an MSME in the Philippines, you’ll need to navigate several government agencies and renew multiple permits annually. New business owners often miss deadlines because they don’t realise these permits expire each January. Even established businesses sometimes fall behind when regulations change. To help you get on top of the permits, deadlines, and costs, this guide covers what you need to register, what you’ll pay, and when renewals are due.

Your Bureau of Internal Revenue (BIR) registration is probably the most important initial step. It sets you up as a legitimate business and gives you a Tax Identification Number. You’ll need this to open a business bank account, issue official receipts, and bid for contracts. It also helps you avoid penalties - operating without proper registration can result in fines or forced closure.

Once you’re properly registered and start working with international clients or suppliers, you’ll need a way to handle payments in different currencies efficiently. A Wise Business account can help your MSME receive payments from overseas clients using 8+ local account numbers in major currencies, hold and manage 40+ currencies in one account, and send payments internationally with transparent, often lower fees.

Table of contents
Registering your MSME Annual compliance requirements for MSMEs BIR registration fees and taxes Annual filing and reporting requirements Government assistance programmes for MSMEs Understanding MSME categories by asset size

Registering your MSME is the crucial first step

All businesses in the Philippines, regardless of size, must follow certain registration requirements to operate legally.

The first step for sole proprietorships is registering with the Department of Trade and Industry (DTI). You can do this online through the DTI Business Name Registration System or at any DTI office. Your business name is valid for five years, and processing typically takes a few days to one week.²

Partnerships and larger corporations must register with the Securities and Exchange Commission (SEC) instead. You’ll need your Articles of Partnership or Incorporation, bank certificates showing minimum capital of PHP 3,000, and details of all partners or shareholders - less than PHP 3,000, and the business should be registered with DTI.

After DTI or SEC registration, you must register with the Bureau of Internal Revenue to get your Tax Identification Number and Certificate of Registration. Sole proprietors use BIR Form 1901, whilst partnerships and corporations use BIR Form 1903.⁴

The PHP 500 annual registration fee has been waived since January 2024 under the Ease of Paying Taxes Act.⁵

Finally, obtain your Barangay Clearance and Mayor’s Permit from your Local Government Unit. The Mayor’s Permit allows you to legally operate and must be renewed annually.

Annual compliance requirements for MSMEs

Newly registered enterprises must be aware of annual compliance requirements to stay in good standing.

You must renew your Mayor’s Permit with your LGU between 1st January and 20th January each year. Missing this deadline results in a 25% surcharge on business tax plus 2% penalty per month.⁶

LGU renewal includes paying for sanitary, fire, environmental, and zoning permits, as well as local business tax and barangay clearance. Requirements vary depending on your business type and location, but generally include:

• New Barangay Clearance for the current year
• Copy of previous Mayor's Permit and official receipts
• Income Tax Return filed with BIR
• Audited Financial Statement (for larger enterprises)

BIR registration fees and taxes

Since the registration fee was waived, businesses need only pay the PHP 30 Documentary Stamp Tax when they first register. When your BIR Certificate of Registration comes through, it will list all the types of taxes your business must pay. The required taxes often include:

• Corporate income tax: 25% standard rate, or 20% for small corporations with net taxable income ≤ PHP 5 million and total assets ≤ PHP 100 million
• Value Added Tax: 12% standard rate, with mandatory registration for businesses with annual gross sales over PHP 3 million
• Documentary Stamp Tax: Rates updated in August 2025 to 0.75% of par value for shares and debt instruments⁷

➡️You can read more about the different types of tax for small businesses here.

Annual filing and reporting requirements

Businesses whose fiscal year ends on 31st December must submit their Annual Financial Statements (AFS) and Annual Income Tax Return (ITR) to the BIR by 15th April of the following year.⁸ The AFS must be attached to the ITR.

MSMEs do not need an accounting firm to audit the statements for BIR submission - this makes compliance more affordable for smaller businesses.

Medium-scale enterprises registered with the SEC must also send their AFS to the SEC. Corporations with total assets or liabilities of at least PHP 600,000 must submit audited financial statements, whilst those below this threshold only need certified statements. In a bid to reduce the disproportionate administrative burden on MSMEs, the SEC is proposing to raise this threshold to PHP 3 million. If it goes ahead, this change would apply to fiscal years ending on or after 31 December 2025.⁹

Sole proprietorships registered with the BIR are exempt from submitting AFS to the SEC.

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Government assistance programmes for MSMEs

The Small Business Corporation (SBCorp) is a government financial institution attached to the DTI. SBCorp engages in development initiatives in finance and business technologies for MSMEs - a drive that reflects the importance of MSMEs in the Philippines. In fact, the government allocated over PHP 8 billion for MSME loans in 2025.¹⁰

Understanding MSME categories by asset size

Knowing what loans you might be eligible for starts with understanding your business structure. MSMEs are categorised based on their asset size, excluding the land where the business is situated:

• Micro: Up to PHP 3,000,000
• Small: PHP 3,000,001 to PHP 15,000,000
• Medium: PHP 15,000,001 to PHP 100,000,000¹⁰

They’re also categorised by number of employees: micro (1-9), small (10-99), and medium (100-199).

To be eligible for MSME benefits in the Philippines, sole proprietorships and partnerships must be 100% Filipino-owned, whilst corporations must be at least 60% Filipino-owned.¹¹

RISE UP loan programme details

The RISE UP (Resilient, Innovative, and Sustainable Enterprises, Unleash Your Power) loan programme aims to sustain MSMEs that survived the pandemic by providing easily accessible, soft-term, multi-purpose loans.

Businesses must comply with several variable requirements. For example, a specific business track record and photographs of operations.¹¹

Maximum loanable amounts range from PHP 300,000 for Micro Multi-Purpose loans up to PHP 20 million for secured loans.¹¹

The programme offers:

Micro Multi-Purpose Loan: ¹²

• Loan amount: Up to PHP 300,000
• Interest rate: 12% per annum
• Repayment term: Up to 3 years
• Collateral: None required
• Business track record required: At least 1 year

First-time borrowers can borrow up to PHP 20 million over 5 years at the same rate and repayment term, if they have at least 2 years of business track record.¹²

MSME Multi-Purpose Suki Loan: ¹²

• Loan amount: Up to PHP 20 million
• Interest rate: 8% to 12% per annum
• Repayment term: Up to 5 years
• Collateral: Free up to PHP 5 million
• Business track record: Must be an existing SB Corp borrower

You can apply online at the SBCorp Borrower Registration System.¹³

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Conclusion

Whilst the registration and compliance process for an MSME can seem complex, it’s necessary to ensure your company is compliant. Legalising your MSME provides credibility and opens up more opportunities for success.

We recommend setting up a compliance calendar with reminders for key dates: LGU registration renewal (1-20 January) and Annual Income Tax Return filing (15 April). Keep your files organised with all required documents throughout the year.

As your business grows and starts working with international clients or suppliers, managing multiple currencies efficiently becomes crucial.

A Wise Business account gives you access to 8+ local account numbers in major currencies, lets you hold and manage 40+ currencies from one account, and always uses the mid-market rate for conversions. You can also integrate with popular accounting software like Xero and QuickBooks to streamline your financial management. With the compliance side sorted and the right tools in place, you can focus on what actually matters - the success of your business.

➡️Get started with Wise Business today.

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Sources:

1 - BSP - MSMEs: Pillars of Inclusive Growth and Resilience in the Philippine Economy

2 - BNRS - FAQs

3 - Incorporation.ph - Incorporation Options

4 - BIR - Forms

5 - BIR - EOPT

6 - FilePino - Business Permit Renewal

7 - Tax At Hand - Documentary Stamp Tax Rates

8 - Guidelines in the Filing of Annual Income Tax Returns and Payment of Taxes Due

9 - Fintech News - SEC Raises Mandatory Audit Threshold

10 - GMA Network - SBCorp Allots PHP 8m for MSME Loans

11 - SBCorp - FAQs

12 - SBCorp - RISE UP Multi-Purpose Loans

13 - SBCorp - Online Portal

Sources checked on 14th November 2025.