EXPLAINER: BIR’s Oplan Kandado has padlocked 132 businesses

Here’s how to keep your business off the BIR’s padlock list.

A missing receipt. An unregistered business. Or a major understatement of sales.

Any of these could lead to your establishment being padlocked by the Bureau of Internal Revenue (BIR) under its intensified Oplan Kandado, a nationwide enforcement campaign that temporarily shuts down businesses found violating key tax rules.

The campaign has recently been stepped up nationwide, with the BIR reporting that it has already covered 419 cases involving an estimated ₱742.1 million in potential tax exposure. So far, 132 businesses have been served Closure Orders and temporarily shut down, while many others were able to avoid closure by correcting their tax deficiencies before enforcement was carried out.

Despite its intimidating name, Oplan Kandado is not meant to catch businesses by surprise.

Under the National Internal Revenue Code, the BIR may temporarily suspend business operations only for four major violations: operating without BIR registration, failing to issue official receipts or invoices, failing to file required Value-Added Tax (VAT) returns, or understating taxable sales or receipts by at least 30 percent.

Contrary to popular belief, the BIR cannot simply arrive and padlock a business overnight.

The agency must first conduct surveillance to document possible violations. If deficiencies are found, the business owner is served a 48-hour notice to explain why the establishment should not be closed. If the explanation is insufficient, the BIR issues a five-day VAT Compliance Notice, giving the taxpayer another opportunity to register, file the necessary returns, issue proper invoices or receipts, or pay outstanding tax liabilities. Only after these steps have been exhausted can the BIR issue a formal Closure Order and physically seal the establishment.

So how can business owners avoid becoming the next target of Oplan Kandado?

The BIR advises businesses to start with the basics. Register the business before operating, including any new branches or additional business activities. Display the Certificate of Registration prominently inside the establishment, as required by law.

Every sale must be supported by a BIR-registered official receipt or invoice. Businesses should never issue unofficial receipts or skip issuing one altogether, even if a customer does not ask for it.

Entrepreneurs should also file all required tax returns on time—even if there is little or no tax due for a particular period. Missing filing deadlines can trigger penalties and increase the likelihood of enforcement action.

Another common mistake is underreporting sales. The BIR compares sales declarations with receipts, invoices, and other available records. Businesses found to have understated taxable sales by at least 30 percent may face closure proceedings under Oplan Kandado.

Owners should also regularly update their BIR registration whenever there are changes in business address, ownership, business name, or line of business. Operating under outdated registration records may also create compliance issues.

The BIR says it now follows an “Assistance First to Comply. Enforcement Only When Necessary” policy.

Through its C.H.A.T. (Counsel, Help, and Assist Taxpayers) Drive, the bureau first encourages businesses to voluntarily correct deficiencies before enforcement measures are imposed.

The crackdown is no longer limited to physical establishments.

The BIR has expanded Oplan Kandado to cover online sellers, e-commerce merchants, and digital businesses, reminding online entrepreneurs that they are subject to the same registration, invoicing, and tax filing requirements as traditional brick-and-mortar stores.

For entrepreneurs, the message is straightforward: good tax compliance is not just about avoiding penalties—it can also keep the doors of the business open. A properly registered business that issues official receipts, files returns on time, and accurately reports its sales is far less likely to find a BIR padlock hanging on its front door.

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