Implementing Section 21 (B) of the National Internal Revenue Code of 1997, as amended by R.A. No. 11976 otherwise known as the “Ease of Paying Taxes Act”, on the Classification of Taxpayers

On 11 April 2024, the Bureau of Internal Revenue (“BIR”) issued Revenue Regulation (“RR”) No. 8-2024 implementing Section 21 (B) of the National Internal Revenue Code of 1997, as amended by R.A. No. 11976 otherwise known as “Ease of Paying Taxes Act”, on the Classification of Taxpayers.

Taxpayers shall be classified as micro, small, medium, and large taxpayers based on the gross sales for the taxable year, as follows:

1. Micro Taxpayer – shall refer to a taxpayer whose gross sales for a taxable year are less than PHP 3 million.
2. Small Taxpayer – shall refer to a taxpayer whose gross sales for a taxable year are PHP 3 million to less than PHP 20 million.
3. Medium Taxpayer – shall refer to a taxpayer whose gross sales for a taxable year are PHP 20 million to less than PHP 1 billion; and
4. Large Taxpayer – shall refer to a taxpayer whose gross sales for a taxable year are PHP 1 billion and above.

For purposes of the above classification, gross sales shall refer to total sales revenue, net of value-added tax (“VAT”), if applicable during the taxable year, without any deduction. Gross sales shall only cover business income excluding compensation income earned under employee-employer relationship, passive income under Sec. 24, 25, 27, 28, and 28, and income excluded under Sec. 32 (B) of the Tax Code.

Taxpayers who will register to engage in business or practice of profession upon the effectivity of RR No. 8-2024 shall initially be classified based on its declaration in the Registration Forms starting from the year they registered and shall remain unless reclassified and notified by the BIR.

For taxpayers registered in 2022 and prior years but without any submitted information on their gross sales for the taxable year 2022 and taxpayers registered in 2023 and in 2024 before the effectivity of this RR shall initially be classified as MICRO taxpayers except VAT-registered taxpayers, who shall be classified as SMALL taxpayers.