Tax Alert No. 41 [Revenue Memorandum Order (RMO) No. 37-2024 dated 26 June 2024]

20 Sep 2024

Policies, Guidelines and Procedures in Classifying Business Taxpayers pursuant to Revenue Regulations No. 8-2024

Please be informed that the BIR issued Revenue Memorandum Order (“RMO”) No. 37-2024 on 4 September 2024 to provide the policies, guidelines and procedures in classifying business taxpayers pursuant to Revenue Regulations (“RR”) No. 8-2024.

Criteria for classifying taxpayers

Type of taxpayer	Gross sales
Micro taxpayer	Less than PHP3,000,000
Small taxpayer	PHP3,000,000 to less than PHP20,000,000
Medium taxpayer	PHP20,000,000 to less than PHP1,000,000,000
Large taxpayer	PHP1,000,000,000 and above

Policies and guidelines

Initial Classification
- Taxpayers registered on or before 2022 shall be classified based on the gross sales declared in the taxable year ending 2022 annual income tax return (“ITR”) in accordance with the criteria mentioned above. A taxpayer who did not file the annual ITR for the taxable year ending 2022 shall initially be classified as Micro Taxpayer. If value-added tax (“VAT”)-registered, it shall initially be classified as Small Taxpayer.
- Taxpayers registered in 2023 and 2024 prior to the effectivity of the RR No. 8-2024 or before 27 April 2024 shall initially be classified as Micro Taxpayer. If VAT-registered, it shall initially be classified as Small Taxpayer.
- Taxpayers who shall register after the effectivity of RR No. 8-2024 or after 27 April 2024 shall initially be classified based on their declaration in the BIR Form No. 1901 or 1903.
  - Note: These initial classifications shall remain in effect until reclassified.
- For mixed-income earners, only business income as defined under Section 2 of RR No. 8-2024 shall be considered for purposes of classifying taxpayers.
- For taxpayers with branches, the classification shall follow the classification of the Head Office.
Reclassification
Taxpayers may be reclassified in accordance with the criteria mentioned above, under the following circumstance:
1. Taxpayers may initiate to reclassify through their Head Office and shall submit their request either through the BIR online facility - Online Registration and Update System (“ORUS”); or manual submission of the applicable registration update form to their home Revenue District Office (“RDO”).
2. The BIR may initiate taxpayer reclassification, depending on any verified information available. The new classification shall take effect upon receipt by the taxpayer of the notification thereof, subject to the final outcome of any ongoing audit/assessment.
  
  Taxpayers who are reclassified pursuant to BIR-initiated reclassification cannot request for an amendment during the same taxable year, unless it is founded on meritorious reasons duly verified based on the statement, declaration or any relevant information, including those obtained through audit or investigation.