RMO No. 37-2024 — Policies, Guidelines and Procedures in Classifying Business Taxpayers pursuant to Revenue Regulations No. 8-2024

DC AUOeiNtEri REVENUE

T DIVISION

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE SEP 0 4 2I24 2

National Office Building BY: ADMIN UNIT TiME: 995P7

Quezon City

June 26, 2024

REVENUE MEMORANDUM ORDER NO. 0 3_7 - 2 0 2 4

SUBJECT : Policies, Guidelines and Procedures in Classifying Business Taxpayers

pursuant to Revenue Regulations No. 8-2024

TO : All Internal Revenue Officers and Others Concerned

I.OBJECTIVE:

For purposes of responsive tax administration, this Order is being issued

pursuant to Section 21(b) of the National Internal Revenue Code of 1997 (Tax Code). as amended, in relation to Section 47 of Republic Act (RA) No. 11976, otherwise known to prescribe the policies, guidelines and procedures in classifying business taxpayers,

as the Ease of Paying Taxes (EOPT) Act

HI.CRITERIA FOR CLASSIFYING TAXPAYERS

For purposes of this Order, only business taxpayers shall be classified as follows:

A. Micro Taxpayer -- shall refer to a taxpayer whose gross sales for a taxable year

is less than Three Million Pesos (3,000,000.00);

B. Small Taxpayer -- shall refer to a taxpayer whose gross sales for a taxable year is Three Million Pesos (3,000,000.00) to less than Twenty Million Pesos (20,000,000.00):

C. Medium Taxpayer -- shall refer to a taxpayer whose gross sales for a taxable year is Twenty Million Pesos (20,000,000.00) to less than One Billion Pesos (1,000,000,000.00); and

D. Large Taxpayer -- shall refer to a taxpayer whose gross sales for a taxable year is One Billion Pesos (1,000,000,000.00) and above.

HII.POLICIES AND GUIDELINES

A. Initial Classification

1. Taxpayers registered in 2022 and prior years shall be classified on the basis of their gross sales as declared in their Income Tax Returns (ITR) filed

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for taxable year 2022 in accordance with the threshold values as stated under Section II of this Order.

(VAT)-registered taxpayers, who shall be classified as SMALL. they shall initially be classified as MICRO, except Value-Added Tax For those taxpayers who have not filed their ITR for taxable year 2022,

The said initial classification shall remain effective until reclassified.

2. Taxpayers registered in 2023 and 2024 before the effectivity of Revenue

Regulations (RR) No. 8-2024, or before April 27, 2024, shall initially be classified as MICRO, except VAT-registered taxpayers, who shall be classi- fied as SMALL. The said initial classification shall remain effective until reclassified.

3. Taxpayers who shall register after the effectivity of RR No. 8-2024,

or after April 27, 2024, shall initially be classified based on their declaration in their Registration Forms (i.e., BIR Form No. 1901 or 1903) starting the year they registered and shall remain effective until reclassified.

4. 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.

5. For taxpayers with branches, the classification shall follow the classification

of the Head Office.

B. Reclassification

in Section HI of this Order, under the following circumstances: Taxpayers may be reclassified in accordance with the threshold values as stated

I.Taxpayer-Initiated

Taxpayers may request for reclassification through their Head Office:

a. From lower to higher classification - Taxpayers shall submit their

requests, together with supporting documents, if applicable, through any of the following:

i. Via BIR online facility - Online Registration and Update

System (ORUS); or

I Manually by submitting applicable registration update form to their home Revenue District Office (RDO).

These requests shall automatically be processed for approval. @BureaY gEinternalrevenue RFCORnS MANAEhFNTOviSON

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b. From higher to lower classification, except for SMALL to MICRO -

Taxpayers shall submit their requests, together with supporting documents, through any of the following:

1 Via BIR online facility -- ORUS; or

I Manually by submitting applicable registration update form to their home RDO.

their gross sales for taxable year 2022 as supporting document. their ITR or Income Statement or any other proof showing ninety (90) days after the effectivity of RR No. 8-2024 (i.e., from April 27, 2024 to July 26, 2024), taxpayers shall submit For reclassification of initial taxpayer classification within

taxpayers shall submit their ITR or Income Statement or any other after the effectivity of RR No. 8-2024 (i.e., after July 26, 2024), For reclassification of taxpayer classification beyond 90 days

proof showing their gross sales for the last two (2) years as supporting documents.

to MICRO, they shall follow the prescribed policy in Section III.B.1.a. For taxpayers requesting for reclassification from SMALI

2. BIR-Initiated

information available. BIR may initiate taxpayer reclassification, depending on any verified

a. National Office-Initiated

on the basis of taxpayers' gross sales from their latest filed ITRs can periodically initiate reclassification every two (2) years) unless as may be otherwise required by the Commissioner. The Deputy Commissioner (DCIR) of Operations Group (OG)

or VAT returns, if ITRs are not available.

b. Revenue Regions (RRs)/Large Taxpayers Service (LTS)-Initiated

I The RDOs/LT-Audit Divisions/LT Divisions (LTDs) Cebu

gross sales did not fall within the threshold amount it was sufficiently established that the concerned taxpayer's of the reclassification of specific taxpayer/s if upon verification of statement, declaration or any relevant information for its current taxpayer classification. and Davao may recommend to Regional Director/Assistant Commissioner (ACIR) of LTS for approval/disapproval

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ii. Regional taxpayer reclassification, as recommended by RDOs/LTS Director/ACIR-LTSshallapprove/disapprove

Divisions under their jurisdiction.

by taxpayer of the notification thereof, subject to the final outcome of RDOs/LTS Divisions as approved by the Regional Director/ ACIR-LTS, the new classification shall take effect upon receipt of any pending audit/assessment that may significantly affect the said If the taxpayer was reclassified, pursuant to the recommendation

classification.

Taxpayers who are reclassified pursuant to BIR-initiated reclassification

through audit or investigation. Request for reclassification should be filed cannot request for reclassification 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

before the Regional Director/ACIR-LTS whose decision thereon is final and unappealable.

IV. PROCEDURES

A: Classification of Taxpayers

1. Initial Classification

a. Data Warehousing and Systems Operations Division (DWSOD) shall:

I Extract the taxpayers' gross sales data for taxable year 2022

and classify taxpayers based on the criteria stated under Section I of this Order.

I. Generate the list of taxpayers who are registered in 2022 and prior years

of RR No. 8-2024, and classify them as MICRO, except VAT-registered taxpayers, who shall be classified as SMALL. but without filed ITR or no reported gross sales for taxable year 2022 and taxpayers registered in 2023 or 2024 before the effectivity

iii. Transmit the lists of taxpayers with their corresponding classification to the Administrative Systems Division (ASD) for tagging.

b. Administrative Systems Division (ASD) shall:

1 Receive the lists of taxpayers' classification from DWSOD

and tag the taxpayers accordingly in the Internal Revenue Integrated System (IRIS).

prescribed under Revenue Mem9Fandm Mircoular Nof2024. ORUS through https://orus.bir.gov.ph/home and follow the procedures To view/inquire on the taxpayer's classification, taxpayers shall access GASMANAEE Mt OSHON

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2. Reclassification

a. Taxpayer-Initiated

i. From lower to higher classification

i.1. Revenue District Offices (RDOs)/LT Assistance Division

(LTAD)/Excise LT Regulatory Division (ELTRD)/LTDs Cebu and Davao (Assistance Section/Client Support Section) shall:

i.1.1. Receive manual request for reclassification.

together with supporting documents, if applicable.

11.2. Process and approve the request for reclassification within the day.

i.1.3. Update the approved taxpayer classification in IRIS.

i.l.4. Notify taxpayer of reclassification approval via if the taxpayer applied for reclassification manually. registered mail, email, or any possible means,

approved and receive an automatic notification. to higher) online through ORUS shall be automatically Taxpayer who updates classification (from lower

ii. From higher to lower classification

ii.1. Revenue District Offices (RDOs)/LT Assistance Division (LTAD)/Excise LT Regulatory Division (ELTRD)/LTDs Cebu and Davao (Assistance Section/Client Support Section) shall:

ii.1.1. Receive manual or online through ORUS request for reclassification, together with supporting documents.

and notify the taxpayer regarding the seven (7) working days processing of the said request.

ii.1.2. Evaluate the request for reclassification.

ii.1.3. Recommend approval/disapproval of reclassification application to Regional Director/ACIR-LTS.

ii.1.4. Update taxpayer classification in IRIS, if reclassification request is approved.

ii.1.5. Notify taxpayer of reclassification approval/disapproval via registered mail, email, or any possible means.

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ii.2. RegionalDirector/Assistant Commissioner (ACIR)-Large Taxpayers Service shall:

ii.2.1. Approve/disapprove recommended reclassification

by the concerned RDOs/LTS Divisions.

b. BIR-Initiated

i. National Office-Initiated

i.1. Deputy Commissioner of Operations Group (DCIR-OG) shall:

i.1.1. Issue a memorandum to DCIR of Information Systems Group (ISG), copy furnished DWSOD, instructing the extraction of data for taxpayer reclassification.

i.1.2. Receive the extracted data with corresponding reclassifi.

the same data/information to Regional Director/ACIR. LTS, through Client Support Service (CSS) cation of taxpayers from DWSOD and disseminate for validation.

i.2. Data Warehousing and Systems Operations Division (DWSOD) shall:

i.2.1. Extract data and prepare the lists of taxpayers with corresponding reclassification, in consultation with CSS, and forward the same to DCIR-OG.

i.3.Client Support Service (CSS) shall:

i.3.1. Receive the lists of reclassified taxpayers from DCIRj OG and transmit the same to the concerned RRs/LTS for validation.

i.3.2. Receive the validated lists of reclassified taxpayers and DCIR-ISG, for tagging. and forward the same to ASD, copy furnished DCIR-OG

i.3.3. Issue an advisory to inform taxpayers regarding reclassification.

i.4.Revenue Regions (RRs)/Large Taxpayers Service (LTS) shall:

i.4.1. Receive the lists of taxpayers with corresponding reclassification from CsS.

i.4.2. Validate the said lists and send back to CSS

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i.5. Administrative Systems Division (ASD) shall:

i.5.1. Receive the lists of reclassified taxpayers from CSs and tag them accordingly in IRIS.

ii. Revenue Regions (RRs)/ Large Taxpayers Service (LTS)-Initiated

ii.l. The LT-Audit Divisions and Revenue District Offices (RDOs)/LTDs Cebu and Davao (Assessment Section) shall:

ii.1.1. Recommend the reclassification of specific taxpayer/s. on the basis of the findings from audit investigation. to the Regional Director/ACIR-LTS.

ii.2. Regional Director/Assistant Commissioner (ACIR)-Large Taxpayers Service shall:

ii.2.1. Approve/disapprove reclassification recommendation byLT-AuditDivisionsandRDOs/LTDsCebu

and Davao (Assessment Section).

ii.2.2. Forward the details of approved taxpayer reclassification for tagging/updating in IRIS. to RDOs/LTAD/ELTRD/LTDs Cebu and Davao Assistance Section/Client Support Section)

ii.3. Revenue District Offices (RDOs)/LT Assistance Division (LTAD)/Excise LT Regulatory Division (ELTRD)/LTDs Cebu and Davao (Assistance Section/Client Support Section) shall:

ii.3.1. Tag/update taxpayer reclassification in IRIS.

ii.3.2. Notify the taxpayer/s manually of their classification

via registered mail, email, or any possible means.

V. REPEALING CLAUSE

herewith. This Order supersedes all revenue issuances or portions thereof inconsistent

VI. EFFECTIVITY

This Order shall take effect immediately.

I8E0U Js- AIEJAIYS FMENT NVSION RNA! REVEN GUI JR

T a issioner of Internal Revenue

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