4A. Draft RR On Classification of Taxpayers (02072024)

For deliberations (02082024)
REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE
National Office Building
Quezon City
REVENUE REGULATIONS NO. _____________
SUBJECT : Implementing Section 21 (b) of the National Internal Revenue Code

of 1997, as Amended by Republic Act No. 11976, otherwise known
as the Ease of Paying Taxes Act, in Relation to Classification
of Taxpayers
TO : All Internal Revenue Officers and Others Concerned
SECTION 1. SCOPE – Pursuant to the provisions of Sections 244 and 245 of the National
Internal Revenue Code of 1997, as amended (Tax Code) in relation to Section 47 of Republic
Act (RA) No. 11976 otherwise known as the Ease of Paying Taxes Act, these Regulations are
hereby promulgated to implement Section 21 (b) of the Tax Code on classification of taxpayers.
SECTION 2. COVERAGE AND CLASSIFICATION OF TAXPAYERS – Taxpayers shall

be classified, and be covered by these regulations, as follows:
A. Micro Taxpayer – shall refer to a taxable person whose gross sales for a taxable
year is less than Three Million Pesos (P 3,000,000.00).
B. Small Taxpayer – shall refer to a taxable person whose gross sales for a taxable
year is Three Million Pesos (P 3,000,000.00) to less than Twenty Million Pesos (P
20,000,000.00).
C. Medium Taxpayer - shall refer to a taxable person whose gross sales for a taxable
year is Twenty Million Pesos (P 20,000,000.00) to less than One Billion Pesos (P
1,000,000,000.00).
D. Large Taxpayer - shall refer to a taxable person whose gross sales for a taxable
year is One Billion Pesos (P 1,000,000,000.00) and above.
For purposes of classification of taxpayers under these regulations, gross sales shall
refer to total sales revenue, net of vat, if applicable, during the taxable year, without any other
deductions.
Gross sales shall refer to business income, excluding compensation income earned
under employer-employee relationship, passive income under Sections 24, 25, 27 and 28, and
income excluded under Section 32(B), all of the Tax Code.
Business income shall refer to income from the conduct of trade or business or the
exercise of a profession.
As of January 24, 2024
SECTION 3. INITIAL CLASSIFICATION OF TAXPAYERS. - Taxpayers who will

register to engage in business or practice of profession upon the effectivity of these Regulations
shall initially be classified based on its declaration in the Registration Forms starting from the
year they registered, and shall remain as such unless reclassified.
The concerned taxpayer shall be re-classified in accordance with the threshold values
as stated under Section 2 of these Regulations.
SECTION 4. NOTIFICATION ON THE CLASSIFICATION/RE-CLASSIFICATION.

– The taxpayer shall be duly notified of their classification or re-classification as may be
applicable by the concerned BIR Office having jurisdiction over the taxpayer in a manner or
procedure to be prescribed in a revenue issuance to be issued separately.
SECTION 5. TRANSITORY PROVISIONS.
Taxpayers registered in calendar year 2022 and prior years, shall be classified on the
basis of their gross sales for the taxable year 2022.
Taxpayers registered in 2022 whose taxable period is less than 12 months and taxpayers
registered in calendar years 2023 and 2024 shall update their registration on or before June 30,
2024 and be classified based on their declaration. For those taxpayers who failed to update
their registration, they shall initially be classified as small except taxpayers registered with
percentage tax (Non-VAT) only who shall be classified as micro.
SECTION 6. SEPARABILITY CLAUSE – If any provision of these Regulations is declared

invalid by a competent court, the remainder of these Regulations or any provision not affected
by such declaration of invalidity shall remain in force and effect.
SECTION 7. REPEALING CLAUSE – The provisions of any regulations, rulings or orders,

or portions thereof which are inconsistent with the provisions of these Regulations are hereby
revoked, repealed or amended accordingly.
SECTION 8. EFFECTIVITY – These regulations shall take effect fifteen (15) days following
its publication in the Official Gazette or in a newspaper of general circulation, whichever comes
first.
RALPH G. RECTO
Secretary of Finance
Recommending Approval:
ROMEO D. LUMAGUI, JR.

Commissioner of Internal Revenue
K1
As of January 24, 2024
TA- DCIR- ACIR- Chief- Action

OCIR LG LS LLD Officer

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For deliberations (02082024)

REPUBLIC OF THE PHILIPPINES

REVENUE REGULATIONS NO. _____________

SUBJECT : Implementing Section 21 (b) of the National Internal Revenue Code

TO : All Internal Revenue Officers and Others Concerned

SECTION 2. COVERAGE AND CLASSIFICATION OF TAXPAYERS – Taxpayers shall

SECTION 3. INITIAL CLASSIFICATION OF TAXPAYERS. - Taxpayers who will

SECTION 4. NOTIFICATION ON THE CLASSIFICATION/RE-CLASSIFICATION.

SECTION 5. TRANSITORY PROVISIONS.

SECTION 6. SEPARABILITY CLAUSE – If any provision of these Regulations is declared

SECTION 7. REPEALING CLAUSE – The provisions of any regulations, rulings or orders,

ROMEO D. LUMAGUI, JR.

TA- DCIR- ACIR- Chief- Action

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