REVENUE MEMORANDUM ORDER NO. 37-2024 issued on September 4, 2024 prescribes the policies, guidelines and procedures in classifying business taxpayers pursuant to Revenue Regulations No. 8-2024.

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.

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 for taxable year 2022 in accordance with the threshold values stated above. For those taxpayers who have not filed their ITR for taxable year 2022, they shall initially be classified as MICRO, except Value-Added Tax (VAT)-registered taxpayers, who shall be classified as SMALL. The said initial classification shall remain effective until reclassified.

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 classified as SMALL. The said initial classification shall remain effective until reclassified.

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.

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 while taxpayers with branches, the classification shall follow the classification of the Head Office.

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

A. 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, through any of the following:

i. Via BIR online facility – Online Registration and Update System (ORUS); or

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

These requests shall automatically be processed for approval.

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:

i. Via BIR online facility – ORUS; or

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

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

For reclassification of taxpayer classification beyond 90 days after the effectivity of RR No. 8-2024 (i.e., after July 26, 2024), taxpayers shall submit their ITR or Income Statement or any other proof showing their gross sales for the last two (2) years as supporting documents.

For taxpayers requesting reclassification from SMALL to MICRO, they shall follow the prescribed policy in Section Ill.B.1.a of the Order.

B. BIR-Initiated

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

a. National Office – Initiated

The Deputy Commissioner (DCIR) of Operations Group (OG) can periodically initiate reclassification every two (2) years, unless as may be otherwise required by the Commissioner, on the basis of taxpayers’ gross sales from their latest filed ITRs 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 and Davao may recommend to Regional Director/Assistant Commissioner (ACIR) of LTS for approval/disapproval of the reclassification of specific taxpayer/s if upon verification of statement, declaration or any relevant information, it was sufficiently established that the concerned taxpayer’s gross sales did not fall within the threshold amount for its current taxpayer classification.

ii. Regional Director/ACIR-LTS shall approve/disapprove taxpayer reclassification, as recommended by RDOs/LTS Divisions under their jurisdiction.

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

Taxpayers who are reclassified pursuant to BIR-initiated reclassification 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 through audit or investigation. Request for reclassification should be filed before the Regional Director/ACIRLTS whose decision thereon is final and unappealable.