RR No. 8-2024: Implements Section 21(b) of the Tax Code of 1997, as amended by RA No. 11976 (Ease of Paying Taxes Act), on the classification of taxpayers

Summary

RR No. 8-2024 implements Section 21(b) of the Tax Code as amended by RA No. 11976 and classifies taxpayers as Micro, Small, Medium or Large by gross sales for a taxable year.

Key points

1. Classification thresholds. Micro: gross sales below Three Million Pesos (₱3,000,000.00). Small: ₱3,000,000.00 to below Twenty Million Pesos (₱20,000,000.00). Medium: ₱20,000,000.00 to below One Billion Pesos (₱1,000,000,000.00). Large: ₱1,000,000,000.00 and above.
2. What counts as gross sales. Gross sales means total sales revenue, net of VAT if applicable, with no other deductions. It covers business income only, and excludes compensation income, passive income under Sections 24, 25, 27 and 28, and income excluded under Section 32(B).
3. New registrants. Taxpayers who register to engage in business or profession upon effectivity are first classified by their declaration in the Registration Forms, starting from the year they registered, until reclassified.
4. Existing taxpayers. Taxpayers registered in 2022 and earlier are classified by taxable year 2022 gross sales. Those registered in 2022 or earlier with no submitted 2022 gross sales, and those registered in 2023 or in 2024 before effectivity, are first classified as MICRO, except VAT-registered taxpayers, who are classified as SMALL.
5. Reclassification and notice. Taxpayers are reclassified by the thresholds and notified of their classification or reclassification under a procedure to be set in a separate revenue issuance.

Who is affected

• All taxpayers engaged in business or practice of profession

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.