Another revenue regulation is published by the BIR to implement the changes or amendments made by EOPT and that is the Revenue Regulation No. 08 (RR 8-2024) – Implementing on Classification of Taxpayers.
If you have been really busy lately and still not aware, a new tax law was passed and implemented last January 2024 which is the Republic Act No. 11976 Ease of Paying Taxes Act (EOPT).
EOPT amended and made an addition to the already existing tax law. There are quiet a number of changes and amendments made by EOPT such as the following:
- Removal of the BIR Form 0605 – Annual Registration Fee (RMC 14-2024) effective January 22, 2024
- Implementing accrual method of accounting sales and use of invoice for all taxpayers engaged in business and self-employment (RR 3-2024, RR 7-2024, RR 11-2024)
- Amending manner of filing and paying taxes (RR 4-2024)
- Adding Output VAT Credit on Uncollected Receivable (RMC 65-2024)
- Amending and updating registration procedure and forms (RMC 27-2024)
- Implementing reduced penalties and interest for Micro and Small Taxpayers (RR 6-2024)
The highlight of RR 8-2024 is the introduction of classification of taxpayers.
Below is the summarized changes implemented by RR 8-2024:
Classification of Taxpayers according to RR 8-2024
The EOPT and RR 8-2024 introduces a new addition to the tax law which categorizes taxpayers according to their annual gross sales as follows:
a. Micro Taxpayer
To be classified as a micro taxpayer, you must have a gross sale for a taxable year of less than three million pesos (P3,000,000).
b. Small Taxpayer
To be classified as a small taxpayer, you must have a gross sale for a taxable year of three million pesos (P3,000,000) to less than twenty million pesos (P20,000,000)
c. Medium Taxpayer
To be classified as a medium taxpayer, you must have a gross sale for a taxable year of twenty million pesos (P20,000,000) to less than one billion pesos (P1,000,000,000)
d. Large Taxpayer
To be classified as a large taxpayer, you must have a gross sale for a taxable year of one billion pesos (P1,000,000,000) and above.
“Gross Sales” as defined by RR 8-2024
Under section 2 of RR 8-2024, the BIR clarified the definition of “Gross Sales”:
- It shall refer to total sales revenue net of value added tax (VAT) during the taxable year without any other deductions.
- It shall only cover business income which comes from conduct of trade or business or exercise of profession / self-employment.
- It shall exclude compensation income earned under employee-employer relationship and passive income.
Initial Classification of Taxpayers
After the effective date of RR 8-2024, which estimated to be last April 27, 2024, taxpayer who are newly registered to engage in business or practice of profession / self-employment will initially be classified based on its declaration in the Registration Forms starting from the year they registered, and it will remain the same unless reclassified. They will be reclassified based on the threshold stated in item no. 1.
Notification on the Classification / Reclassification of Taxpayers
The BIR will notify the existing taxpayers of their classification or reclassification. But the manner or procedure of notification is not stated in RR 8-2024. Another revenue issuance will be issued by the BIR regarding the manner and procedure of notification.
Based on Section 5 of RR 8-2024, taxpayers registered in 2022 and prior but didn’t submit any information about their gross sales for taxable year 2022, and taxpayers registered in 2023 and 2024 prior to the effective date of RR 8-2024, will be classified as “Micro Taxpayer” except for VAT registered taxpayers who will be classified as “Small Taxpayer”.
I hope this article has helped you learn and be updated on the new classifications of taxpayers. I hope by now you already know which classification of taxpayer you (or your company) belong.
If you have any questions or clarifications, you may leave a comment below. And if you liked the article and find it useful, please share the article!
