REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE
National Office Building
Quezon City
January 25, 2024
REVENUE MEMORANDUM ORDER NO. _____
SUBJECT : POLICIES, GUIDELINES AND PROCEDURES IN CLASSIFYING TAXPAYER
PURSUANT TO REVENUE REGULATIONS NO. _________
TO : ALL INTERNAL REVENUE OFFICERS AND OTHERS CONCERNED
I. OBJECTIVES
For purposes of responsive tax administration, this Order is being issued to prescribe
the policies, guidelines and procedures in classifying taxpayers, pursuant to Section 21(b) 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 (EOPT) Act.
II. CRITERIA FOR CLASSIFYING TAXPAYERS
Taxpayer shall be classified as follows:
A. Micro Taxpayer – shall refer to a taxable person whose gross sales for a taxable
year is less than Three Million Pesos (₱ 3,000,000.00).
B. Small Taxpayer – shall refer to a taxable person 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 taxable person 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).
D. Large Taxpayer - shall refer to a taxable person whose gross sales for a taxable
year is One Billion Pesos (₱ 1,000,000,000.00) and above.
III. POLICIES AND GUIDELINES
A. Initial Classification
1. Taxpayers registered in calendar year 2022 and prior years shall be classified on
the basis of their gross sales for the taxable year 2022 in accordance with the
threshold values as stated under Section II of this Order. This shall remain
effective unless reclassified.
Gross sales shall be determined on the basis of the income tax return filed by
the taxpayer for taxable year 2022. For those taxpayers who have not filed
income tax return for taxable year 2022, they shall be initially classified as
small. Policy direction for taxpayers registered but without ITR filing.
2. Taxpayers registered in calendar year 2022 whose taxable period is less than
12 months and taxpayers registered in calendar years 2023 and 2024 before the
effectivity of Revenue Regulations (RR) No. ___________ shall update their
registration information through a BIR online facility by indicating therein their
classification. 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. The said initial
classification shall remain effective unless reclassified.
3. Taxpayers newly registered after the implementation of EOPT law shall initially
be classified based on its declaration in the Registration Forms starting the year
they registered unless reclassified
B. Reclassification
Taxpayers may be reclassified in accordance with the threshold values as stated
under Section II of this Order, under the following circumstances:
1. Upon request for reclassification by a taxpayer who has proven that it failed
to reach the threshold values set for the current classification for the last
two (2) years. Reclassification shall take effect on the next taxable year from
the approval of the request; and
2. After verification of any return, statement, declaration or any relevant
information, it was sufficiently established that the concerned taxpayer
exceeded the threshold amount on the current taxpayer classification.
IV. PROCEDURES
A. Classification of Taxpayers
1. Initial Classification
a. Systems Development Division (SDD) shall prepare the BIR online facility
to facilitate the taxpayers’ declaration of their classification.
b. Data Warehousing and Systems Operations Division (DWSOD) shall:
i. Extract/generate the necessary taxpayer data and classify taxpayers
based on the policies and guidelines in Section III.A of this Order.
ii. Prepare lists of taxpayers with classification based on home Revenue
District Offices (RDO) and forward these to the respective RDOs and
divisions under the Large Taxpayers Service (LTDs), i.e., RLTAD1,
RLTAD2, RLTAD3, ELTAD1, ELTAD2, LTD-Cebu
and LTD-Davao, through the Revenue Data Centers (RDCs)/National
Office Data Center (NODC) for validation.
iii. Update the list of taxpayers with classification considering the
comments/feedback of RDOs and divisions under Large Taxpayers
Service (LTS) and transmit to Administrative Systems Division
(ASD).
iv. Forward the validated list of taxpayers classified as LARGE to the
Assistant Commissioner – LTS.
c. ASD shall receive the updated list of taxpayers’ classification from
DWSOD and tag the taxpayers accordingly in the system.
d. RDOs and divisions under the LTS shall:
i. Review/Validate the initial lists of taxpayers with classification
generated by DWSOD.
ii. Inform RDCs/NODC of the validated list of taxpayers’ classification.
e. RDCs/NODC shall:
i. Distribute the generated initial lists of taxpayers with classification to
RDOs and divisions under the LTS.
ii. Receive the validated lists of taxpayers’ classification from RDOs
and divisions under the LTS and submit to DWSOD for updating.
f. Assistant Commissioner - LTS through Large Taxpayers – Performance
Monitoring and Programs Division (LTPMPD) shall:
i. Receive the list of taxpayers classified as LARGE from DWSOD for
enlisting.
ii. Receive the list of taxpayers reclassified as either MICRO, SMALL
or MEDIUM from LTDs for delisting. (Office having jurisdiction
shall be covered by separate issuance?)
2. Reclassification
This covers the reclassification requested by the taxpayers, as validated by
RDOs and divisions under the LTS and reclassification based on the results of
audit, investigation, or examination of any return, statement, or declaration.
a. For taxpayer-requested reclassification, RDOs and divisions under the
LTS shall:
i. Receive application together with supporting documents for
taxpayer reclassification.
ii. Assess the received reclassification application.
iii. Approve/Disapprove reclassification application online, or request
to update approved taxpayer reclassification to ASD through the
concerned RDCs/NODC.
b. For recommended reclassification,
i. Concerned Offices shall recommend for taxpayer reclassification
based on verified return, statement, declaration or any relevant
information.
ii. RDOs/LTDs shall approve/disapprove reclassification application
online, or request to update approved taxpayer reclassification to
ASD through the concerned RDCs/NODC.
The Bureau may reclassify taxpayers as may be deemed necessary,
following the procedures outlined in Section IV.A.1. of this Order based on
the latest available data.
B. Notification of Taxpayer Classification/Reclassification
The taxpayer shall be duly notified of their classification or
reclassification as may be applicable, by the concerned BIR office having
jurisdiction over the taxpayer.
RDOs/Concerned division under LTS shall:
1. Notify the taxpayers of their classification/reclassification based
on the existing data; or
2. In case of taxpayer declaration of their own classification or request
for reclassification, notify the taxpayer of the receipt of their
declaration/request, and after validation, send confirmation or
denial notice to the concerned taxpayer.
V. REPEALING CLAUSE
This Order supersedes all revenue issuances or portions thereof inconsistent herewith.
VI. EFFECTIVITY
This Order shall take effect immediately.
ROMEO D. LUMAGUI JR.
Commissioner of Internal Revenue
B-3
