Tax Alert No. 20 [Revenue Regulation (RR) No. 8-2024 dated 22 March 2024]

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", on the Classification of Taxpayers

Please be informed that RR No. 8-2024 was issued to implement Section 21(b) of the Tax Code, as amended, on the classification of taxpayers.

Coverage and Classification of Taxpayers

Gross sales shall refer to total sales revenue, net of VAT, if applicable, during the taxable year, without any other deductions. Gross sales shall only cover business income, excluding compensation income earned under employer-employee relationship, passive income, and income excluded from gross income. Business income shall include income from the conduct of trade or business or the exercise of a profession.

Initial Classification of Taxpayers
Taxpayers who will register to engage in business or practice of profession upon the effectivity of the said Regulation 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 reclassified in accordance with the threshold values above.

Notification on the Classification/Reclassification
Taxpayers shall be duly notified by the BIR of their classification or reclassification in a manner or procedure to be prescribed in a separate revenue issuance.

You may access the full version of this Circular through the BIR website.

For any inquiry or request for assistance, please feel free to contact anyone from our Tax Services group. You may also reach us through this link.