IGD & Associates April 29, 2024BIR has issued the following Revenue Regulations (RR) to implement Sections 45 and 47 of Republic Act No. 11976 (Ease of Paying Taxes Act) last April 11, 2024, which will be effective 15 days after:
CLASSIFICATION OF TAXPAYERS
| MICRO Less than P3M in gross sales | SMALL P3M to less than P20M in gross sales |
| MEDIUM P20M to less than P1B in gross sales | LARGE P1B and above in gross sales |
For purposes of the above classification, Gross Sales, as detailed below, shall refer to total sales revenue, net of VAT, without any other deduction:
| INCLUSION | EXCLUSION |
| Business income (from the conduct of trade or business; or exercise of profession | Compensation income Passive income Income excluded under Section 32(B) |
The basis of initial classification of taxpayers is as follows:
| REGISTRATION DATE | BASIS OF INITIAL CLASSIFICATION |
| 2022 and prior years | 2022 gross sales |
| 2023 and 2024 (before April 27) | To be initially classified as MICRO, except for VAT-registered Taxpayers who shall be classified as SMALL |
| April 27, 2024 onwards | Gross sales on the sales declaration in their registration |
* Taxpayers shall be duly notified of their classification/reclassification by the BIR, which procedure shall be documented on a separate revenue issuance.
REDUCED PENALTIES
The below reduced penalties shall be for MICRO and SMALL Taxpayers only:
| Taxpayer | Penalty | Old Rules | Eopt Act |
| Micro Small | Surcharge | 25% | 10% |
| Interest | 12% | 6% | |
| Late filing of certain information returns | P1,000.00 | P500.00 | |
| Compromise penalties (Sections 113, 237, 238 of Tax Code) | Specific amounts | 50% reduction |
However, 50% surcharge shall be charged to a taxpayer in case of willful neglect to file a return or false/fraudulent filing of a return. Provided, that a substantial under-declaration of taxable sales or income, or a substantial overstatement of deductions, as determined by the Commissioner of Internal Revenue pursuant to the rules and regulations promulgated by the Secretary of Finance, shall constitute prima facie evidence of a false or fraudulent return.
SUBSTANTIAL UNDER-DECLARATION OF SALES & OVERSTATEMENT OF DEDUCTIONS shall mean:
- Failure to report sales or income in an amount exceeding 30% of the declared per return; or
- Claim of deductions in an amount exceeding 30% of actual deductions
