diff --git a/src/libs/actions/Policy/Tag.ts b/src/libs/actions/Policy/Tag.ts
index e332f3b472c7..22e42f90d244 100644
--- a/src/libs/actions/Policy/Tag.ts
+++ b/src/libs/actions/Policy/Tag.ts
@@ -737,7 +737,6 @@ function renamePolicyTagList(policyID: string, policyTagListName: {oldName: stri
 
 function setPolicyRequiresTag(policyID: string, requiresTag: boolean) {
     const policyTags = allPolicyTags?.[`${ONYXKEYS.COLLECTION.POLICY_TAGS}${policyID}`] ?? {};
-    const isMultiLevelTags = PolicyUtils.isMultiLevelTags(policyTags);
 
     const onyxData: OnyxData = {
         optimisticData: [
@@ -782,25 +781,23 @@ function setPolicyRequiresTag(policyID: string, requiresTag: boolean) {
         ],
     };
 
-    if (isMultiLevelTags) {
-        const getUpdatedTagsData = (required: boolean): OnyxUpdate => ({
-            key: `${ONYXKEYS.COLLECTION.POLICY_TAGS}${policyID}`,
-            onyxMethod: Onyx.METHOD.MERGE,
-            value: {
-                ...Object.keys(policyTags).reduce<PolicyTagLists>((acc, key) => {
-                    acc[key] = {
-                        ...acc[key],
-                        required,
-                    };
-                    return acc;
-                }, {}),
-            },
-        });
+    const getUpdatedTagsData = (required: boolean): OnyxUpdate => ({
+        key: `${ONYXKEYS.COLLECTION.POLICY_TAGS}${policyID}`,
+        onyxMethod: Onyx.METHOD.MERGE,
+        value: {
+            ...Object.keys(policyTags).reduce<PolicyTagLists>((acc, key) => {
+                acc[key] = {
+                    ...acc[key],
+                    required,
+                };
+                return acc;
+            }, {}),
+        },
+    });
 
-        onyxData.optimisticData?.push(getUpdatedTagsData(requiresTag));
-        onyxData.failureData?.push(getUpdatedTagsData(!requiresTag));
-        onyxData.successData?.push(getUpdatedTagsData(requiresTag));
-    }
+    onyxData.optimisticData?.push(getUpdatedTagsData(requiresTag));
+    onyxData.failureData?.push(getUpdatedTagsData(!requiresTag));
+    onyxData.successData?.push(getUpdatedTagsData(requiresTag));
 
     const parameters = {
         policyID,
diff --git a/tests/actions/PolicyTagTest.ts b/tests/actions/PolicyTagTest.ts
index 7c01a05df5ac..f590f3be27b8 100644
--- a/tests/actions/PolicyTagTest.ts
+++ b/tests/actions/PolicyTagTest.ts
@@ -1,9 +1,9 @@
 import Onyx from 'react-native-onyx';
 import OnyxUpdateManager from '@libs/actions/OnyxUpdateManager';
-import * as Tag from '@userActions/Policy/Tag';
+import {createPolicyTag, deletePolicyTags, renamePolicyTag, renamePolicyTagList, setPolicyRequiresTag, setWorkspaceTagEnabled} from '@libs/actions/Policy/Tag';
 import CONST from '@src/CONST';
 import ONYXKEYS from '@src/ONYXKEYS';
-import type {PolicyTags} from '@src/types/onyx';
+import type {PolicyTagLists, PolicyTags} from '@src/types/onyx';
 import createRandomPolicy from '../utils/collections/policies';
 import createRandomPolicyTags from '../utils/collections/policyTags';
 import * as TestHelper from '../utils/TestHelper';
@@ -34,7 +34,7 @@ describe('actions/Policy', () => {
 
             return Onyx.set(`${ONYXKEYS.COLLECTION.POLICY}${fakePolicy.id}`, fakePolicy)
                 .then(() => {
-                    Tag.setPolicyRequiresTag(fakePolicy.id, true);
+                    setPolicyRequiresTag(fakePolicy.id, true);
                     return waitForBatchedUpdates();
                 })
                 .then(
@@ -81,7 +81,7 @@ describe('actions/Policy', () => {
 
             return Onyx.set(`${ONYXKEYS.COLLECTION.POLICY}${fakePolicy.id}`, fakePolicy)
                 .then(() => {
-                    Tag.setPolicyRequiresTag(fakePolicy.id, false);
+                    setPolicyRequiresTag(fakePolicy.id, false);
                     return waitForBatchedUpdates();
                 })
                 .then(
@@ -129,7 +129,7 @@ describe('actions/Policy', () => {
             return Onyx.set(`${ONYXKEYS.COLLECTION.POLICY}${fakePolicy.id}`, fakePolicy)
                 .then(() => {
                     mockFetch?.fail?.();
-                    Tag.setPolicyRequiresTag(fakePolicy.id, false);
+                    setPolicyRequiresTag(fakePolicy.id, false);
                     return waitForBatchedUpdates();
                 })
 
@@ -152,6 +152,28 @@ describe('actions/Policy', () => {
                         }),
                 );
         });
+
+        it('should update required field in policy tag list', async () => {
+            const fakePolicy = createRandomPolicy(0);
+            const tagListName = 'Tag';
+            fakePolicy.requiresTag = false;
+
+            const fakePolicyTags = createRandomPolicyTags(tagListName);
+            await Onyx.set(`${ONYXKEYS.COLLECTION.POLICY}${fakePolicy.id}`, fakePolicy);
+            await Onyx.set(`${ONYXKEYS.COLLECTION.POLICY_TAGS}${fakePolicy.id}`, fakePolicyTags);
+
+            setPolicyRequiresTag(fakePolicy.id, true);
+            await waitForBatchedUpdates();
+
+            let updatePolicyTags: PolicyTagLists | undefined;
+
+            await TestHelper.getOnyxData({
+                key: `${ONYXKEYS.COLLECTION.POLICY_TAGS}${fakePolicy.id}`,
+                callback: (val) => (updatePolicyTags = val),
+            });
+
+            expect(updatePolicyTags?.[tagListName]?.required).toBeTruthy();
+        });
     });
 
     describe('renamePolicyTagList', () => {
@@ -170,7 +192,7 @@ describe('actions/Policy', () => {
                     Onyx.set(`${ONYXKEYS.COLLECTION.POLICY_TAGS}${fakePolicy.id}`, fakePolicyTags);
                 })
                 .then(() => {
-                    Tag.renamePolicyTagList(
+                    renamePolicyTagList(
                         fakePolicy.id,
                         {
                             oldName: oldTagListName,
@@ -238,7 +260,7 @@ describe('actions/Policy', () => {
                 .then(() => {
                     mockFetch?.fail?.();
 
-                    Tag.renamePolicyTagList(
+                    renamePolicyTagList(
                         fakePolicy.id,
                         {
                             oldName: oldTagListName,
@@ -288,7 +310,7 @@ describe('actions/Policy', () => {
                     Onyx.set(`${ONYXKEYS.COLLECTION.POLICY_TAGS}${fakePolicy.id}`, fakePolicyTags);
                 })
                 .then(() => {
-                    Tag.createPolicyTag(fakePolicy.id, newTagName);
+                    createPolicyTag(fakePolicy.id, newTagName);
                     return waitForBatchedUpdates();
                 })
                 .then(
@@ -350,7 +372,7 @@ describe('actions/Policy', () => {
                 .then(() => {
                     mockFetch?.fail?.();
 
-                    Tag.createPolicyTag(fakePolicy.id, newTagName);
+                    createPolicyTag(fakePolicy.id, newTagName);
                     return waitForBatchedUpdates();
                 })
                 .then(mockFetch?.resume)
@@ -397,7 +419,7 @@ describe('actions/Policy', () => {
                     Onyx.set(`${ONYXKEYS.COLLECTION.POLICY_TAGS}${fakePolicy.id}`, fakePolicyTags);
                 })
                 .then(() => {
-                    Tag.setWorkspaceTagEnabled(fakePolicy.id, tagsToUpdate, 0);
+                    setWorkspaceTagEnabled(fakePolicy.id, tagsToUpdate, 0);
                     return waitForBatchedUpdates();
                 })
                 .then(
@@ -470,7 +492,7 @@ describe('actions/Policy', () => {
                 .then(() => {
                     mockFetch?.fail?.();
 
-                    Tag.setWorkspaceTagEnabled(fakePolicy.id, tagsToUpdate, 0);
+                    setWorkspaceTagEnabled(fakePolicy.id, tagsToUpdate, 0);
                     return waitForBatchedUpdates();
                 })
                 .then(mockFetch?.resume)
@@ -516,7 +538,7 @@ describe('actions/Policy', () => {
                     Onyx.set(`${ONYXKEYS.COLLECTION.POLICY_TAGS}${fakePolicy.id}`, fakePolicyTags);
                 })
                 .then(() => {
-                    Tag.renamePolicyTag(
+                    renamePolicyTag(
                         fakePolicy.id,
                         {
                             oldName: oldTagName ?? '',
@@ -586,7 +608,7 @@ describe('actions/Policy', () => {
                 .then(() => {
                     mockFetch?.fail?.();
 
-                    Tag.renamePolicyTag(
+                    renamePolicyTag(
                         fakePolicy.id,
                         {
                             oldName: oldTagName,
@@ -635,7 +657,7 @@ describe('actions/Policy', () => {
                     Onyx.set(`${ONYXKEYS.COLLECTION.POLICY_TAGS}${fakePolicy.id}`, fakePolicyTags);
                 })
                 .then(() => {
-                    Tag.deletePolicyTags(fakePolicy.id, tagsToDelete);
+                    deletePolicyTags(fakePolicy.id, tagsToDelete);
                     return waitForBatchedUpdates();
                 })
                 .then(
@@ -695,7 +717,7 @@ describe('actions/Policy', () => {
                 .then(() => {
                     mockFetch?.fail?.();
 
-                    Tag.deletePolicyTags(fakePolicy.id, tagsToDelete);
+                    deletePolicyTags(fakePolicy.id, tagsToDelete);
                     return waitForBatchedUpdates();
                 })
                 .then(mockFetch?.resume)