Can WhatsApp upgrade the tier during the flagged status.?

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If a business has a Flagged status, it cannot upgrade tiers. After a business is Flagged, it must return to the Connected status and then restart the process to upgrade to the next tier.

If your business has a "Flagged" status and the quality rating doesn't improve, you will be placed in a lower messaging limit tier. See more information about the "Flagged" status trough the below given link.