BIR Form 2307 and Expanded Withholding Tax: The Current Rate Table

TL;DR: BIR Form 2307 is the certificate a payor gives a payee proving that expanded withholding tax was deducted from a payment and will be remitted to the BIR on the payee’s behalf. Current rates under Revenue Regulations No. 11-2018, as amended by RR No. 31-2020, run from 1% to 15% depending on the payment category, and a payor must issue the certificate by the 20th day after the close of the quarter, or immediately if the payee asks for it sooner.

What Form 2307 actually proves

BIR Form 2307, the Certificate of Creditable Tax Withheld at Source, is a receipt with legal weight. When your Philippine company pays a local supplier, a contractor, or a professional for services, the law often requires you to deduct a percentage of that payment before it reaches them and hand that percentage to the Bureau of Internal Revenue. Form 2307 is the document you give the payee to prove you did it.

The tax deducted is creditable, not final. The payee does not lose that money. They use the 2307 to reduce the income tax they owe when they file their own quarterly and annual income tax return. If a consultant invoices your company 100,000 pesos and you withhold 5,000 pesos of expanded withholding tax (EWT), the consultant still earned the full 100,000 pesos for tax purposes. They received 95,000 pesos in cash and a 2307 worth 5,000 pesos in prepaid tax credit. Lose the certificate and that credit becomes very hard to prove.

For a foreign-owned company, this cuts both ways. You issue 2307s to every local supplier, contractor, and professional you pay above the withholding thresholds, which makes you a withholding agent for the BIR whether you asked for the job or not. You also receive 2307s from any Philippine client or government office that withholds tax on payments to you, and those certificates reduce your own company’s income tax due. Our broader explainer on how withholding tax works in the Philippines covers all three withholding regimes; this article stays narrowly on the form and the rate table that sits behind it.

When a payor must issue Form 2307

The certificate follows a fixed clock, not the payor’s convenience. Under Section 2.57.2 of the BIR’s withholding regulations, a payor issues Form 2307 to each payee on or before the 20th day of the month following the close of the taxable quarter in which the income was earned. For a payment made anytime in the first calendar quarter (January to March), the certificate is due by April 20. For the second quarter, by July 20, and so on.

There are two exceptions worth knowing:

1. Upon request. If the payee asks for the certificate before the quarterly deadline, commonly because they are filing their own return early or need to show a bank the tax already withheld, the payor must furnish it at the time of the request or simultaneously with the income payment.
2. Medical practitioners paid through a hospital, clinic, or HMO. The regulations spell this case out specifically: the hospital, clinic, or HMO must issue the 2307 to the practitioner every 20th day following the close of the quarter or upon the practitioner’s request, the same rule as the general case but written out because so many practitioners never see the patient’s payment directly.

Failing to issue the certificate does not make the withholding obligation disappear. It shifts the pain onto the payee, who cannot substantiate a credit they are entitled to, and it exposes the payor to assessment as a non-compliant withholding agent, including surcharges and interest on any related deficiency the BIR later finds during audit. In practice, a missing or late 2307 is one of the most common reasons a Philippine tax audit escalates from a routine desk review into a full field investigation, because the examiner has no paper trail connecting the withheld amount to an actual remittance.

The current expanded withholding tax rate table

Expanded withholding tax is not one flat rate. It is a schedule of categories, each with its own percentage, set out in Revenue Regulations No. 11-2018 (issued to implement the TRAIN law) and refined since by later regulations. The categories below are the ones a foreign-owned company operating in the Philippines runs into most often when paying local suppliers, landlords, and professionals.

Two of these categories deserve more explanation, because the rate you apply depends on a fact about the payee that your company has to track, not just the type of payment.

Professional and talent fees: the threshold that flips the rate

For an individual professional, lawyer, engineer, architect, real estate broker, freelance consultant, or similar, the rate is 5% as long as their gross income for the current year has not passed 3,000,000 pesos. Cross that line and the rate jumps to 10% on the full payment, not just the excess. For a corporate payee, the split is 10% up to 720,000 pesos of current-year gross income and 15% above it.

The mechanism that decides which rate applies is a sworn declaration, not a guess. Under RR No. 11-2018, an individual payee whose gross receipts will not exceed 3,000,000 pesos in the taxable year must submit a sworn declaration of that fact, together with a copy of their BIR Certificate of Registration, to each income payor no later than January 15 of the year or before the first payment, whichever comes first. Non-individual payees estimating gross income of 720,000 pesos or below follow the same mechanic with a notarized declaration from a company officer. If the payee never files the declaration, or the actual payment exceeds the threshold anyway, the payor must apply the higher rate, 10% instead of 5%, or 15% instead of 10%.

Worked example: your company engages a Philippine-based individual IT consultant for a 150,000-peso project. The consultant is not VAT-registered, has filed the sworn declaration confirming gross income under 3,000,000 pesos for the year, and this is not the same engagement as a construction or security contractor covered by the 2% contractor rate. You withhold 5% of 150,000 pesos, which is 7,500 pesos, pay the consultant 142,500 pesos net, and remit the 7,500 pesos to the BIR. The consultant receives a 2307 for 7,500 pesos to use as a credit on their own return.

Rent, real and personal property

Rent on real property used in your business, office space, a warehouse, a retail unit, carries a flat 5% EWT regardless of the landlord’s income level. There is no threshold test here. If your company leases a serviced office at 80,000 pesos a month, you withhold 4,000 pesos every month and pay the landlord 76,000 pesos net.

Personal property rental, leased equipment, vehicles, or machinery, also sits at 5%, but only once the annual rental from that lessor passes 10,000 pesos. Below that, no withholding applies. Once the accumulated rent for the year exceeds or is reasonably expected to exceed 10,000 pesos, the full amount becomes subject to the 5% rate, not just the portion above the threshold. Financial lease arrangements with companies licensed under the Financing Company Act are carved out of this rule.

Contractor payments: a broader category than “construction”

The 2% contractor rate covers far more than builders. RR No. 11-2018 lists general engineering and building contractors alongside specialty contractors and a long tail of “other contractors”: security and janitorial agencies, messengerial services, computer programming and software development shops, advertising agencies, landscaping services, and businesses that install or maintain elevators and air conditioning systems, among others. If your company outsources office security, IT support, or building maintenance to a Philippine vendor, that invoice almost always falls under this 2% category rather than the general services catch-all.

Purchases by a “top withholding agent”: the 1% and 2% catch-all

A large share of ordinary purchases, office supplies, raw materials, general services that do not fit a more specific category, are not subject to any EWT at all unless the buyer has been formally classified by the BIR as a top withholding agent (TWA). Once your company is on that list, a new obligation appears: withhold 1% on purchases of goods and 2% on purchases of services from your local, regular suppliers, even where no other EWT category applies.

Classification is not a request you make. Under RR No. 31-2020, the BIR classifies a taxpayer as a TWA automatically once its gross sales, receipts, or purchases in the preceding taxable year meet the threshold set for its revenue district office (RDO) group under Revenue Memorandum Order 13-2018: 12,000,000 pesos for RDO Groups A and B, and 5,000,000 pesos for RDO Groups C, D, and E. Large taxpayers and those under the BIR’s Taxpayer Account Management Program are also automatically included. There is no separate application. The BIR publishes the list, or additions and deletions to it, in a newspaper of general circulation and often on its own website, and the obligation to start withholding begins on the first day of the month following that publication. Once classified, a company stays a TWA until it is formally delisted, not simply until its revenue drops below the threshold.

Two definitions matter once you are on the list. “Goods” means tangible personal property, so it excludes services and agricultural products, which have their own separate 1% category. And withholding applies only to a “regular supplier,” defined as a vendor you have transacted with at least six times in the current or prior year, plus any single purchase of 10,000 pesos or more even from a first-time vendor.

Worked example: your company crosses the TWA threshold and starts appearing on the BIR’s published list. You buy 40,000 pesos of office and pantry supplies from a vendor you order from monthly, comfortably a regular supplier, so you withhold 1%, or 400 pesos, and issue a 2307 for that amount. You also pay a graphic design freelancer 20,000 pesos for a one-off project. If the freelancer counts as a professional under the licensure-based list, the professional fee rate applies instead of the TWA services rate; if not, and they meet the regular-supplier test, the 2% TWA services rate applies. Getting this classification right, professional fee versus TWA purchase versus contractor payment, is the part that trips up finance teams building their chart of accounts for the first time.

The Ease of Paying Taxes Act changed the trigger, not the rate

Republic Act No. 11976, the Ease of Paying Taxes Act, took effect in January 2024 and touched withholding tax mechanics without touching the percentages in the table above. Before the law, the obligation to withhold arose at the earliest of three events: the payment being made, becoming payable, or being recorded as an expense or asset in the payor’s books. RR No. 4-2024, the regulation implementing the EOPT changes to withholding, replaced that formulation. The obligation to withhold now arises at the time the income payment is accrued or recorded as an expense or asset in the payor’s books, or upon the seller’s issuance of a sales invoice or other adequate supporting document, whichever comes first.

The practical effect for a company issuing 2307s is timing, not arithmetic. Under the old rule, withholding could sometimes be deferred until actual payment. Under the current rule, receiving the supplier’s invoice or booking the accrual can trigger the obligation to withhold before cash actually moves, which means your accounts payable process now has to flag withholding at the point of invoice receipt, not at the point of releasing payment. The law also replaced the official receipt with the sales invoice as the primary document for the sale of services, which matters for matching a 2307 to the correct supporting document during an audit. None of this changed the 5%, 10%, 2%, or 1% figures in the rate table. If a supplier tells you the EOPT law lowered their withholding rate, that claim does not match the regulation.

The full compliance cycle, step by step

Expanded withholding tax runs on a repeating monthly and quarterly cycle. For a company that both pays local suppliers and, in some cases, receives withheld payments itself (a Philippine subsidiary invoicing a Philippine client, for instance), the cycle looks like this:

1. Withhold at the trigger point. Deduct the correct EWT percentage from the payment at the time the obligation arises under the EOPT timing rule described above, whether that is invoice receipt, accrual, or actual payment.
2. Remit monthly. For the first two months of each calendar quarter, remit the withheld amount using BIR Form 0619-E on or before the 10th day of the following month. For the third month of the quarter, the amount is consolidated and remitted with the quarterly return instead of a separate monthly form.
3. File the quarterly return. File BIR Form 1601-EQ, the quarterly remittance return of creditable income taxes withheld, on or before the last day of the month following the close of the quarter, April 30, July 31, October 31, and January 31, together with the Quarterly Alphalist of Payees listing every payee and the amount withheld.
4. Issue Form 2307 to each payee by the 20th day after the quarter closes, or sooner if requested, as covered above.
5. The payee claims the credit. The payee attaches the 2307 to their own quarterly income tax return (Form 1701Q for individuals, 1702Q for corporations) and, at year-end, to the annual return, reducing their income tax payable by the total amount already withheld.
6. Annual reconciliation. The payor files BIR Form 1604-E, the annual information return of creditable income taxes withheld, listing every payee and certificate issued for the year, which the BIR cross-checks against what each payee separately claimed.

If your own Philippine company is the payee somewhere in this chain, for example a client withholds EWT on your consulting invoice, the 2307 you receive from that client flows into step 5 for your own return. This is the point where withholding tax stops being a pure cost center and becomes a prepayment against the corporate income tax your company will owe anyway, which is why keeping every certificate you receive, not just the ones you issue, protects your own cash position. Our general guide to withholding tax in the Philippines walks through how this credit interacts with your annual income tax filing in more detail.

What a wrong or missing certificate costs you

Three failure modes show up most often in practice. The first is simply forgetting to withhold, which the BIR treats as a failure of the payor’s own obligation and can result in disallowance of the related expense for income tax purposes, on top of penalties for the unremitted tax. The second is withholding the correct amount but never issuing the certificate, which does not expose the payor to the same disallowance risk but does damage supplier relationships and invites disputes when the payee’s own return gets flagged for an unsubstantiated credit. The third, and the one that causes the most audit friction, is a mismatch between what a payor reports as withheld in their Alphalist of Payees and what the payee claims on their own return using the certificate in hand. Since the BIR’s data systems now cross-reference these filings, a discrepancy on either side tends to surface within a year or two, not immediately, which makes it worth reconciling 2307s issued against 2307s received every quarter rather than waiting for a notice.

This guide is general information, not legal or tax advice on your specific facts. Book a consultation if you want a fixed-scope review of your withholding classification before your next quarterly filing.