Asked about Philippines withholding tax, especially Expanded Withholding Tax (EWT) on professional fees and other payments.
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Primary tax authority
Bureau of Internal Revenue (BIR)NIRC
Primary legislation
NIRC Sections 57-58, as amended; RR 2-98, as amended by RR 11-2018 and RR 14-2023NIRC s57-58
Creditable Withholding Tax (CWT/EWT) treatment
Tax withheld is creditable against final income tax; payee reports gross income and claims creditNIRC s57-58
Final Withholding Tax (FWT) treatment
Tax withheld is full and final; payee does NOT report income in ITRNIRC s57-58
EWT rate — individual payee (annual gross ≤ PHP 3,000,000)
5%RR 11-2018
EWT rate — individual payee (annual gross > PHP 3,000,000)
10%RR 11-2018
Threshold for lower individual EWT rate
PHP 3,000,000 annual gross incomeRR 11-2018
EWT rate — corporate payee (annual gross ≤ PHP 720,000)
10%RR 11-2018
EWT rate — corporate payee (annual gross > PHP 720,000)
15%RR 11-2018
Threshold for lower corporate EWT rate
PHP 720,000 annual gross incomeRR 11-2018
Sworn declaration form — individual with multiple payors
Annex B-1RR 2-98
Sworn declaration form — individual with single payor
Annex B-2RR 2-98
Sworn declaration form — non-individual payee
Annex B-3RR 2-98
Additional document required with sworn declaration
Copy of BIR Certificate of Registration (Form 2303)RR 2-98
Annual deadline for sworn declaration submission
15 January of each year (or before first payment for new engagements)RR 2-98
Default EWT rate if no sworn declaration submitted — individual
10%RR 2-98
Default EWT rate if no sworn declaration submitted — corporate
15%RR 2-98
EWT rate — rentals, real property
5%RR 2-98
EWT rental — personal property minimum payment threshold
PHP 10,000RR 2-98
EWT rate — rentals, personal property (≥ PHP 10,000)
5%RR 2-98
EWT rate — income payments to contractors/subcontractors
2%RR 2-98
EWT rate — payments by top withholding agents (goods)
1%RR 14-2023
EWT rate — payments by top withholding agents (services)
2%RR 14-2023
EWT rate — interest on deposits and deposit substitutes (final)
20% (final)NIRC s24(B)
EWT rate — royalties (final)
20% (final)NIRC s24(B)
EWT rate — prizes over PHP 10,000 (final)
20% (final)NIRC s24(B)
EWT prizes — taxable threshold
PHP 10,000NIRC s24(B)
EWT rate — dividends from domestic corporation to individual (final)
10% (final)NIRC s24(B)
BIR Form 2307 purpose
Certificate of Creditable Tax Withheld at Source — issued by withholding agent to payee; used to claim creditable tax against ITRNIRC s58
Alphanumeric Tax Code (ATC)
Identifies type of income and applicable EWT rate; included on Form 2307RR 2-98
Revenue Memorandum Order RMO 23-2018
Guidelines on 8% income tax rate electionRMO 23-2018
ATC WI100 — professional fees, individual (≤ PHP 3M)
5%RR 2-98
ATC WI010 — professional fees, individual (> PHP 3M)
10%RR 2-98
ATC WC100 — professional fees, corporate (≤ PHP 720K)
10%RR 2-98
ATC WC010 — professional fees, corporate (> PHP 720K)
15%RR 2-98
Form 2307 attachment to ITR
All Forms 2307 must be attached to annual ITR (Form 1701/1701A) to claim tax creditsNIRC s58
Frequency payees should collect Form 2307
Every quarter from all payorsRR 2-98
BIR Form 1601-EQ purpose
Quarterly Remittance Return of Creditable Income Taxes Withheld (Expanded)RR 2-98
BIR Form 1601-EQ filing deadline
Last day of the month following the close of the quarterRR 2-98
BIR Form 1601-EQ required attachment
Quarterly Alphalist of Payees (QAP)RR 2-98
BIR Form 0619-E purpose
Monthly Remittance Return of Creditable Income Taxes Withheld (Expanded) — for months 1 and 2 of each quarterRR 2-98
BIR Form 0619-E filing deadline
10th day of the following month (for months 1 and 2 of each quarter)RR 2-98
BIR Form 1604-E purpose
Annual Information Return of Creditable Income Taxes Withheld (Expanded)RR 2-98
BIR Form 1604-E filing deadline
31 January of the following yearRR 2-98
BIR Form 1604-E required attachment
Annual Alphalist of PayeesRR 2-98
FWT rate — interest on bank deposits (PHP)
20%NIRC s24(B)
FWT — interest on long-term deposits (>5 years)
ExemptNIRC s24(B)
FWT rate — royalties (books, literary, musical works)
10%NIRC s24(B)
FWT rate — royalties (other)
20%NIRC s24(B)
FWT rate — prizes over PHP 10,000
20%NIRC s24(B)
FWT rate — PCSO/lotto winnings over PHP 10,000
20%NIRC s24(B)
Revenue Regulation RR 2-98
Original withholding tax regulationsRR 2-98
FWT rate — dividends from domestic corporation
10%NIRC s24(B)
FWT rate — capital gains on sale of shares (not traded on exchange)
15%NIRC s24(C)
FWT rate — capital gains tax on real property
6%NIRC s24(D)
BIR Form 1601-FQ purpose
Quarterly Final Withholding Tax returnNIRC s58
BIR Form 1601-FQ filing deadline
Last day of month following quarter endNIRC s58
BIR Form 1604-F purpose
Annual Final Withholding Tax information returnNIRC s58
BIR Form 1604-F filing deadline
31 January of following yearNIRC s58
Penalty — failure to withhold
Withholding agent liable for amount not withheld + 25% surcharge + 20% interest per annumNIRC s248-249
Penalty — failure to remit withheld tax
25% surcharge + 20% interest per annumNIRC s248-249
Penalty — failure to issue Form 2307
Fine of PHP 1,000 per failureNIRC s250
Penalty — failure to file Form 1601-EQ or 1604-E
PHP 1,000 per return + 25% surchargeNIRC s248-250
Penalty — late filing surcharge
25% of tax dueNIRC s248
Interest rate on unpaid taxes
20% per annumNIRC s249
Revenue Regulation RR 11-2018
TRAIN Law amendments to withholding taxRR 11-2018
Revenue Regulation RR 14-2023
Further amendments to withholding tax regulationsRR 14-2023
EWT covered professionals — CPAs
Licensed CPAs subject to EWT on professional feesRR 2-98
EWT covered professionals — lawyers
Licensed lawyers subject to EWT on professional feesRR 2-98
EWT covered — directors of corporations (not employees)
Non-employee directors subject to EWT on directors feesRR 2-98
EWT covered professionals — insurance agents and adjusters
Subject to EWT on commissions/feesRR 2-98
EWT covered professionals — management and technical consultants
Subject to EWT on professional feesRR 2-98
EWT rate — commission payments to individual agents
5% (≤ PHP 3M annual gross) or 10% (> PHP 3M)RR 2-98
BIR Form 2307 — who files/issues
Withholding agent issues to payeeNIRC s58
BIR Form 0619-E — months covered
Months 1 and 2 of each quarter only (not month 3)RR 2-98
BIR Form 1601-EQ — who files
Withholding agent (payor)RR 2-98
BIR Form 1604-E — who files
Withholding agent (payor)RR 2-98
BIR Form 1601-FQ — who files
Withholding agent (payor)NIRC s58
BIR Form 1604-F — who files
Withholding agent (payor)NIRC s58
BIR Certificate of Registration form
Form 2303NIRC
Quick Reference
| Field | Value |
|---|---|
| Country | Philippines |
| Tax | Withholding Tax (Creditable and Final) |
| Currency | PHP (₱) only |
| Tax year | Calendar year |
| Primary legislation | NIRC Sections 57-58, as amended; RR 2-98, as amended by RR 11-2018 and RR 14-2023 |
| Tax authority | Bureau of Internal Revenue (BIR) |
| Validated by | Pending |
| Validation date | Pending |
| Skill version | 1.0 |
Key Distinction
| Type | Treatment |
|---|---|
| Creditable Withholding Tax (CWT / EWT) | Withheld tax is creditable against final income tax liability; payee reports gross income and claims credit |
| Final Withholding Tax (FWT) | Tax withheld constitutes the full and final tax; payee does NOT report this income in the ITR |
Rates -- Individual Payees
| Annual Gross Income of Payee | EWT Rate |
|---|---|
| ≤₱3,000,000 | 5% |
| >₱3,000,000 | 10% |
Rates -- Non-Individual (Corporate) Payees
| Annual Gross Income of Payee | EWT Rate |
|---|---|
| ≤₱720,000 | 10% |
| >₱720,000 | 15% |
To apply the lower EWT rate (5% for individuals, 10% for corporates):
Requirements table
| Requirement | Detail |
|---|---|
| Sworn Declaration | Payee must submit Annex B-1 (multiple payors), B-2 (single payor), or B-3 (non-individual) |
| With COR | Attach copy of BIR Certificate of Registration (Form 2303) |
| Deadline | By 15 January of each year, or before first payment for new engagements |
| Default if not submitted | Higher rate applies (10% for individuals, 15% for corporates) |
EWT on professional fees applies to licensed professionals under PRC and Supreme Court, including:
Other Common EWT Rates
| Payment Type | Rate |
|---|---|
| Rentals -- real property | 5% |
| Rentals -- personal property (≥₱10,000) | 5% |
| Income payments to contractors/subcontractors | 2% |
| Income payments by top withholding agents (goods) | 1% |
| Income payments by top withholding agents (services) | 2% |
| Commission payments to agents | 5%/10% (individual) |
| Interest on deposits and deposit substitutes | 20% (final) |
| Royalties | 20% (final) |
| Prizes (>₱10,000) | 20% (final) |
| Dividends (from domestic corp to individual) | 10% (final) |
Key Information on Form 2307
| Field | Content |
|---|---|
| Withholding Agent TIN | Payor's Tax Identification Number |
| Payee TIN | Recipient's Tax Identification Number |
| Period covered | Quarter/year of the payments |
| Income payment | Gross amount paid |
| Tax withheld | Amount withheld at the applicable EWT rate |
| ATC (Alphanumeric Tax Code) | Identifies the type of income and applicable rate |
Common ATCs for Professional Fees
| ATC | Description | Rate |
|---|---|---|
| WI100 | Professional fees -- individual (≤₱3M) | 5% |
| WI010 | Professional fees -- individual (>₱3M) | 10% |
| WC100 | Professional fees -- corporate (≤₱720K) | 10% |
| WC010 | Professional fees -- corporate (>₱720K) | 15% |
Quarterly Remittance
| Form | Purpose | Deadline |
|---|---|---|
| Form 1601-EQ | Quarterly Remittance Return of Creditable Income Taxes Withheld (Expanded) | Last day of the month following the close of the quarter |
| Attachments | Quarterly Alphalist of Payees (QAP) | Filed with Form 1601-EQ |
Monthly Remittance
| Form | Purpose | Deadline |
|---|---|---|
| Form 0619-E | Monthly Remittance Return of Creditable Income Taxes Withheld (Expanded) | 10th day of the following month (for months 1 and 2 of each quarter) |
Annual Information Return
| Form | Purpose | Deadline |
|---|---|---|
| Form 1604-E | Annual Information Return of Creditable Income Taxes Withheld (Expanded) | 31 January of the following year |
| Attachments | Annual Alphalist of Payees | Filed with Form 1604-E |
Common FWT Rates
| Income Type | Rate |
|---|---|
| Interest on bank deposits (PHP) | 20% |
| Interest on long-term deposits (>5 years) | Exempt |
| Royalties (books, literary, musical) | 10% |
| Royalties (other) | 20% |
| Prizes (>₱10,000) | 20% |
| PCSO/lotto winnings (>₱10,000) | 20% |
| Dividends from domestic corporation | 10% |
| Capital gains on sale of shares (not traded) | 15% |
| Capital gains tax on real property | 6% |
FWT Forms
| Form | Purpose | Deadline |
|---|---|---|
| Form 1601-FQ | Quarterly Final Withholding Tax | Last day of month following quarter end |
| Form 1604-F | Annual Final Withholding Tax | 31 January of following year |
Situation: CPA bills client ₱100,000 for consulting. CPA's annual gross receipts are under ₱3M and sworn declaration has been submitted.
Withholding: ₱100,000 × 5% = ₱5,000 withheld. Client pays ₱95,000 net and issues Form 2307 for ₱5,000.
CPA's ITR: Reports ₱100,000 gross income. Claims ₱5,000 creditable tax.
Situation: Same CPA, but did not submit Annex B-1.
Withholding: Higher rate applies: ₱100,000 × 10% = ₱10,000. Client pays ₱90,000 net.
Situation: Accounting firm (corporation) bills ₱500,000. Annual gross >₱720,000.
Withholding: ₱500,000 × 15% = ₱75,000 withheld.
Penalties
| Offence | Penalty |
|---|---|
| Failure to withhold | Withholding agent liable for the amount not withheld + 25% surcharge + 20% interest |
| Failure to remit | 25% surcharge + 20% interest per annum |
| Failure to issue Form 2307 | Fine ₱1,000 per failure |
| Failure to file Form 1601-EQ / 1604-E | ₱1,000 per return + 25% surcharge |
| Late filing | 25% surcharge on tax due |
Key BIR Issuances
| Issuance | Topic |
|---|---|
| RR 2-98 | Original withholding tax regulations |
| RR 11-2018 | TRAIN Law amendments to withholding |
| RR 14-2023 | Further amendments |
| RMO 23-2018 | Guidelines on 8% income tax rate election |
Key Forms Summary
| Form | Who Files | Purpose |
|---|---|---|
| 2307 | Withholding agent → payee | Certificate of creditable tax withheld |
| 0619-E | Withholding agent | Monthly remittance (months 1, 2 of quarter) |
| 1601-EQ | Withholding agent | Quarterly remittance |
| 1604-E | Withholding agent | Annual information return |
| 1601-FQ | Withholding agent | Quarterly final withholding tax |
| 1604-F | Withholding agent | Annual final withholding tax |
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