Does the advertiser withhold tax on the advertising agency's commission directly?

Usually not, when a media supplier is involved. Under RMC No. 63-2012, the advertiser withholds 2% on the full amount it pays the media supplier (which already embeds the agency's commission), and the media supplier separately withholds 2% when it pays the agency's commission — so the commission isn't withheld on twice.

What does the advertiser actually receive as proof of withholding?

The advertiser issues BIR Form 2307 to the media supplier for the full invoiced amount it paid. The media supplier, in turn, issues its own BIR Form 2307 to the advertising agency for the commission it withheld on.

What if the advertiser pays the advertising agency directly, with no separate media supplier billing?

If the agency itself bills and is paid directly by the advertiser for its own agency services — rather than the advertiser paying the media outlet directly — the advertiser withholds 2% on that agency invoice and issues BIR Form 2307 to the agency, the same as it would for any other corporate service supplier.

BIR Form 2307 for Advertising Agencies and Media Placements: Who Withholds What

Q: What EWT rate applies to payments to an advertising agency?

Advertising and media agency service fees fall under the general 2% expanded withholding tax rate for corporate suppliers of services under RR No. 11-2018, using ATC WC160 (corporate) or WI160 (individual) — not the professional-fee or broker-specific rate categories.

A company paying for a media campaign generally withholds 2% expanded withholding tax on the full amount it pays the media supplier, and issues BIR Form 2307 to that media supplier — not separately to the advertising agency that arranged the campaign. The agency’s commission gets withheld on a step later, when the media supplier pays the agency, under the invoicing structure Revenue Memorandum Circular (RMC) No. 63-2012 sets out for the advertiser–media–agency chain.

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What withholding tax rate applies to advertising and media payments? #

There is no special ATC or rate category just for “advertising agencies” — their fees fall under the general 2% expanded withholding tax (EWT) rate for corporate suppliers of services under RR No. 11-2018, using ATC WC160 for a corporate payee or WI160 for an individual. This is the same rate bucket that applies to ordinary service contractors — it’s not the higher 5%/10% professional-fee rate that applies to individually licensed professionals like doctors or engineers, and it’s not the broker/agent-specific rate either. An advertising agency is treated, for withholding purposes, as an ordinary corporate service supplier.

How does the advertiser–media–agency withholding chain actually work? #

Most advertising campaigns run through a three-party structure: the advertiser (the brand paying for the campaign), the media supplier (TV network, radio station, digital platform, or outdoor media owner selling the placement), and the advertising agency (which plans and buys the placement on the advertiser’s behalf and earns a commission). RMC No. 63-2012 addresses exactly this structure to prevent the agency’s commission from being withheld on twice. Tax practitioners who have reviewed the circular describe its operative rule this way:

“The advertiser shall withhold two percent (2%) on the entire invoice amount and issue a Certificate of Creditable Income Tax Withheld at Source (BIR Form 2307) for the media supplier… the media supplier shall withhold two percent (2%) from the commission/service fee of the advertising agency.”
— summarized from RMC No. 63-2012 by Grant Thornton Philippines’ tax alert on media supplier transactions

The advertiser pays the media supplier directly for the full cost of the campaign — creative production, media placement, the agency’s embedded commission, and VAT — and withholds 2% on that invoice (net of VAT), issuing BIR Form 2307 to the media supplier.
The media supplier then pays the advertising agency its commission or service fee out of what it received, and withholds 2% on that commission itself, issuing a separate BIR Form 2307 to the agency.

Because the advertiser’s withholding already covers the full billed amount — including the portion that will eventually become the agency’s commission — the advertiser does not withhold again separately on that same commission when it later flows to the agency. That second round of withholding is the media supplier’s responsibility, not the advertiser’s.

Worked example: a ₱2,000,000 digital media campaign #

A retail brand engages an advertising agency to run a ₱2,000,000 digital media campaign (net of VAT). The media platforms bill the brand directly for the full amount, with the agency’s 15% commission embedded in that invoice.

Step	Who pays whom	Amount	Withholding
1	Brand pays media supplier (full campaign cost)	₱2,000,000	2% × ₱2,000,000 = ₱40,000 — brand issues BIR Form 2307 to media supplier
2	Media supplier pays agency’s commission	₱300,000 (15% of ₱2,000,000)	2% × ₱300,000 = ₱6,000 — media supplier issues BIR Form 2307 to agency

The brand issues one BIR Form 2307 covering the full ₱2,000,000 invoice; it does not separately withhold on the ₱300,000 commission, because that amount was already inside the figure it withheld on in step 1.

What if there’s no separate media supplier? #

Not every engagement runs through this three-party structure. If the advertising agency itself bills the advertiser directly for its own creative or agency services — with no separate media supplier invoice passing through — the advertiser withholds 2% on that agency invoice directly and issues BIR Form 2307 to the agency, exactly as it would for any other corporate service supplier under the standard EWT rules. The RMC No. 63-2012 split only matters when a media supplier sits between the advertiser and the agency.

How does this fit with the rest of the BIR Form 2307 series? #

This advertiser–media–agency split is a variation on the general rule that BIR Form 2307 for Professional Fees and BIR Form 2307 for Commissions and Brokers cover for other service and commission arrangements — the underlying EWT mechanics are the same, but RMC No. 63-2012 clarifies specifically where the withholding obligation falls when a payment passes through more than one party before reaching the ultimate service provider. For the full range of ATC codes used across this series, see What Is an ATC and How to Find the Right One for BIR Form 2307.

Summary #

An advertiser withholds 2% on the full amount it pays a media supplier and issues that supplier BIR Form 2307; the media supplier then withholds 2% again when it pays the advertising agency’s commission, under the structure RMC No. 63-2012 sets out. The one thing to avoid is withholding twice on the same commission — that only happens when the advertiser mistakenly withholds separately on the agency’s cut after already withholding on the full media supplier invoice that contained it.