Does an airline withhold tax on payments to a ground handling company?

Yes. An airline or its local general sales agent paying a ground handling company for ramp handling, baggage services, passenger check-in support, or aircraft cleaning withholds 2% expanded withholding tax under RR No. 2-98 Section 2.57.2(E), as amended by RR No. 11-2018, using ATC WI120 for an individually operated ground handler or WC120 for one organized as a corporation.

Is airport ground handling treated like stevedoring?

The reasoning is analogous. RR No. 2-98's enumeration of 'other contractors' subject to creditable withholding tax specifically names operators of stevedoring, warehousing, or forwarding establishments — businesses that load, unload, and move cargo for a fee. Ground handling performs the equivalent function at an airport, so this guide applies the same flat 2% treatment rather than inventing a separate rate.

Does the same rate apply to a cargo-only ground handler?

Yes. Whether a ground handler services passenger flights, cargo flights, or both, the fee it charges the airline for handling services is withheld the same way — 2% under ATC WI120/WC120 — because the classification turns on the nature of the service (contracted handling work), not on whether the aircraft carries passengers or freight.

Does a foreign airline with no Philippine office withhold on this payment?

Philippine EWT withholding generally requires a Philippine withholding agent making the payment. A foreign airline that pays a Philippine ground handler directly from abroad, with no Philippine office or general sales agent involved, typically has no Philippine withholding agent in the transaction. Most foreign carriers operating into the Philippines route payments through a local general sales agent or station, which is the party that actually withholds.

BIR Form 2307 for Airport Ground Handling Service Providers

An airline or its local general sales agent that pays a ground handling company for ramp handling, baggage services, passenger check-in support, or aircraft servicing withholds 2% expanded withholding tax on that fee, under Revenue Regulations (RR) No. 2-98 as amended by RR No. 11-2018, using ATC WI120 (individually operated ground handler) or WC120 (ground handler organized as a corporation) — the same bracket this series already applies to stevedoring, forwarding, and warehousing services.

This guide is part of the BIR Form 2307 series. It draws on the “other contractors” enumeration already used in BIR Form 2307 for Warehousing, Storage, and Logistics Service Fees and BIR Form 2307 for Freight Forwarders and Customs Brokers.

Generate a Ground Handling BIR Form 2307 FREE →

Why ground handling falls under the “other contractors” bracket #

RR No. 2-98’s enumeration of contractors subject to creditable withholding tax specifically names businesses that load, unload, store, and move cargo for a fee — the same essential function an airport ground handler performs for arriving and departing flights:

“Operators of stevedoring, warehousing or forwarding establishments” — listed among “Other contractors” subject to creditable withholding tax under RR No. 2-98’s income payments to certain contractors.

An airport ground handler loads and unloads baggage and cargo, marshals aircraft, manages passenger check-in and boarding support, and services the aircraft between flights — functionally the airport equivalent of a stevedoring or forwarding operation, which is why this guide applies the same 2% contractor treatment rather than treating ground handling as an undefined category.

What rate and ATC code apply to a ground handling contract? #

Payee	ATC	Rate
Ground handling company, individually operated	WI120	2%
Ground handling company, organized as a corporation	WC120	2%

The rate stays the same whether the ground handler’s contract covers passenger flights, cargo flights, or a mixed operation, because what decides the ATC code is the nature of the service — contracted airport handling work — not the type of aircraft or payload being handled.

Worked example: a general sales agent’s monthly ground handling contract #

Starline Travel and Aviation Services, Inc. (fictional), the Philippine general sales agent for a foreign carrier, pays Skyport Ground Services Corp. (a corporation) a monthly ground handling retainer of ₱620,000 covering ramp, baggage, and passenger-service support for the carrier’s daily flight.

Item	Amount
Monthly ground handling fee (gross)	₱620,000.00
EWT withheld (2%, ATC WC120)	₱12,400.00
Net paid to Skyport Ground Services	₱607,600.00

Starline withholds ₱12,400, remits it through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, lists Skyport Ground Services on its Quarterly Alphalist of Payees, and issues a BIR Form 2307 for ₱620,000 under ATC WC120 each quarter.

Summary #

Airport ground handling fees are withheld at 2% under the “other contractors” bracket of RR No. 2-98 (ATC WI120/WC120) — the same treatment this series applies to stevedoring, warehousing, and forwarding businesses — regardless of whether the handler services passenger or cargo flights. See BIR Form 2307 for Warehousing, Storage, and Logistics Service Fees for the closest “other contractors” template this guide follows. For the full library of BIR Form 2307 guidance, start at the BIR Form 2307 series hub or the pillar guide.