BIR Form 2307 for Barbershops, Salons, and Spas: Corporate Fee vs. Chair Rental

A hotel spa concession fee or a corporate grooming-benefit contract paid to a salon or spa business withholds at a flat 2% under RR No. 2-98 Section 2.57.2(E), the same general services bracket that applies to most business-to-business service contracts. An independent stylist or barber who rents a defined chair or station from a salon owner, however, can instead fall under the 5% rental bracket if that arrangement is structured as a genuine space lease rather than a service. Which rate applies — or whether withholding applies at all — depends entirely on who is being paid and what, exactly, is being paid for.

This guide is part of the BIR Form 2307 series. It covers the corporate-service-contract scenario, the chair-rental/concessionaire scenario, why ordinary walk-in transactions aren’t withheld at all, the ATC codes involved, and a worked example.

When does a salon, barbershop, or spa payment get withheld at all? #

Withholding only attaches when the payor is itself a business — a corporation, or an individual engaged in trade or business paying in the course of that business — not when an individual customer pays for a personal service. RR No. 2-98 frames the withholding-agent test around the payor’s own status:

“(A) In general, any juridical person, whether or not engaged in trade or business; (B) An individual, with respect to payments made in connection with his trade or business…”

— RR No. 2-98, Section 2.57.3(A)–(B)

That means a hotel paying its outsourced spa concessionaire, a production company paying a salon for on-set hair and makeup, or a company running a corporate grooming-benefit program is a withholding agent on that payment, exactly as this series covers for a corporate wellness program in BIR Form 2307 for Gyms, Fitness Studios, and Personal Trainers. An individual client paying a barbershop or salon out of pocket for a haircut, manicure, or facial is not, in that transaction, a withholding agent at all — see the walk-in scenario further down.

Corporate service contract: the 2% general services rate #

A business client that pays a salon or spa business — not an individual stylist — under a service contract generally withholds 2% on the full billing under RR No. 2-98, Section 2.57.2(E), as amended by RR No. 11-2018, the same general contractor/business-services bracket this series covers for other outsourced business services. Typical arrangements that fall here include:

• A hotel paying a monthly concession fee to the outside operator running its spa
• A company paying a salon or spa a fixed fee for a recurring employee grooming-benefit program
• A TV or film production paying a salon business for on-set hair and makeup services for a shoot

In each case, the payment goes to the salon or spa as a business entity, covering its staff, space, and equipment collectively — not to one individually engaged stylist — which is why it sits in the same general-services bracket this series applies to outsourced contractor work in BIR Form 2307 for Contractors and Subcontractors.

Chair rental or concessionaire model: when the 5% rental rate applies instead #

Many salons and barbershops operate on a “chair rental” or concessionaire model: an independent stylist or barber pays the salon owner to use a specific chair or station, keeps their own clients and pricing, and often supplies their own tools. Whether that payment is a 2% service fee or a 5% rental turns on the same exclusive-use test this series applies to co-working desks in BIR Form 2307 for Co-Working Space and Virtual Office Providers:

“Rentals — On gross rental for the continued use or possession of real property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity — Five percent (5%).” — RR No. 2-98, Section 2.57.2(C), as amended by RR No. 11-2018

• If the salon owner assigns the stylist a specific, identifiable station or chair for a fixed period, with the stylist controlling that space and effectively acting as the payor renting it — the arrangement functions as a real property rental, and payments the salon owner receives from the stylist for that space can fall under the 5% rental bracket, rather than a service fee, once the salon owner (or whichever party is the withholding agent in the arrangement) is required to withhold.
• If instead the stylist is simply paid by the salon on a commission or per-service basis, with no defined space assigned exclusively to them, that payment functions as a service or talent fee rather than rent, and generally follows the individual professional-fee treatment this series covers in BIR Form 2307 for Tutors and Review Center Instructors — 5%/10% under RR No. 11-2018, using ATC WI010/WI011.

Because chair-rental arrangements vary widely — some are genuine space leases, others are dressed-up commission splits — confirm which structure actually governs a given salon’s contracts before assuming the 5% rental rate applies; a stylist billed and paid strictly per haircut or service, with no assigned station, is still closer to a service or talent-fee payment than a rental.

Worked example: a hotel spa concession and an independent colorist #

Coral Bay Hotel Corp. outsources its spa to Serene Wellness Spa Services, an outside operator, under a monthly concession fee. Separately, an independent hair colorist, Nina Reyes, rents a fixed station inside a different salon, Studio Luxe, for her own client base.

Coral Bay Hotel withholds ₱1,600 on the spa concession fee and issues Serene Wellness Spa Services a BIR Form 2307 under the 2% services bracket. Studio Luxe, in the separate station-rental arrangement, withholds ₱750 from what it owes or collects from Nina Reyes if that rental payment flows through it as a withholding agent — the two payments sit under different ATC codes and different rates even though both involve a “chair” changing hands for money.

Ordinary walk-in transactions: no withholding at all #

The overwhelming majority of salon, barbershop, and spa transactions are retail sales to individual consumers, and those are never withheld. An individual customer paying for a haircut, blow-dry, facial, or massage out of pocket is not engaged in trade or business with respect to that payment, so no withholding-agent relationship exists under RR No. 2-98, Section 2.57.3(B). The salon simply issues an official receipt or invoice for the service; no BIR Form 2307 is generated for that transaction. Withholding only enters the picture once the payor is itself a business paying under a recurring contract, concession, or space-rental arrangement — the two scenarios covered above.

Frequently asked questions #

Does a barbershop, salon, or spa need to deal with BIR Form 2307? #

Only when a business client — not an individual walk-in customer — pays the salon or spa for services under a contract, such as a hotel spa concession, a corporate grooming-benefit program, or an on-set hair and makeup arrangement for a production. That business is a withholding agent and must withhold tax and issue BIR Form 2307 to the salon or spa.

What withholding tax rate applies to a corporate spa concession or grooming-services contract? #

A service-contract payment made to a salon or spa business — for example a hotel paying its outsourced spa operator, or a production company paying a salon for on-set hair and makeup — generally falls under the 2% general contractor/business-services bracket under RR No. 2-98, Section 2.57.2(E), as amended by RR No. 11-2018, using ATC WI120 (individual/sole proprietor) or WC120 (corporation).

Is a stylist’s chair rental withheld at the same 2% rate as a service fee? #

Not necessarily. If the salon owner leases a specific, defined chair or station to an independent stylist or barber for a fixed period, with the stylist controlling that space and billing their own clients, that payment can be treated as a rental of a specific space rather than a service fee, and taxed at the 5% rental rate under RR No. 2-98, Section 2.57.2(C), instead of the 2% services rate.

Do walk-in customers paying for a haircut or spa treatment trigger withholding tax? #

No. Withholding under RR No. 2-98 applies only when the payor is a business or an individual engaged in trade or business paying in the course of that business. An individual walk-in customer paying a barbershop or salon directly for a haircut, manicure, or facial is not a withholding agent, so no BIR Form 2307 is issued for that transaction.

Which ATC codes apply to salon and spa payments on BIR Form 2307? #

A corporate service-contract fee to the salon or spa business uses ATC WI120 (individual/sole proprietor payee) or WC120 (corporation payee) under the 2% services bracket. A genuine chair or station rental to an independent stylist uses the rental codes WI100 (individual lessor) or WC100 (corporate lessor) under the 5% bracket.

Is an employed stylist or barber at a salon covered by BIR Form 2307? #

No. A stylist or barber who is a regular employee of the salon, with withholding tax already deducted from their compensation, is covered by BIR Form 2316, not Form 2307. Form 2307 only comes into play when the stylist operates as an independent contractor or chair-renting concessionaire billing outside the salon’s payroll.

Summary #

A corporate client paying a salon, barbershop, or spa business under a service contract — a hotel spa concession, a grooming-benefit program, an on-set styling arrangement — withholds at the flat 2% general services rate (ATC WI120/WC120) under RR No. 2-98, Section 2.57.2(E). An independent stylist or barber renting a defined chair or station from a salon owner can instead fall under the 5% rental bracket (ATC WI100/WC100) under Section 2.57.2(C), if the arrangement is genuinely structured as a space lease rather than a commission split. Ordinary walk-in retail transactions with individual customers are not withheld at all, since no business-to-business withholding relationship exists. See BIR Form 2307 for Gyms, Fitness Studios, and Personal Trainers for the closest analogous corporate-facility-vs-individual-provider split, and BIR Form 2307 for Co-Working Space and Virtual Office Providers for the exclusive-use test behind the chair-rental treatment.