BIR Form 2307 for Courier and Last-Mile Delivery Providers: Delivery Fee vs COD Remittance
A merchant or online seller that pays a courier company for delivery withholds 2% expanded withholding tax (EWT) on the courier’s own delivery fee under RR No. 2-98, Section 2.57.2(E) — but not on cash-on-delivery (COD) payments the courier collects from customers and remits back to the merchant. The COD amount is the merchant’s own sales revenue passing through the courier; it was never the courier’s income, so it stays outside the withholding base entirely.
This guide is part of the BIR Form 2307 series. It covers who withholds on a courier payment, why COD remittances aren’t part of the withholding base, how this differs from the separate 0.5% e-marketplace withholding rule, and a worked e-commerce shipping example.
Generate a Courier's BIR Form 2307 FREE →Who withholds on a courier or delivery payment? #
A merchant, online seller, or business paying a courier for shipping and delivery is a withholding agent, the same as it would be for any other business-service supplier. RR No. 2-98 sets the withholding-agent test this way:
“(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)
A corporation running an online store and paying a courier company for outbound deliveries, or a self-employed online seller paying a rider-aggregator app for individual pickups, is a withholding agent under clauses (A) or (B) and must withhold and issue BIR Form 2307 on its payments to the courier.
What EWT rate applies to a courier’s delivery fee? #
A courier or last-mile delivery service’s fee is not named as its own separate line item in RR No. 2-98 — it falls under the same flat 2% general contractor/business-services catch-all described in BIR Form 2307 for Contractors and Subcontractors, the bracket this series applies to freight forwarders, warehouse operators, and similar logistics-service suppliers not given a more specific rate elsewhere.
| Payee | ATC | Rate |
|---|---|---|
| Courier / delivery provider, individually run | WI120 | 2% |
| Courier / delivery provider, organized as a corporation | WC120 | 2% |
Why COD remittances don’t get withheld #
A cash-on-delivery model has the courier collecting payment from the end customer at the point of delivery and remitting it back to the merchant, minus the courier’s own delivery fee — and only that delivery fee is the courier’s income. The COD amount itself is the merchant’s own sales revenue for the goods sold; the courier is simply the collection and remittance channel, holding the customer’s payment briefly before passing it on. This is the same pass-through principle this series applies more generally in Do You Withhold Tax on Reimbursement of Out-of-Pocket Expenses Billed Separately From a Service Fee? — a genuine pass-through amount, clearly separated from the service provider’s own fee, is not the service provider’s income and sits outside the EWT base.
In practice, most courier services already net this out for the merchant: the courier deducts its delivery fee from the COD amount before remitting the balance, and it’s that net remittance — plus the separately stated delivery fee — that the merchant should look at to isolate the actual withholdable amount.
How this differs from e-marketplace withholding #
Courier withholding and e-marketplace withholding are two separate rules applying to two separate parties in the same online-selling chain, and it’s easy to conflate them. Under RR No. 16-2023, as restated by RR No. 5-2025, an e-marketplace operator or digital financial services provider (DFSP) withholds an effective 0.5% on what it remits to a seller for goods sold through the platform, once the seller’s cumulative remittances exceed ₱500,000 for the year — covered in detail in BIR Form 2307 for Online Sellers: The 0.5% E-Marketplace and DFSP Withholding Tax Under RR No. 16-2023. That rule taxes the platform’s payment to the seller.
A merchant’s own payment to a third-party courier for delivery is a completely different transaction: the seller is now the payor, the courier is the payee, and the applicable rate is the general 2% services rate covered in this guide — not 0.5%. A single online sale can therefore run through both rules at once: the marketplace withholds 0.5% on its remittance to the seller for the sale itself, and the seller separately withholds 2% on its own payment to the courier for shipping that sale.
Worked example: an online store’s monthly courier bill #
Home Essentials PH, an online store operating its own website (not routed through a marketplace), pays Rapid Express Logistics Corp., a courier company, ₱35,000 for a month of last-mile deliveries. Rapid Express had been collecting COD payments from customers on Home Essentials’ behalf and already remitted ₱410,000 in customer payments net of its ₱35,000 delivery fee earlier in the month.
| Item | Amount |
|---|---|
| Delivery fee for the month (VAT-exclusive) | ₱35,000.00 |
| EWT withheld (2%, ATC WC120, on the fee only) | ₱700.00 |
| VAT (12% on ₱35,000) | ₱4,200.00 |
| COD sales proceeds remitted separately (not part of EWT base) | ₱410,000.00 |
Home Essentials PH withholds ₱700 — 2% of the ₱35,000 delivery fee only — and remits it through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, listing Rapid Express Logistics on its Quarterly Alphalist of Payees. The ₱410,000 in COD sales proceeds Rapid Express collected and remitted never enters the withholding computation at all, because it was Home Essentials’ own sales revenue, not Rapid Express’s income.
Frequently asked questions #
Does a merchant have to withhold tax when paying a courier or delivery company? #
Yes, if the merchant is a corporation or a business-registered individual. A merchant or online seller paying a courier company, delivery aggregator, or last-mile logistics provider for shipping is a withholding agent under RR No. 2-98, Section 2.57.3(A)-(B), and withholds expanded withholding tax on the delivery fee, then issues BIR Form 2307.
What withholding tax rate applies to a courier’s delivery fee? #
A courier or last-mile delivery service’s fee 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 — ATC WI120 for an individually run courier or rider-aggregator business, WC120 for a courier company organized as a corporation.
Does a merchant withhold tax on the cash-on-delivery amount a courier collects and remits? #
No. A cash-on-delivery (COD) payment the courier collects from the end customer and remits back to the merchant is the merchant’s own sales revenue passing through the courier, not income to the courier. Only the courier’s own delivery fee — usually deducted from the COD remittance or billed separately — is the courier’s income and falls inside the withholding base.
How is this different from the 0.5% withholding that applies to online sellers on e-marketplaces? #
They’re two separate withholding rules on two separate parties. Under RR No. 16-2023, an e-marketplace operator or digital financial services provider withholds 0.5% on what it remits to the seller for the goods sold. Separately, if the seller pays a third-party courier company for delivery, the seller withholds 2% on the courier’s own delivery fee under the general services bracket — the two rates apply to different payments between different parties in the same transaction chain.
Does it matter if the courier is an individual rider-partner or a large courier corporation? #
Yes, for the ATC code. An individually operated courier or independent rider-aggregator business uses ATC WI120 at 2%; a courier company organized as a corporation uses ATC WC120, also at 2%. The rate is the same either way — only the code changes with the payee’s entity type.
Summary #
A courier or last-mile delivery provider’s own delivery fee sits in the flat 2% general business-services bracket (ATC WI120/WC120) under RR No. 2-98, Section 2.57.2(E) — but the far larger COD amount it collects and remits back to the merchant is never part of that base, because it was always the merchant’s own sales revenue, not the courier’s income. This runs alongside, not instead of, the separate 0.5% e-marketplace withholding on the merchant’s own sale under RR No. 16-2023. See BIR Form 2307 for Online Sellers: The 0.5% E-Marketplace and DFSP Withholding Tax Under RR No. 16-2023 for that companion rule, and BIR Form 2307 for Freight Forwarders and Customs Brokers for a related fee-vs-pass-through split in logistics.