BIR Form 2307 for Certified Public Accountants and Independent Auditors: Professional Fee Withholding

A business that pays a certified public accountant (CPA) or an independent auditor for accounting, bookkeeping, tax preparation, or audit services must withhold expanded withholding tax (EWT) and issue BIR Form 2307, because CPAs are individually named among the professionals covered by Section 2.57.2(A) of Revenue Regulations (RR) No. 2-98, as restructured by RR No. 11-2018 — the same clause that names lawyers, doctors, and architects. The rate and ATC code depend on whether the payee is the individual CPA (5%/10%) or an accounting/audit firm organized as a corporation or partnership (10%/15%).

This guide is part of the BIR Form 2307 series. It covers why CPAs sit in the named-professional bracket, the individual-vs-firm rate split, how this compares to a non-CPA bookkeeper, and a worked annual-audit example.

Are CPAs named professionals for withholding tax purposes? #

Yes — certified public accountants are individually enumerated among the professionals whose fees fall under expanded withholding tax rules, in the same clause that names lawyers, doctors of medicine, and engineers. RR No. 2-98, as amended by RR No. 11-2018 to implement the TRAIN Law (RA No. 10963), lists CPAs directly:

“…the following individuals shall be subjected to expanded withholding tax: …certified public accountants…”

— Section 2.57.2(A) of Revenue Regulations No. 2-98, as amended, listing individually engaged professionals subject to expanded withholding tax

Because CPAs are named directly rather than folded into a general catch-all, any business paying an individually practicing CPA for accounting, tax, or audit services withholds under this named-professional item — whether the CPA is preparing financial statements, conducting a statutory audit, or advising on tax compliance.

Individual CPA or audit firm — why the payee type changes the rate #

The withholding rate and ATC code turn on who the actual payee is: an individually practicing CPA is withheld under the individual professional-fee rate, while an accounting or auditing firm organized as a corporation or partnership is withheld under the corporate professional-fee rate — even though both are billing for the same kind of accounting or audit work.

A manufacturing company that retains “CPA Ana Villareal” directly — billing under her own name and TIN for its statutory audit — withholds using WI010/WI011. The same company paying an invoice from “Villareal & Associates, CPAs” for identical audit work withholds using WC010/WC011 instead, because the payee on that invoice is a partnership.

How is a CPA different from a non-CPA bookkeeper for withholding purposes? #

A non-CPA freelance bookkeeper is withheld at the identical 5%/10% rate as a licensed CPA, because RR No. 2-98 covers bookkeeping, accounting, and auditing as professional services generally — the CPA license changes who can sign an audit opinion, not the withholding rate. As BIR Form 2307 for Freelance Bookkeepers covers, a bookkeeper without a CPA license providing day-to-day bookkeeping services to a business client falls under the same professional-fee item and the same WI010/WI011/WC010/WC011 codes as the CPA covered in this guide. What changes between the two is the scope of work a CPA alone may legally perform — such as signing financial statements for regulatory filing — not the tax treatment of the fee itself.

Who has to withhold on a CPA or audit fee? #

Any business or individual engaged in business that pays a CPA or audit firm for accounting, tax, or audit services is a withholding agent and must withhold EWT before releasing payment. Common payors include:

• A corporation retaining an independent CPA to conduct its annual statutory audit
• A small business engaging a CPA for monthly bookkeeping and BIR compliance filing
• A real estate developer paying an audit firm for a due-diligence financial review ahead of a transaction
• A nonprofit organization retaining a CPA to prepare its annual financial statements for its board and donors

As with other named professionals in this bracket, the individual CPA secures the lower 5% rate by filing an Income Payee’s Sworn Declaration of Gross Receipts/Sales with each business client, together with a copy of their BIR Certificate of Registration — see BIR Form 2307 for Professional Fees for the full declaration mechanic.

Worked example: a corporation’s annual statutory audit #

Pinnacle Manufacturing Corporation engages CPA Ana Villareal, an individually practicing certified public accountant, for a fixed audit fee of ₱400,000 to conduct its annual statutory financial statement audit. Villareal bills Pinnacle directly under her own name and TIN and has an Income Payee’s Sworn Declaration of Gross Receipts/Sales (Annex “B-1”) on file confirming her gross income for the year has not exceeded ₱3,000,000, so ATC WI010 at 5% applies.

Pinnacle remits the ₱20,000 withheld through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, and issues Villareal a BIR Form 2307 showing the audit fee, ATC WI010, and the tax withheld — which she credits against her income tax due. Had Pinnacle instead engaged “Villareal & Associates, CPAs,” a partnership, for the identical audit, it would withhold using ATC WC010 at 10% (assuming the firm’s gross income for the year does not exceed ₱720,000) — ₱40,000 withheld on the same ₱400,000 fee.

Frequently asked questions #

Is a CPA’s professional fee subject to expanded withholding tax? #

Yes. Certified public accountants are individually named among the professionals subject to expanded withholding tax under Section 2.57.2(A) of Revenue Regulations No. 2-98, as amended by RR No. 11-2018. A business that pays a CPA for accounting, bookkeeping, tax, or audit services must withhold expanded withholding tax (EWT) and issue BIR Form 2307.

What withholding tax rate applies when a client pays a CPA directly? #

An individually practicing CPA is withheld at the same 5%/10% individual professional-fee rate as any other named professional under RR No. 11-2018: 5% (ATC WI010) if the CPA’s gross income for the current year does not exceed ₱3,000,000 and a sworn declaration is on file, or 10% (ATC WI011) if it exceeds ₱3,000,000, the CPA is VAT-registered, or no valid declaration has been submitted.

Does the rate change if the payment goes to an audit firm instead of the individual CPA? #

Yes. If the payee is an accounting or auditing firm organized as a corporation or partnership rather than the individual CPA, the payment is a professional fee to a corporate or non-individual payee, subject to 10% (ATC WC010) if the firm’s gross income for the current year does not exceed ₱720,000, or 15% (ATC WC011) if it exceeds ₱720,000.

Is a non-CPA freelance bookkeeper withheld the same way as a CPA? #

Yes, at the same rate, but under a different named basis. RR No. 2-98 covers bookkeeping and accounting services generally, so a freelance bookkeeper without a CPA license is still withheld at the same 5%/10% individual professional-fee rate as a licensed CPA — the fee, not the license itself, triggers the withholding obligation.

Summary #

Certified public accountants sit inside the RR No. 11-2018 individual professional-fee withholding bracket under Section 2.57.2(A) of RR No. 2-98, named directly alongside lawyers and doctors. The payee’s legal form decides which rate applies: an individual CPA is withheld at 5%/10% (ATC WI010/WI011) once a sworn declaration is on file, while an accounting or audit firm organized as a corporation or partnership is withheld at 10%/15% (ATC WC010/WC011) based on its own gross income threshold — the same rate a non-CPA bookkeeper receives under the general professional-fee item. For the general mechanics this scenario builds on, see BIR Form 2307 for Professional Fees, and for the non-CPA comparison, see BIR Form 2307 for Freelance Bookkeepers.