What Is BIR Form 2307 and When Must You Issue It?

BIR Form 2307 is the Certificate of Creditable Tax Withheld at Source issued by a withholding agent to a payee when income tax is withheld on a qualifying payment. The form serves as official proof of withholding and allows the payee to claim the withheld amount as a tax credit to offset their income tax due.

Following the implementation of major tax reforms—including the Ease of Paying Taxes (EOPT) Act and the CREATE MORE Act—the rules governing withholding timing, digital compliance, and industry-specific exemptions have dramatically changed. This guide explains everything you need to know about BIR Form 2307, updated with the latest regulations.

What is BIR Form 2307? #

BIR Form 2307 is an official BIR certificate documenting creditable withholding taxes (CWT), often referred to as Expanded Withholding Tax (EWT). When a buyer (the withholding agent) procures goods or services from a seller (the payee), they deduct a designated percentage from the gross payment and remit it directly to the BIR on behalf of the seller.

For the payee, this withheld tax is not an expense but a prepaid tax asset, recorded in the accounting ledger as Creditable Withholding Tax Receivable. The payee uses BIR Form 2307 as proof of prepayment to deduct the withheld amount from their quarterly or annual Income Tax Returns (ITR). Without the physical or electronic possession of a valid Form 2307, the payee is legally barred from claiming these tax credits.

BIR Form 2307 vs. Other Common Certificates #

It is critical not to confuse Form 2307 with other information certificates issued by the BIR:

Who Must Issue BIR Form 2307 and When? #

A withholding agent must issue BIR Form 2307 when making payments subject to creditable withholding tax. Withholding agents include corporations, partnerships, government entities, and individuals designated by the BIR.

The EOPT Act Timing Rule: “At the Time Income Becomes Payable” #

Under Section 2.57.4 of RR No. 2-98, as amended by RR No. 4-2024 of the EOPT Act, the obligation of the payor to withhold tax arises strictly at the time the income has become payable. “Payable” refers to when the obligation becomes due, demandable, or legally enforceable.

Specifically, the payor must withhold the tax and prepare the Form 2307 at the earliest of the following events:

1. When the income payment is accrued or recorded as an expense or asset in the payor’s books of accounts; or

2. Upon the issuance by the seller of the sales invoice or other adequate document supporting the payable.

Important Timing Note: The actual cash payment date is no longer the trigger. For instance, if rentals for October 2025 are accrued as an expense in the tenant’s books in 2025 but paid in February 2026, the withholding obligation arose in 2025. Thus, the Form 2307 must pertain to 2025, and the landlord should decline a certificate dated 2026.

Repeal of Section 34(K) on Expense Deductibility #

Previously, if a taxpayer failed to withhold EWT, the BIR would disallow the corresponding business deduction for income tax purposes. Thanks to the EOPT Act, Section 34(K) has been repealed. Failing to withhold EWT is no longer a ground for the disallowance of business deductions. However, the withholding agent remains liable for the basic underwithheld tax, surcharges, and compromise interest penalties.

Key ATCs and Tax Rates #

Each transaction type reported on Form 2307 corresponds to a specific Alphanumeric Tax Code (ATC), which dictates the tax rate. The table below outlines the most common EWT rates and ATCs, including 2025/2026 revisions:

Note: Under the CREATE MORE Act (RR No. 5-2025), e-commerce platforms and digital wallets (like Shopee, Lazada, GCash, or Maya) must deduct a flat 0.5% withholding tax on remittances to online merchants. Merchants are exempt if their gross annual remittances are below ₱500,000, provided they submit a registered Sworn Declaration.

How to Prepare and File BIR Form 2307 #

Preparing and filing Form 2307 is a shared compliance responsibility between the payor and the payee.

Step-by-Step for Withholding Agents (The Payor) #

1. Withhold at Source: Compute EWT based on the gross amount of the purchase invoice excluding the 12% VAT component.

2. Accrue/Pay: Remit monthly via BIR Form 0619-E and quarterly via Form 1601-EQ.

3. Generate Form 2307: Complete Part I (Payee details), Part II (Payor details), and the monthly breakdown tables matching the transaction dates.

4. Issue to Payee: Hand over the completed certificate on or before the 20th day following the close of the taxable quarter, or upon request.

Step-by-Step for Income Recipients (The Payee) #

To claim the withholding tax as a credit against your tax dues, you must compile all Form 2307s received and file them digitally:

Step 1: Consolidate certificates into a SAWT (Summary Alphalist of Withholding Tax)
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Step 2: Submit the SAWT electronically to generate a BIR email confirmation
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Step 3: Convert/scan ITR, AFS, and your Form 2307 certificates into high-quality PDFs
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Step 4: Rename files according to strict BIR naming conventions
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Step 5: Upload all files via the eAFS Portal (eafs.bir.gov.ph) within 15 days of your ITR deadline

Mandated eAFS File Naming Conventions #

When uploading your attachments to the eAFS portal, you must compile your documents into four PDF files and rename them precisely as follows (replacing XXXXXXXXX with your nine-digit TIN, and MMYYYY with your tax period):

• File 1 (Income Tax Return): EAFSXXXXXXXXXITRTYMMYYYY

• File 2 (Audited Financial Statements): EAFSXXXXXXXXXAFSTYMMYYYY

• File 3 (Other Attachments/SAWT Confirmations): EAFSXXXXXXXXXOTHTYMMYYYY

• File 4 (Tax Credits/Form 2307 Copies): EAFSXXXXXXXXXTCRTYMMYYYY-01

Real Estate Discontinuation: Form 2307 vs. Form 1606 #

A significant administrative update under RMC No. 31-2025 applies to the sale of real properties classified as “ordinary assets” by developers habitually engaged in the real estate business.

• The Rule: Real estate buyers are no longer issued a Form 2307 as proof of tax credit.

• The New Procedure: The EWT must be declared and remitted strictly using BIR Form 1606. To claim their tax credits, real estate businesses must attach Form 1606 (along with validated payment proofs) directly to their Annual ITR. These credits are lodged under the “Other Tax Credits/Payments” section rather than the standard Form 2307 line item.

Audits, Refunds, and the “Matching Principle” #

When claiming a refund for excess, unutilized creditable withholding taxes, RMO No. 8-2025 and RMC No. 14-2025 establish fair compliance guidelines:

• No Original Form 2307 Required: The BIR accepts scanned, photocopied, or digitally generated copies of Form 2307.

• The Matching Principle Excludes Remittance Proof: Payees are no longer penalized if their withholding agent failed to remit the tax to the government. As long as your withholding agent declared you on their Alphalist of Payees (submitted via Form 1604-E or 1601-EQ), your Form 2307 is deemed valid, satisfying your burden of proof.

• Amendment Restraints: Once you officially file a claim for a tax refund or receive an Electronic Letter of Authority (eLA) for a covered period, you are barred from amending your tax returns.

Frequently Asked Questions #

What is BIR Form 2307? #

BIR Form 2307 is the Certificate of Creditable Tax Withheld at Source. It acts as official proof that tax was withheld from a payee’s income, allowing them to claim the amount as a tax credit.

Who must issue BIR Form 2307? #

Withholding agents, including businesses, top withholding agents, and government offices making payments subject to Expanded Withholding Tax (EWT), must issue BIR Form 2307 to their payees.

When should BIR Form 2307 be issued? #

Under the Ease of Paying Taxes (EOPT) Act, it must be issued when the income becomes payable (upon expense/asset accrual or invoice, whichever comes first). For general transactions, it is furnished to the payee on or before the 20th day following the close of the taxable quarter.

How is BIR Form 2307 different from BIR Form 2316? #

BIR Form 2307 is for creditable taxes withheld on business transactions, professional fees, and leases. BIR Form 2316 is the annual certificate of tax withheld purely on employee compensation.

Can a payee use digital or scanned copies of BIR Form 2307 for tax refunds? #

Yes. Under RMC No. 14-2025, the BIR accepts scanned, digital, or reproduced copies of Form 2307 for tax refunds, as the processing office validates authenticity by matching it directly against the database alphalist.

Summary #

BIR Form 2307 serves as your primary defense against double taxation in the Philippines, functioning as a legitimate prepayment of your income tax. Following the EOPT Act, remember that withholding is triggered strictly when an income becomes payable—either upon books accrual or the issuance of a sales invoice—not on the payment date.

By maintaining clean master vendor files, submitting your Summary Alphalist of Withholding Tax (SAWT) electronically, and strictly adhering to eAFS portal upload rules, your business can avoid audit adjustments, escape penalties, and smoothly claim your earned tax credits.