Do Food Delivery Apps Withhold Tax on Restaurant Payouts? BIR Form 2307 for Merchant Partners
A food delivery platform such as GrabFood or foodpanda withholds a flat 0.5% of its gross remittances to a restaurant or food-stall merchant partner once that merchant’s cumulative annual remittances exceed ₱500,000 — a rule set by Revenue Regulations No. 16-2023 and simplified by Revenue Regulations No. 5-2025. This is a separate question from whether the platform withholds on driver or rider payouts, and it applies specifically to the settlement the platform sends the restaurant for food orders, not the delivery fee charged to the customer.
This guide is part of the BIR Form 2307 series. It covers the withholding rule, how it differs from driver-payout and general e-marketplace withholding, and a worked monthly settlement example for a restaurant partner.
Generate This Merchant's BIR Form 2307 FREE →Does a food delivery platform withhold tax on what it pays a restaurant? #
Yes — a food delivery platform is treated as an electronic marketplace operator or digital financial services platform (DFSP) for withholding purposes, and it must withhold creditable income tax on its gross remittances to merchant partners, including restaurants and food stalls, once the ₱500,000 annual exemption is exceeded. A government information bulletin covering the underlying rule described the obligation this way:
“Apps or website platforms like Shopee, Lazada, Foodpanda, Grab, etc. will have to withhold 1 percent of half of the gross remittances sent to their merchants, partner drivers, or online sellers.”
— Philippine Information Agency, reporting on the BIR’s e-marketplace withholding rule under RR No. 16-2023
That original 1%-of-one-half formula — mathematically equivalent to withholding 0.5% of the full remittance — was later restated as a flat 0.5% under RR No. 5-2025, which simplified the computation without changing the underlying tax burden. A restaurant that receives its weekly or monthly food-sales settlement from a delivery app is a “merchant” under this rule, in the same category as a Shopee or Lazada seller, even though the underlying transaction is a meal order rather than a retail good.
The ₱500,000 threshold and the 0.5% rate #
The platform withholds nothing on a merchant’s first ₱500,000 of cumulative remittances for the year; once that threshold is crossed, it withholds 0.5% on the remittances above it. This mirrors the same threshold and rate structure covered in BIR Form 2307 for Online Sellers, applied here to a restaurant’s food-order settlements instead of a retail seller’s product sales.
| Merchant’s cumulative annual remittance from the platform | Withholding |
|---|---|
| ₱500,000 or below | None |
| Above ₱500,000 | 0.5% on the amount exceeding ₱500,000 |
A high-volume restaurant chain generating several hundred thousand pesos a month in delivery-app settlements will typically cross the threshold within the first quarter of the year, while a small neighborhood food stall with occasional delivery orders may never cross it in a given year.
Restaurant payouts vs driver payouts — two different rules on the same platform #
A food delivery platform runs two separate withholding questions at once: the merchant-payout rule covered here, which applies to what the platform remits to the restaurant, and a separate driver/rider-payout question, which generally falls outside BIR Form 2307 for different reasons. As Do Ride-Hailing and Delivery Apps Withhold Tax on Driver and Rider Payouts? explains, the driver-payout side of these platforms is not treated the same way as the merchant-payout side — a restaurant should not assume its delivery-fee cost structure tells it anything about its own withholding as a merchant, and a driver should not assume a restaurant’s BIR Form 2307 treatment applies to their own payouts.
Worked example: a restaurant partner’s monthly settlement #
Kusina ni Aling Rosa, a small restaurant registered as a sole proprietorship, partners with a food delivery platform. Through August, its cumulative remittances from the platform for the year total ₱470,000 — below the ₱500,000 threshold, so no withholding has occurred. In September, the platform remits ₱90,000 for that month’s food orders, pushing cumulative remittances to ₱560,000, or ₱60,000 above the threshold.
| Item | Amount |
|---|---|
| September remittance | ₱90,000.00 |
| Portion still within the ₱500,000 exemption | ₱30,000.00 |
| Portion subject to withholding | ₱60,000.00 |
| EWT withheld (0.5% of ₱60,000) | ₱300.00 |
| Net amount paid to the restaurant | ₱89,700.00 |
From that point forward, every additional remittance for the rest of the year is withheld in full at 0.5%, since the ₱500,000 exemption has already been used up. The platform remits the amounts withheld and issues the restaurant a BIR Form 2307 reflecting the cumulative withholding for the period, which the restaurant credits against its income tax due when filing its quarterly and annual returns.
Summary #
A food delivery platform withholds 0.5% of its gross remittances to a restaurant or food-stall merchant partner once cumulative annual remittances exceed ₱500,000, under RR No. 16-2023 as simplified by RR No. 5-2025 — the same rate and threshold structure that applies to a general e-marketplace seller, applied here to food-order settlements. This merchant-side rule is separate from the driver/rider-payout question on the same platforms. For the parallel retail-seller analysis, see BIR Form 2307 for Online Sellers, and for the driver-payout side, see Do Ride-Hailing and Delivery Apps Withhold Tax on Driver and Rider Payouts?