BIR Form 2307 for Purchases of Goods: Top Withholding Agent 1% Rate Explained

A BIR Top Withholding Agent (TWA) must withhold one percent (1%) expanded withholding tax (EWT) on its local purchases of goods and issue BIR Form 2307 to each affected supplier, under Revenue Regulations (RR) No. 2-98 as amended by RR No. 11-2018, RR No. 7-2019 (₱12 million classification threshold), and RR No. 24-2025 (current rate structure). The matching alphanumeric tax codes for private-sector TWAs are WC158 (corporate supplier) and WI158 (individual supplier).

This guide is part of the BIR Form 2307 series. It focuses on goods purchases — when the 1% rule applies, how it differs from the 2% services rate, the reduced 0.5% wholesale categories, and a ₱300,000 worked example. For the full TWA classification rules, see Who Is a BIR Top Withholding Agent?.

Who must withhold 1% on purchases of goods? #

Only taxpayers the BIR has classified as Top Withholding Agents (plus other payors specifically named by regulation) withhold 1% EWT on ordinary local goods purchases. Under RR No. 7-2019, TWA status turns on meeting a ₱12,000,000 threshold in the preceding taxable year on any one of gross sales/receipts, gross purchases, or claimed deductible itemized expenses — and on the BIR publishing the taxpayer on the official list. The obligation to withhold begins on the first day of the month following that publication, not retroactively.

A company that is not on the TWA list does not start issuing BIR Form 2307 on inventory purchases merely because the invoice is large. Once classified, every local purchase of goods from that effective date forward is generally subject to the 1% withholding — and every local purchase of services to the separate 2% rate.

What rates and ATC codes apply to TWA goods purchases? #

Private-sector TWAs withhold 1% on goods (WC158/WI158) and 2% on services (WC160/WI160); RR No. 24-2025 added a 0.5% reduced rate for specific wholesale goods effective October 10, 2025.

These private TWA codes must not be confused with government purchase codes (WC640/WI640 for goods; WC157/WI157 for services). Putting a government ATC on a private TWA certificate — or a services ATC on a goods invoice — is a common mismatch flagged in the ATC codes guide.

Worked example: TWA buys ₱300,000 of goods #

A classified Top Withholding Agent that buys ₱300,000 of goods from a corporate supplier withholds ₱3,000 at 1% under ATC WC158 and issues BIR Form 2307 for that amount.

Pacific Packaging Inc. has been on the BIR TWA list since the prior year. In July it purchases raw materials totaling ₱300,000 (VAT-exclusive) from Metro Resins Corp., a corporate supplier:

Pacific Packaging remits the ₱3,000 with its EWT filings, lists Metro Resins on its Quarterly Alphalist of Payees, and issues BIR Form 2307 showing ₱300,000 income payment, ATC WC158, and ₱3,000 tax withheld. Metro Resins uses that certificate when claiming CWT credit.

If the same ₱300,000 had instead been a local service purchase (for example, contract manufacturing billed as a service), the rate would be 2% (₱6,000) under ATC WC160, not 1% under WC158 — classifying the invoice correctly before selecting the ATC is the operational control that keeps BIR Form 2307 consistent with the QAP.

Frequently asked questions #

What withholding rate does a Top Withholding Agent apply on purchases of goods? #

A Top Withholding Agent withholds one percent (1%) expanded withholding tax on its local purchases of goods, under RR No. 2-98 as amended by RR No. 11-2018 and RR No. 24-2025. The agent issues BIR Form 2307 to the supplier using ATC WC158 (corporate supplier) or WI158 (individual supplier).

What is the Top Withholding Agent threshold? #

Under Revenue Regulations No. 7-2019, a taxpayer is classified as a Top Withholding Agent if its gross sales/receipts, gross purchases, or claimed deductible itemized expenses amounted to ₱12,000,000 or more during the preceding taxable year. Classification takes effect when the BIR publishes the taxpayer on the TWA list.

Which ATC codes apply to TWA purchases of goods on BIR Form 2307? #

Private-sector Top Withholding Agents use ATC WC158 for corporate suppliers of goods and WI158 for individual suppliers of goods, both at 1%. These codes are distinct from TWA service codes WC160/WI160 (2%) and from government-purchase goods codes WC640/WI640.

Is there a reduced rate for some goods purchases? #

Yes. Under RR No. 24-2025, effective October 10, 2025, a reduced 0.5% rate applies to gross payments by TWAs to manufacturers or importers of motor vehicles, pharmaceutical products, and solid or liquid fuels intended for wholesale. Ordinary local goods purchases remain at 1%.

Does every business withhold 1% when it buys goods? #

No. The 1% goods withholding obligation applies to taxpayers the BIR has classified as Top Withholding Agents (and to other payors specifically required by regulation). An ordinary buyer that is not a TWA does not withhold EWT merely because it purchased inventory from a local supplier.

Summary #

For a Top Withholding Agent, local goods purchases mean 1% EWT and BIR Form 2307 with WC158/WI158; services are a separate 2% track with WC160/WI160, and RR No. 24-2025’s 0.5% reduced rate covers only the listed wholesale fuel, pharma, and motor-vehicle categories from October 10, 2025. Confirm TWA status and effective date before changing AP withholding, then keep certificates aligned with the QAP. Start with Who Is a BIR Top Withholding Agent? and What Is BIR Form 2307.