BIR Form 2307 for Business and Management Consultants: Which Withholding Rate Applies

A business that pays a management or business consultant for advisory services withholds expanded withholding tax (EWT) and issues BIR Form 2307, because management and technical consultants 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 rate and ATC code depend on whether the payee is the individual consultant (5%/10%) or a consulting firm organized as a corporation (10%/15%).

This guide is part of the BIR Form 2307 series. It covers why management consultants sit in the same named-professional bracket as lawyers and CPAs, the individual-vs-firm rate split, the sworn declaration for the lower rate, and a worked example for a strategy engagement. For the general consultant/professional-fee mechanics this builds on, see BIR Form 2307 for Professional Fees.

Are management consultants named professionals for withholding tax purposes? #

Yes — “management and technical consultants” is one of the specific categories enumerated in the same clause of RR No. 2-98 that names lawyers, certified public accountants, and engineers. RR No. 2-98, as amended by RR No. 11-2018 to implement the TRAIN Law (RA No. 10963), lists professionals subject to expanded withholding tax by individually engaged category:

“…the following individuals shall be subjected to expanded withholding tax: …management and technical consultants…”

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

Because the item names the consulting function itself rather than a specific industry, the same bracket covers a strategy consultant advising a manufacturer, an HR consultant redesigning a company’s compensation structure, an operations consultant running a process-improvement project, and a general business advisor retained for ad hoc guidance — the common thread is that the client is paying for advice, not for the sale of a product or a different named service.

Individual consultant or consulting firm — why the payee type changes the rate #

The withholding rate and ATC code turn on who the actual payee is: an individually engaged management consultant is withheld under the individual professional-fee rate, while a consulting firm organized as a corporation is withheld under the corporate professional-fee rate — the same individual-vs-entity split this series applies to financial advisors and software developers and IT consultants, who share this same consultant item.

A manufacturer that retains “Consultant Ma. Reyes” directly — billing under her own name and TIN for a six-month operations review — withholds using WI010/WI011. The same manufacturer paying an invoice from “Reyes Strategy Partners, Inc.” for identical consulting work withholds using WC010/WC011 instead, purely because the payee on that invoice is a corporation.

Who has to withhold on a management consulting fee? #

Any business or individual engaged in business that pays a management or business consultant for advisory services is a withholding agent and must withhold EWT before releasing payment. Common payors include:

• A manufacturing company retaining a consultant to redesign its production workflow
• A retail chain engaging an HR consultant to restructure its compensation and benefits program
• A startup paying a strategy consultant for a market-entry study
• A family-owned business retaining a general business advisor for a succession-planning engagement

The sworn declaration mechanic is the same as any other named professional under this bracket: without an Income Payee’s Sworn Declaration of Gross Receipts/Sales (Annex “B-1” or “B-2”) on file, together with a copy of the consultant’s BIR Certificate of Registration, the paying business should default to the higher 10% individual rate rather than assume eligibility for 5%. See BIR Form 2307 for Professional Fees for how this declaration mechanic works in full.

Worked example: a retailer’s operations consulting engagement #

Lakeside Retail Group, Inc. engages Consultant Ma. Reyes, an individually practicing operations consultant, for a fixed project fee of ₱500,000 to review and redesign the company’s warehouse and fulfillment workflow. Reyes bills the retailer 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.

Lakeside remits the ₱25,000 withheld through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, and issues Reyes a BIR Form 2307 each quarter showing the cumulative consulting fees paid, ATC WI010, and the total tax withheld — which she then credits against her income tax due when filing BIR Form 1701Q/1701. Had Lakeside instead engaged “Reyes Strategy Partners, Inc.,” a corporation, for the identical project, the retailer would withhold using ATC WC010 at 10% (assuming the firm’s gross income for the year does not exceed ₱720,000) — ₱50,000 withheld on the same ₱500,000 fee.

Frequently asked questions #

Is a management consultant’s fee subject to expanded withholding tax? #

Yes. Management and technical consultants are individually named among the professionals covered by Section 2.57.2(A) of Revenue Regulations No. 2-98, as amended by RR No. 11-2018. A business that pays a management or business consultant for advisory services must withhold expanded withholding tax (EWT) and issue BIR Form 2307.

What withholding tax rate applies to a management consultant? #

An individually engaged management consultant is withheld at 5% (ATC WI010) if their 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 consultant is VAT-registered, or no valid declaration has been submitted.

Does the rate change if a consulting firm is engaged instead of an individual consultant? #

Yes. If the payee is a management or business consulting firm organized as a corporation rather than the individual consultant, the payment falls under the corporate professional-fee item: 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.

Does it matter what kind of consulting work is being done? #

No. Whether the engagement covers strategy, operations, HR, process improvement, or general business advisory work, it falls under the same “management and technical consultants” item as long as the consultant is advising the client rather than selling a product or performing a different named service — the specific consulting discipline doesn’t change the ATC or rate.

Summary #

Management and business consultants sit inside the RR No. 11-2018 named-professional bracket under Section 2.57.2(A) of RR No. 2-98, the same clause that covers lawyers, CPAs, and financial advisors. The payee’s legal form decides which rate applies: an individual consultant is withheld at 5%/10% (ATC WI010/WI011) once a sworn declaration is on file, while a consulting firm organized as a corporation is withheld at 10%/15% (ATC WC010/WC011) based on its own gross income threshold. For the general mechanics this scenario builds on, see BIR Form 2307 for Professional Fees, and for a closely related consultant scenario, see BIR Form 2307 for Financial Advisors and Fee-Based Wealth Managers.