BIR Form 2307 for Parking Lot and Valet Services: Rental or Service Fee?

A company that leases dedicated, identified parking slots or floor space under a term lease is renting real property, withheld at 5% under RR No. 2-98, Section 2.57.2(B), as amended by RR No. 11-2018. A company that instead pays a parking-lot operator or valet company to run pay-per-use or per-transaction parking service for whoever shows up — without receiving an identified exclusive space — is buying a service, withheld at the flat 2% under Section 2.57.2(E). The two arrangements can look identical from the outside, but the withholding rate depends entirely on who controls the space.

This guide is part of the BIR Form 2307 series. It covers the beneficial-use-and-control test that separates a parking lease from a parking or valet service, the applicable ATC codes, and worked examples for both a reserved-slot corporate lease and a mall valet management fee.

What decides the rate: rental or service? #

The distinction turns on whether the paying business has beneficial use and control of a specific, identified parking space — not on the fact that a vehicle happens to end up parked. If a company leases a defined number of reserved parking slots or a specific floor area, with those spaces set aside exclusively for its use under a term, the payment is rent for real property. If a company instead pays a parking-lot operator or valet company a fee to manage parking for whoever arrives — with the operator deciding how to allocate space and staff the lot — the payment is for a service, even though the underlying activity in both cases is “parking.”

This is the same beneficial-use-and-control test this series applies to warehouse and coworking space, covered in BIR Form 2307 for Warehousing, Storage, and Logistics Service Fees and BIR Form 2307 for Coworking and Virtual Office Arrangements: the rate follows who has the right to occupy, control access to, and exclude others from an identified space.

Why does a dedicated parking slot lease get the 5% rental rate? #

A company that leases specific, reserved parking slots withholds 5% expanded withholding tax (EWT) on gross rental for real property used in business, under RR No. 2-98 Section 2.57.2(B) as amended by RR No. 11-2018. The regulation frames the rate around continued use or possession without ownership:

“5% EWT — On gross rental for the continued use or possession of real property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity.”

— RR No. 2-98, Section 2.57.2(B), as amended by RR No. 11-2018

A corporate tenant that leases 20 specific parking slots in an office building under a term lease — with those slots reserved to it and other parties excluded from using them — has beneficial use and control of an identified space in exactly the sense this provision targets. That payment withholds at 5% under ATC WC100 (corporate lessor) or WI100 (individual lessor).

Why does a parking-lot or valet management fee get the 2% service rate instead? #

A parking-lot operator or valet company that runs pay-per-use or per-transaction parking for whoever shows up, without giving the payor a dedicated, identified space, is delivering a service under a business contract, which puts the payment in the general contractor/business-services category under RR No. 2-98 Section 2.57.2(E) rather than the rental bracket. The operator retains control and staffing of the lot itself — the payor is buying management of a flow of vehicles, not a leasehold interest in any specific space.

A shopping mall that pays a valet company a flat monthly fee to operate its public valet service, or a building administrator that contracts an operator to run transient (pay-per-entry) parking for visitors, is buying exactly this kind of service. That payment withholds at the flat 2% contractor rate under ATC WC120 (corporate operator) or WI120 (individual/sole proprietor operator), the same bracket covered generally in BIR Form 2307 for Contractors and Subcontractors.

Worked example 1: a corporate tenant leases reserved parking slots #

Grandview Tower Corp., a building administrator, leases 20 reserved parking slots to Apex Logistics Inc. at ₱3,000 per slot per month. The slots are specifically identified and reserved to Apex, which excludes other tenants from using them — this is a real property rental.

Worked example 2: a mall pays a valet company a management fee #

Contrast that with a shopping mall that pays ValetPro Services Inc. a flat ₱80,000 monthly fee to run its public valet parking service. The mall does not receive any identified exclusive parking space — ValetPro controls the flow of vehicles, staffing, and layout of the lot itself. This is a service fee, not a rental.

Grandview Tower issues Apex Logistics a BIR Form 2307 each quarter showing the cumulative rental fees paid, ATC WC100, and total EWT withheld. The mall issues ValetPro a separate BIR Form 2307 each quarter showing the cumulative management fees paid, ATC WC120, and total EWT withheld — a materially different rate for what might otherwise look, on the surface, like the same kind of “parking” payment.

Frequently asked questions #

Do I withhold 5% or 2% on a parking or valet services payment? #

It depends on what’s actually being paid for. Leasing dedicated, identified parking slots or floor space under a term lease is a real property rental withheld at 5% under RR No. 2-98, Section 2.57.2(B), as amended by RR No. 11-2018. Paying a parking-lot operator or valet company to run pay-per-use or per-transaction service for whoever shows up, without giving the payor an identified exclusive space, is a service fee withheld at the flat 2% under Section 2.57.2(E).

What is the beneficial-use-and-control test applied to parking space? #

It asks whether the paying business has an identified, exclusive space it controls and can restrict others from using. A company leasing specific reserved parking slots under a term has beneficial use and control of that space, taxed at 5% as a rental. A company paying an operator to manage a public parking lot or valet service, where the operator retains control and staffing of the lot itself, is buying a service, taxed at 2%.

Which ATC code applies to a parking or valet services payment? #

For a dedicated parking slot lease paid to a corporate lessor, use ATC WC100; for an individual lessor, use WI100. For a parking-lot management or valet service fee paid to a corporate operator, use ATC WC120; for an individual/sole proprietor operator, use WI120.

Does a monthly parking fee for an unreserved company car always count as rent? #

No. If the company simply pays a per-slot or per-vehicle fee for access to a general parking area without an identified, exclusive space reserved to it, and the operator retains control over which vehicles park where, that arrangement functions closer to a service than a rental. The 5% rate applies specifically where the payor has beneficial use and control of a defined, reserved space under a lease.

How is a mall’s valet parking management fee withheld? #

A mall that pays a valet company a fee to operate its public valet parking service — where the valet company controls staffing and the flow of the lot itself, and the mall does not receive an identified exclusive space — withholds 2% expanded withholding tax under RR No. 2-98, Section 2.57.2(E), ATC WC120 for a corporate valet operator or WI120 for an individual one.

Summary #

A parking or valet payment splits on the same beneficial-use-and-control test this series applies to warehouse and coworking space: a lease of dedicated, identified parking slots is real property rental at 5% under RR No. 2-98 Section 2.57.2(B), while a fee paid to an operator to manage parking or valet service for the general public is a contractor service fee at 2% under Section 2.57.2(E). Use ATC WC100/WI100 for the rental and WC120/WI120 for the service fee. See BIR Form 2307 for Warehousing, Storage, and Logistics Service Fees and BIR Form 2307 for Coworking and Virtual Office Arrangements for the same test applied to other space types, Withholding Tax on Rent for the general rental rules, and BIR Form 2307 for Contractors and Subcontractors for the general 2% service bracket a valet or lot-management fee falls under.