BIR Form 2307 for Professional Fees: Withholding Rates, ATC Codes, and a Worked Example

Professional and talent fees paid to individuals are subject to 5% or 10% expanded withholding tax (EWT), and those paid to corporations to 10% or 15%, depending on the payee’s income level and VAT status, under Revenue Regulations (RR) No. 11-2018. The withholding agent deducts the tax at the applicable rate and issues BIR Form 2307 to the payee as proof of the amount withheld.

This guide is part of the BIR Form 2307 series. It covers the rate tiers, the ATC codes that select between them, the sworn declaration that determines which individual rate applies, and a worked example for a professional-services engagement.

Who withholds tax on professional fees? #

Any business or individual engaged in business or the practice of a profession that pays a professional, consultant, talent, or similar service provider for services rendered is a withholding agent on that payment and must withhold EWT before paying the fee, then issue BIR Form 2307 to the payee.

Payments covered include fees to:

• Lawyers, CPAs, engineers, architects, and other licensed professionals
• Consultants (marketing, IT, management, HR, and similar advisory work)
• Talent fees to entertainers, athletes, and similar service providers — for the talent-specific ATC codes (WI020/WI030/WI080), see BIR Form 2307 for Talent Fees
• Agents, brokers, and other individuals paid on a professional or commission basis

What is the withholding tax rate on professional fees? #

The rate depends on whether the payee is an individual or a corporation, and on the payee’s income level, under RR No. 11-2018, which restructured expanded withholding tax rates to implement the TRAIN Law (Republic Act No. 10963).

For an individual payee, both conditions for the lower 5% rate must hold — gross income within the ₱3,000,000 threshold and non-VAT registration on the payee’s BIR Certificate of Registration. If either condition fails, or if the payor has no sworn declaration on file, the higher 10% rate applies.

What is the sworn declaration, and why does it decide the rate? #

An individual payee claims the lower 5% rate by submitting an Income Payee’s Sworn Declaration of Gross Receipts/Sales, together with a copy of their BIR Certificate of Registration (BIR Form 2303), to each income payor — typically at the start of the engagement or the start of the taxable year. The payor consolidates the declarations it receives and submits its own sworn declaration to the BIR. Without a valid declaration on file, the payor should default to withholding at 10% rather than risk under-withholding, since RR No. 11-2018 places the burden of proof for the lower rate on the payee’s submission, not the payor’s assumption.

Which ATC code applies to a professional fee? #

The Alphanumeric Tax Code (ATC) on BIR Form 2307 encodes both the payee type and the applicable rate:

Selecting the wrong ATC either under- or over-withholds the payment and is one of the common BIR Form 2307 mistakes that surfaces later when the payee’s certificate fails to match the withholding agent’s own alphalist during BIR review.

Worked example: a marketing consultant’s professional fee #

Suppose a retail company engages an individual marketing consultant for a project fee of ₱150,000. The consultant has submitted a sworn declaration confirming gross income for the year has not exceeded ₱3,000,000 and that she is non-VAT registered, so ATC WI010 at 5% applies.

The company pays the consultant ₱142,500 in cash, remits the ₱7,500 withheld through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, and issues a BIR Form 2307 showing ₱150,000 as the income payment, ATC WI010, and ₱7,500 as tax withheld. The company also reports the payment on its Quarterly Alphalist of Payees — see How to Convert Excel to BIR DAT File for QAP for how that alphalist is prepared. The consultant then credits the ₱7,500 against her income tax due when filing BIR Form 1701, attaching the certificate or reporting it through SAWT.

If the same fee had instead gone to a marketing agency organized as a corporation with gross income for the year under ₱720,000, ATC WC010 at 10% would apply instead, withholding ₱15,000 rather than ₱7,500 — the same gross fee produces a different withheld amount purely because the payee type and ATC code changed.

Frequently asked questions #

What is the withholding tax rate on professional fees in the Philippines? #

For an individual payee, the rate is 5% if their gross income for the current year does not exceed ₱3,000,000 and they are non-VAT registered, or 10% if it exceeds ₱3,000,000 or they are VAT-registered. For a corporate or non-individual payee, the rate is 10% if gross income does not exceed ₱720,000, or 15% if it exceeds ₱720,000, under Revenue Regulations No. 11-2018.

What is a sworn declaration and why does it matter for the 5% rate? #

The Income Payee’s Sworn Declaration of Gross Receipts/Sales is a document an individual professional submits to each income payor, together with a copy of their BIR Certificate of Registration, to certify their non-VAT status and confirm gross income has not exceeded ₱3,000,000. Without it on file, the payor should withhold at the higher 10% rate rather than 5%, under RR No. 11-2018.

Which ATC codes apply to professional fees on BIR Form 2307? #

For individual professionals, ATC WI010 applies at 5% (gross income up to ₱3M, non-VAT) and WI011 at 10% (over ₱3M or VAT-registered). For corporate payees, ATC WC010 applies at 10% (gross income up to ₱720,000) and WC011 at 15% (over ₱720,000).

Does the 5%/10% threshold reset every year? #

Yes. The ₱3,000,000 gross income test for individual payees, and the ₱720,000 test for corporate payees, are measured against income for the current taxable year, so a payee’s applicable rate can change from one year to the next as their cumulative gross income crosses the threshold.

What happens if the wrong professional-fee ATC code is used on BIR Form 2307? #

Using the wrong ATC code either under-withholds or over-withholds tax and misstates the payee category the BIR expects to match against the withholding agent’s own alphalist, which can complicate the payee’s tax credit claim — see Common BIR Form 2307 Mistakes and How to Correct Them for the correction process.

Summary #

Professional-fee withholding under RR No. 11-2018 turns on two questions: is the payee an individual or a corporation, and has their gross income for the year crossed the relevant threshold — ₱3,000,000 for individuals, ₱720,000 for corporations. Getting the sworn declaration on file and selecting the matching ATC code (WI010/WI011 for individuals, WC010/WC011 for corporations) keeps the withheld amount correct and the certificate consistent with the payee’s own tax credit claim. For other payment scenarios, see Withholding Tax on Rent: How to Complete BIR Form 2307 for Lessors and BIR Form 2307 for Government Money Payments.