Do Ride-Hailing and Delivery Apps Withhold Tax on Driver and Rider Payouts? BIR Form 2307 Explained

A ride-hailing or delivery platform such as Grab, Angkas, foodpanda, or Lalamove generally does not withhold tax or issue a BIR Form 2307 on the fares and delivery fees it pays out to individual drivers and riders, because those drivers are independent, self-employed contractors and the fare is their own income passing through the app rather than a service fee the platform is procuring for itself. The picture flips, however, when a corporate client pays the platform company directly through a business account: that corporate client is a withholding agent paying a services vendor and must withhold 2% expanded withholding tax (EWT) on the bill.

Are ride-hailing and delivery drivers employees of the platform? #

No — Philippine drivers and riders for transport network companies (TNCs) like Grab and Angkas, and delivery platforms like foodpanda and Lalamove, are treated as independent contractors, not employees, which is why compensation withholding under BIR Form 2316 doesn’t apply to their fare income. Under Revenue Memorandum Circular (RMC) No. 70-2015, “Reiterating the Tax Treatment of Certain Persons Engaged in the Business of Land Transportation,” the Bureau of Internal Revenue (BIR) addressed TNCs “such as but not limited to Uber, GrabTaxi, their partners/suppliers and similar arrangements” and treated the driver-partner, not the platform, as the party carrying on the transport or delivery business for tax purposes.

The dividing line between employee and independent contractor in Philippine law is the control test: whether the hiring party controls not just the result of the work but the means and methods used to achieve it. A platform that sets an app-based fare algorithm, service standards, and dispatch logic — without setting the driver’s hours, requiring exclusivity, or directing the specific route and manner of driving — falls short of the employer-level control the test looks for. That is the same classification question already covered in BIR Form 2307 for Pharmaceutical and Medical Sales Representatives: whether a payment is compensation (BIR Form 2316) or an independent contractor’s income (BIR Form 2307) turns on the real working relationship, not on what the engagement is called.

Because they are self-employed, drivers and riders register with the BIR using BIR Form 1901 (Application for Registration for Self-Employed and Mixed Income Individuals) and file their own income tax and business tax returns, rather than having an employer withhold tax on compensation.

Does the platform withhold on the fare it pays out to a driver? #

Generally, no — because the fare paid to a driver is not a “top-down” services payment the platform is buying for its own account; it is the passenger’s or customer’s own payment for a ride or delivery, merely collected and remitted through the app. This is the same pass-through logic already established for cash-on-delivery amounts in BIR Form 2307 for Courier and Last-Mile Delivery Providers: a courier that collects a customer’s payment and remits it to a merchant isn’t earning that amount as its own income, so it sits outside the withholding base entirely. A ride-hailing or delivery app runs a mirror version of that structure — the platform is the technology and dispatch layer between the paying customer and the driver, not itself the procurer of the driver’s driving or delivery service.

Under RMC No. 70-2015, a driver-partner’s own tax profile depends on whether they hold a Certificate of Public Convenience (CPC) from the Land Transportation Franchising and Regulatory Board: a CPC holder is a common carrier subject to the 3% common carrier’s tax on gross receipts under Section 117 of the National Internal Revenue Code (NIRC), while a driver-partner without a CPC is treated as a land transportation service contractor subject to 12% value-added tax (VAT) if VAT-registered, or the 3% percentage tax under NIRC Section 116 if not. Either way, this is the driver’s own output tax on fares earned — a separate question from whether anyone withholds creditable tax on the payout, which BIR Form 2307 tracks.

What about the commission the platform deducts from the fare? #

The commission or “service fee” a platform charges its drivers — commonly reported in the range of a fifth of the fare, depending on the platform and service tier — is typically netted out of the payout before the driver receives it, not paid as a separate invoice the driver settles afterward. That structural detail matters for BIR Form 2307 because the form only has meaning where an identifiable payor withholds tax on a payment to an identifiable payee. RR No. 2-98 sets out who qualifies as a withholding agent this way:

“(A) In general, any juridical person, whether or not engaged in trade or business; (B) An individual, with respect to payments made in connection with his trade or business…”

— RR No. 2-98, Section 2.57.3(A)–(B)

An individual driver, strictly read, could fall under clause (B) as “an individual… with respect to payments made in connection with his trade or business” when paying the platform’s commission — but in practice, a driver netting a small, automatically deducted commission from a fare is not commonly treated, administered, or enforced as a withholding-agent relationship the way a registered business paying an outside vendor is. The commission is the platform’s own service revenue, taxed on the platform’s side through its regular corporate income tax and VAT returns — it is not run through the BIR Form 2307 system in the driver-to-platform direction.

When does BIR Form 2307 actually apply in this chain? #

BIR Form 2307 becomes directly relevant when a corporate client sets up a direct-billing account with the platform company and pays a consolidated invoice — not cash fares from individual riders — because that payment is a straightforward vendor-services transaction. Ride-hailing and delivery platforms commonly offer a business or “for business” tier that lets a company centralize employee trips or last-mile deliveries onto one monthly invoice payable by the company itself, rather than by each rider individually.

When a company pays that invoice, the relationship is no different from paying any other corporate services supplier: the company is the payor, the platform operator (a corporation) is the payee, and RR No. 2-98, Section 2.57.3(A), makes “any juridical person, whether or not engaged in trade or business” a withholding agent on qualifying income payments. This is the same principle already covered for contracted business services generally in BIR Form 2307 for Contractors and Subcontractors — the classification question isn’t whether the vendor happens to run an app-based platform, but what kind of service the company is actually paying for.

Worked example: a corporate account’s monthly platform bill #

A mid-sized logistics firm, Meridian Distribution Corp., enrolls in a ride-hailing platform’s corporate account for staff transport and in a delivery platform’s business tier for last-mile parcel runs, and receives one consolidated monthly invoice from each platform operator.

For the month, Meridian’s combined invoices total ₱50,000, exclusive of 12% VAT, billed directly by the two platform operating companies (not individual drivers). Because Meridian is a corporation paying a corporate services vendor, it withholds under the 2% contractor/general-services bracket:

Meridian remits the ₱1,000 EWT through its monthly BIR Form 0619-E and quarterly BIR Form 1601-EQ, lists each platform operating company on its Quarterly Alphalist of Payees (QAP), and issues each one a BIR Form 2307 for the tax withheld on its respective invoice. None of the individual drivers who actually completed the trips or deliveries appear anywhere in this computation — Meridian’s contract and payment relationship runs only with the platform companies themselves.

How does this differ from BIR Form 2316? #

BIR Form 2316 documents withholding tax on compensation paid to an employee at year-end, and it has no role in this chain because drivers and riders are not employees of the platform, the passenger, or the merchant in the first place. A company that misclassified a driver as an employee would owe withholding tax on compensation and a year-end BIR Form 2316, plus SSS, PhilHealth, and Pag-IBIG contributions; a company correctly treating a driver as an independent contractor owes neither of those, and, per the sections above, generally owes no BIR Form 2307 obligation on the fare either, since the platform — not the paying company — is the counterparty actually receiving the fare’s flow. The clean BIR Form 2307 trigger in this whole chain is the corporate account scenario above, where an identifiable corporate payor is paying an identifiable corporate services vendor.

Frequently asked questions #

Do Grab, Angkas, foodpanda, or Lalamove withhold BIR Form 2307 tax on what they pay drivers? #

Generally no. Drivers and riders are independent, self-employed contractors, not employees, and the fare a customer pays is the driver’s own income passing through the app, not a service fee the platform itself is procuring and paying out — so the platform does not issue a driver a BIR Form 2307 on the fare in the ordinary case.

Does the driver have to withhold tax on the commission the platform deducts from the fare? #

In practice, no. The platform’s commission is deducted from the fare before payout, not paid separately by the driver, and an individual driver operating below the scale that triggers withholding-agent status is not commonly treated as withholding on that deduction. The bigger compliance point for the driver is registering as self-employed and paying the driver’s own income and percentage or value-added tax.

Are ride-hailing and delivery drivers employees of the platform for tax purposes? #

No. Philippine ride-hailing and delivery drivers are treated as independent contractors or self-employed transport network company (TNC) partners, not employees, because the platform does not exercise the degree of control over the means and methods of the work that the control test requires. This is why BIR Form 2316 and withholding tax on compensation do not apply to fare payouts.

When does BIR Form 2307 actually apply to a ride-hailing or delivery transaction? #

When a corporate client sets up a direct-billing corporate account with the platform company itself and pays a consolidated invoice for employee rides or business deliveries, that corporate client is a withholding agent paying a services vendor. It withholds 2% expanded withholding tax on the invoice and issues the platform company a BIR Form 2307, the same way it would for any other corporate services supplier.

What ATC code and rate apply when a company withholds on its ride-hailing or delivery platform bill? #

A corporate client’s payment to a ride-hailing or delivery platform company for a direct-billed corporate account generally falls under the flat 2% contractor/general-services bracket under RR No. 2-98, Section 2.57.2(E), as amended by RR No. 11-2018 — ATC WC120, since the platform company is a corporation.

Summary #

Fare payouts from ride-hailing and delivery apps to individual drivers generally stay outside the BIR Form 2307 system, because the drivers are self-employed independent contractors under RMC No. 70-2015, taxed on their own fares through percentage tax, VAT, and income tax rather than through anyone else’s withholding — and the platform’s commission deduction from the fare isn’t administered as a formal withholding transaction either. BIR Form 2307 enters the picture cleanly only when a corporate client is billed directly by the platform operating company itself, which is an ordinary 2% EWT vendor-services payment under RR No. 2-98, Section 2.57.2(E). For related scenarios, see BIR Form 2307 for Courier and Last-Mile Delivery Providers, BIR Form 2307 for Contractors and Subcontractors, and the BIR Form 2307 hub.