BIR Form 2307 for Seafarer Manning and Recruitment Agencies: Who Withholds the Management Fee?

A Philippine shipping agent or principal that pays a licensed manning agency a management, recruitment, or crewing-processing fee withholds 2% expanded withholding tax (EWT) on that fee, under Revenue Regulations (RR) No. 2-98 as amended by RR No. 11-2018, using ATC WI120 (individually owned agency) or WC120 (agency organized as a corporation). This is a distinct question from whether the seafarer crew members themselves are taxed — their own foreign-sourced wages are generally exempt and never appear on a BIR Form 2307 at all.

This guide is part of the BIR Form 2307 series. It applies the same general contractor/business-services framework already covered in BIR Form 2307 for Manpower and Staffing Agencies and BIR Form 2307 for Recruitment and Headhunting Agencies to the maritime manning context, and contrasts with Why Filipino Seafarers Are Tax-Exempt OFWs on the payee side.

Who is the withholding agent in a manning arrangement? #

The withholding agent is whoever in the Philippines actually pays the manning agency — typically a local shipping agent acting for a foreign principal, or the principal’s Philippine representative office — not the individual seafarer and not the foreign shipowner directly. The base definition of a withholding agent under RR No. 2-98 covers any juridical person, or any individual with respect to payments connected with trade or business:

“(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)

A Philippine manning agency is engaged by a foreign principal (the actual vessel owner or operator) to recruit, process, and often pre-fund the deployment of Filipino crew. The principal — through its local agent, since foreign principals don’t typically remit Philippine withholding tax directly — pays the manning agency a management or processing fee for these crewing services, separate and apart from the crew’s own wages, which the principal pays directly or through an allotment system.

What rate and ATC code apply to the manning fee? #

The manning agency’s management or processing fee sits in the same 2% general contractor/business-services bracket already used in this series for manpower and staffing agencies, recruitment firms, and similar labor-intermediary businesses.

This mirrors the manpower-staffing treatment in BIR Form 2307 for Manpower and Staffing Agencies: withholding applies to whatever the agency actually bills the paying principal for its own crewing/processing service. It does not extend to the seafarer’s wages, which the agency or principal disburses under a separate allotment arrangement and which carry no Philippine withholding exposure once the seafarer qualifies as exempt under NIRC Section 23(C).

A manning agency may also not pass a placement fee onto the seafarer in the first place:

Section 2 (a), Rule II, Part V of the 2003 POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers prohibits a manning agency from charging, imposing, or accepting, directly or indirectly, any amount of money, goods or services, or any fee or bond for any purpose, from an applicant seafarer.

That rule explains why the agency’s revenue model runs through the principal’s management fee rather than a deduction from the seafarer — which is exactly the payment this guide’s 2% withholding analysis covers.

Worked example: principal’s management fee vs. the seafarer’s wage #

Horizon Crew Management Services, Inc. (fictional), a Philippine manning agency organized as a corporation, bills a foreign shipping principal’s local agent a monthly management fee of ₱180,000 for recruiting, processing, and administering 12 Filipino seafarers deployed aboard an ocean-going vessel.

The local agent withholds ₱3,600, remits it through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, lists Horizon Crew Management on its Quarterly Alphalist of Payees, and issues a BIR Form 2307 for ₱180,000 under ATC WC120. The 12 seafarers’ own monthly allotments — disbursed separately by the agency on the principal’s behalf — generate no BIR Form 2307 at all, because that income is foreign-sourced wages exempt under NIRC Section 23(C), not a creditable withholding payment.

Summary #

A manning fee paid to a Philippine seafarer manning or recruitment agency is withheld at 2% under the same general contractor/business-services bracket used throughout this series (ATC WI120 for an individually owned agency, WC120 for a corporation) — but only on the agency’s own management or processing fee, never on the crew’s wages, which stay outside the withholding system entirely once they qualify as exempt foreign-sourced seafarer income. See BIR Form 2307 for Manpower and Staffing Agencies for the general staffing-agency rule this guide applies, and Why Filipino Seafarers Are Tax-Exempt OFWs for the payee-side exemption. For the full library of BIR Form 2307 guidance, start at the BIR Form 2307 series hub or the pillar guide.