BIR Form 2307 for Travel Agencies and Tour Operators: Which Fees Get Withheld

A corporation or business booking group travel, a corporate offsite, or an incentive tour through a Philippine travel agency withholds 2% expanded withholding tax (EWT) on the agency’s own service or handling fee and issues BIR Form 2307 — but not on the airfare, hotel charges, or tour costs the agency simply pays through to airlines, hotels, and other suppliers on the client’s behalf. Getting that split right is the main thing that trips up companies paying travel agencies, because a single invoice often bundles both.

This guide is part of the BIR Form 2307 series. It covers who has to withhold on a travel agency payment, why only the agency’s fee — not pass-through travel costs — sits inside the withholding base, the applicable ATC codes, and a worked example for a corporate offsite booking.

Who has to withhold when paying a travel agency? #

The obligation follows the payor’s status exactly the same way it does for any other business-service supplier: a corporation, or an individual paying in connection with a trade or business, withholds; a private individual booking personal travel generally does not. RR No. 2-98 sets out who counts as a withholding agent in these terms:

“(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)

Applied to travel bookings:

• A corporation booking flights, hotels, and ground transport for a sales conference, corporate offsite, or client incentive trip is a withholding agent under clause (A), regardless of company size.
• A sole proprietor or self-employed professional booking business travel for themselves or staff withholds under clause (B), because the payment is connected to trade or business.
• A private individual booking a personal family vacation, honeymoon, or leisure trip through the same travel agency falls outside clause (B) — no trade or business connection, no withholding obligation, and no BIR Form 2307.

This is the same threshold question this series covers in BIR Form 2307 for Event Planners, Caterers, and Wedding Suppliers — the nature of the purchase (travel, catering, event support) doesn’t decide withholding; who is paying and why does.

Why only the agency’s fee — not airfare and hotel costs — gets withheld #

Travel agency invoices typically bundle two very different things: the agency’s own service or handling fee, and the actual cost of flights, hotels, and tours the agency pays to airlines, hotel chains, and tour operators on the client’s behalf. Only the first category is income to the agency and belongs in the EWT base.

• The agency’s service fee — a booking fee, arrangement fee, or markup for coordinating an itinerary — is the agency’s own income for services rendered. This is what falls under the general 2% business-services bracket described below.
• Pass-through travel costs — the airfare, hotel room charges, or tour package cost the agency paid an airline, hotel, or third-party operator and is re-billing the client at cost — are not income to the agency at all. A true reimbursement, billed at cost and separately itemized from the service fee, is treated as a return of capital rather than income, the same principle covered in Do You Withhold Tax on Reimbursement of Out-of-Pocket Expenses Billed Separately From a Service Fee?

A travel agency invoice that lumps a ₱15,000 booking fee together with ₱300,000 of pre-paid airfare into a single ₱315,000 line item makes it look, on paper, like ₱315,000 of agency income. Itemizing the fee separately from the pass-through cost is what keeps the withholding base — and the agency’s own income tax exposure — accurate.

What EWT rate applies to a travel agency’s service fee? #

A travel agency’s own booking or service fee is commonly treated at the flat 2% rate under RR No. 2-98, Section 2.57.2(E), as amended by RR No. 11-2018 — the same general contractor/business-services bracket this series covers for event planners, caterers, and similar service-supplying businesses in BIR Form 2307 for Contractors and Subcontractors. Travel agency fees are not named as their own separate line item in the regulation; they fall under the same catch-all that covers other business-service agencies not given a more specific rate elsewhere.

There is a second, independent route to the same 2% figure. If the paying corporation is a classified Top Withholding Agent (TWA) — reached once gross sales/receipts, gross purchases, or claimed deductible expenses hit ₱12,000,000 in the preceding year under RR No. 7-2019, RR No. 11-2018, and RR No. 24-2025 — its local purchases of services not otherwise assigned a more specific rate are withheld at 2% under the TWA services catch-all described in BIR Form 2307 for Purchases of Services: Top Withholding Agent 2% Rate Explained. Either route lands on 2%.

Worked example: a corporate offsite booking #

A manufacturing company engages Manila Horizon Travel & Tours Corp. to organize a three-day corporate offsite for 40 employees. The agency’s invoice separates its own arrangement fee from the airfare and resort costs it pays through on the company’s behalf:

The company withholds ₱800 — 2% of the ₱40,000 service fee only, not of the full ₱520,000 invoice — and remits it through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly. It issues Manila Horizon Travel & Tours Corp. a BIR Form 2307 showing ₱40,000 as the income payment, ATC WC120, and ₱800 tax withheld; the ₱480,000 in pass-through airfare and accommodation costs does not appear on the certificate at all, because it was never the agency’s income.

When a travel agency booking is not withheld from at all #

A private individual paying a travel agency for a personal vacation is not a withholding agent, regardless of how large the booking is. An employee who books their own family holiday through the same agency the company uses for business travel is paying in a purely personal capacity — no trade or business connection means no EWT and no BIR Form 2307, even on a six-figure booking. The moment a company pays for the trip instead — sponsoring an employee incentive trip, for example — that company becomes the withholding agent on its own payment to the agency.

Frequently asked questions #

Does a company have to withhold tax when paying a travel agency? #

Yes, if the payor is a corporation or an individual paying in the course of trade or business. Under RR No. 2-98, Section 2.57.3(A)-(B), a corporate client booking travel arrangements through a Philippine travel agency for a business trip, offsite, or incentive tour is a withholding agent and must withhold expanded withholding tax and issue BIR Form 2307.

What withholding tax rate applies to a travel agency’s fee? #

A travel agency’s own service, handling, or booking fee falls under the same 2% general contractor/business-services bracket as event planners and other business-service suppliers under RR No. 2-98, Section 2.57.2(E), as amended by RR No. 11-2018 — ATC WI120 for an individual travel consultant or sole proprietor, WC120 for a travel agency organized as a corporation.

Do you withhold tax on the airfare and hotel costs a travel agency bills you for? #

No, not if those costs are billed as a true pass-through — the agency paid the airline, hotel, or tour operator directly and is simply re-billing the client at cost, separately itemized from its own service fee. A cost genuinely reimbursed at cost is a return of capital, not income to the agency, and sits outside the EWT base. Only the agency’s own markup or service fee is withheld.

Does a personal or family vacation booked through a travel agency get withheld? #

No. Withholding under RR No. 2-98, Section 2.57.3(B) applies only to a payment connected to the payor’s trade or business. An individual booking a personal family vacation through a travel agency is not a withholding agent and does not issue BIR Form 2307, even though the same agency would be withheld from when booking for a corporate client.

What ATC code goes on BIR Form 2307 for a travel agency payment? #

Use ATC WI120 if the travel agency is a sole proprietor or an individually registered travel consultant, or WC120 if it is a corporation. If the paying company is separately classified as a Top Withholding Agent, the same 2% is reached instead through ATC WI160/WC160 under the TWA services rule — either route lands on the same 2% rate.

Summary #

A travel agency’s own service or booking fee sits in the same 2% general business-services bracket (ATC WI120/WC120, or WI160/WC160 for a Top Withholding Agent payor) as event planners and other service suppliers under RR No. 2-98, Section 2.57.2(E). What makes travel agency invoices distinct is the pass-through cost problem: airfare, hotel bills, and tour costs the agency pays through to suppliers at cost are not the agency’s income and stay outside the withholding base, as long as they’re billed separately from the service fee. Only a corporate or business-connected payment triggers withholding at all — a personal vacation booking does not. See BIR Form 2307 for Event Planners, Caterers, and Wedding Suppliers for the closely parallel service-fee-vs-pass-through structure in another event-adjacent industry, and BIR Form 2307 for Freight Forwarders and Customs Brokers for how a similar fee-vs-pass-through split works in logistics.