BIR Form 2307 for Trucking and Cargo Hauling Companies: Withholding Tax on Transport Contracts

A manufacturer, distributor, or retailer that hires a trucking or cargo hauling company to move goods withholds a flat 2% expanded withholding tax on the hauling fee, once its payments to that trucking company reach at least ₱2,000 in a calendar month. This is a payor-side obligation under RR No. 2-98’s transportation contractor clause — separate and distinct from the trucking company’s own percentage tax liability on its gross receipts as a common carrier.

This guide is part of the BIR Form 2307 series. It covers the transportation-contractor withholding rule, how it differs from a hauler’s own percentage tax and a freight forwarder’s bracket, and a worked monthly hauling-contract example.

Do you withhold tax when paying a trucking or hauling company? #

Yes — RR No. 2-98 names transportation contractors specifically as a category subject to 2% expanded withholding tax, distinct from the general contractor’s rate and from a hauler’s own tax liability as a common carrier. Section 2.57.2(E) of the regulation defines the category this way:

“Transportation contractors which include common carriers for the carriage of goods and merchandise of whatever kind by land, air or water, where the gross payments by the payor to the same payee amounts to at least two thousand pesos (₱2,000) per month, regardless of the number of shipments during the month.”

— Section 2.57.2(E) of Revenue Regulations No. 2-98

A manufacturer that contracts a trucking company to haul finished goods from its factory to a regional warehouse, or a distributor that pays a hauler to move inventory between branches, is engaging a transportation contractor under this clause. The ₱2,000-a-month threshold is measured against total gross payments to that same trucking company across all shipments in the month, not per individual trip.

Trucking withholding vs the hauler’s own percentage tax — two different obligations #

The 2% EWT covered here is what the payor withholds from the trucking company’s fee; it is entirely separate from the trucking company’s own liability to pay the 3% common carrier’s percentage tax (or VAT, depending on classification) on its gross receipts under NIRC Section 117. As Common Carrier’s Tax on Land and Sea Transport explains, that percentage tax is the trucking company’s own tax on its earnings as a common carrier, filed and paid regardless of what its customers do. A business hiring a hauler has to get both sides right on paper: it withholds 2% under BIR Form 2307 as the payor, while the trucking company separately remits its own percentage tax as the payee — one does not substitute for or reduce the other.

Trucking company vs freight forwarder — a similar rate, a different clause #

A trucking or hauling company that physically carries goods is withheld under the transportation contractor clause, while a freight forwarder that arranges and coordinates shipping logistics on the customer’s behalf is generally withheld under the separate general contractor bracket — both often land at 2%, but for different reasons. BIR Form 2307 for Freight Forwarders and Customs Brokers covers the forwarding side of this distinction: a forwarder that subcontracts the actual trucking to a separate hauling company creates two withholdable payments in the chain — the customer withholds on the forwarder’s fee, and if the forwarder itself pays the trucking company at least ₱2,000 a month, the forwarder becomes the withholding agent on that second payment in turn.

Who is the withholding agent on a trucking contract #

Any business engaged in trade or business that pays a trucking or hauling company at least ₱2,000 in a month for carriage of its goods is a withholding agent. Common payors include:

• A manufacturer contracting a hauler to move finished goods from factory to warehouse or port
• A distributor or wholesaler paying a trucking company for inter-branch inventory transfers
• A retail chain engaging a hauler for scheduled store-replenishment deliveries
• A construction company hiring a dump truck operator to haul aggregates or debris to and from a project site

Worked example: a manufacturer’s monthly hauling contract #

Bataan Steel Products, Inc. contracts Del Rosario Trucking Services to haul finished steel products from its Bataan plant to a Metro Manila distribution center. In a given month, Del Rosario Trucking makes six trips, billing ₱15,000 per trip for a total of ₱90,000 — well above the ₱2,000 monthly threshold, so the transportation-contractor withholding applies to the full amount.

Bataan Steel remits the ₱1,800 withheld through BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, and issues Del Rosario Trucking a BIR Form 2307 showing the cumulative hauling fees paid and the tax withheld — which the trucking company credits against its own income tax due, separately from the common carrier’s percentage tax it remits on the same gross receipts.

Summary #

A business that pays a trucking or cargo hauling company at least ₱2,000 in a calendar month withholds a flat 2% EWT under RR No. 2-98 Section 2.57.2(E)’s transportation contractor clause — a payor-side obligation that exists alongside, not instead of, the trucking company’s own common carrier’s percentage tax under NIRC Section 117. This sits in its own clause distinct from a freight forwarder’s arrangement-fee bracket, even when a shipment passes through both. For the hauler’s own tax liability, see Common Carrier’s Tax on Land and Sea Transport, and for the related forwarding-service analysis, see BIR Form 2307 for Freight Forwarders and Customs Brokers.