BIR Form 2307 for Warehousing, Storage, and Logistics Service Fees: Which EWT Rate Applies

A payment for dedicated, controlled warehouse space is a real property rental withheld at 5%; a payment to a third-party logistics (3PL) provider for storage-as-a-service, pick-pack-ship, or fulfillment — where the provider controls its own space — is a contractor service fee withheld at the flat 2%. Both rates come from the same regulation, RR No. 2-98 as amended by RR No. 11-2018, but they sit in different subsections, and getting the wrong one wrong is a recurring error on logistics invoices.

This guide is part of the BIR Form 2307 series. It covers the beneficial-use-and-control test that separates a warehouse lease from a logistics service, the applicable ATC codes, and a worked example for a typical 3PL fulfillment invoice.

What decides the rate: rental or service? #

The distinction turns on who has beneficial use and control of a specific, identifiable space — not on the fact that goods happen to sit in a warehouse. If a business leases a defined area within a warehouse, controls access to it, and can exclude the provider’s own staff from that area except as agreed, the payment is rent for real property. If a business instead pays a 3PL to receive, store, pick, pack, and ship its inventory — with the 3PL deciding where within its own facility the goods sit and who handles them — the payment is for a service, even though storage is part of what’s delivered.

This is the same beneficial-use logic that governs ordinary commercial leases, covered generally in Withholding Tax on Rent: How to Complete BIR Form 2307 for Lessors. The wrinkle with warehousing and logistics is that both arrangements can look identical on the surface — goods go in, goods come out — while sitting in completely different EWT brackets.

Why does a warehouse lease get the 5% rental rate? #

A lessee that is itself a withholding agent must withhold 5% expanded withholding tax (EWT) on gross rental for real property used in business, under RR No. 2-98 Section 2.57.2(B) as amended by RR No. 11-2018. The regulation frames this specifically around possession without ownership — a lessee occupying space it does not own or hold equity in:

“5% EWT — On gross rental for the continued use or possession of real property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity.”

That language is the reason the beneficial-use test matters: the rate attaches to continued use or possession of a specific property, not merely to a payment that happens to relate to storage. A business that signs a lease for a defined warehouse bay — with its own racking, its own access badge, and the right to keep the landlord’s staff out except for maintenance — is renting real property in exactly the sense this provision targets, and withholds 5% under ATC WC100 (corporate lessor) or WI100 (individual lessor).

Why does a 3PL/logistics service fee get the 2% contractor rate instead? #

A third-party logistics provider that stores, handles, and ships a customer’s goods — without granting the customer a defined, controlled space — is delivering a service under a business contract, which puts the payment in the “other contractors” category under RR No. 2-98 Section 2.57.2(E) rather than the rental bracket. That provision specifically enumerates warehousing operators among the contractor categories subject to the flat 2% rate, as covered in more detail in BIR Form 2307 for Freight Forwarders and Customs Brokers:

“Operators of stevedoring, warehousing or forwarding establishments” — listed among “Other contractors” subject to creditable withholding tax under RR No. 2-98’s income payments to certain contractors.

A 3PL that bills for storage-as-a-service, pick-pack-ship, cross-docking, or inventory management is operating exactly this kind of warehousing establishment — the customer is buying throughput and handling, not a leasehold interest in the building. That payment withholds at the flat 2% contractor rate under ATC WC120 (corporate provider) or WI120 (individual/sole proprietor provider), the same contractor bracket covered generally in BIR Form 2307 for Contractors and Subcontractors.

Worked example: a retailer pays a 3PL for fulfillment #

Northgate Retail Corp. contracts with a 3PL company to receive, store, and ship its e-commerce orders. Northgate does not lease any specific bay or floor area — the 3PL stores Northgate’s inventory wherever it has capacity within its own facility and decides how to allocate space among its clients. Each month, the 3PL invoices Northgate a flat ₱150,000 covering storage, pick-pack-ship labor, and outbound shipping coordination.

Because Northgate never has beneficial use or control of a specific space — it is buying a bundled fulfillment service, not a leasehold — the payment is withheld as a contractor service fee, not a rental:

Northgate remits the ₱3,000 withheld with its monthly and quarterly EWT filings, lists the 3PL on its Quarterly Alphalist of Payees, and issues a BIR Form 2307 showing ₱150,000 as the income payment, ATC WC120, and ₱3,000 as tax withheld.

Contrast that with a different scenario: if Northgate had instead signed a lease for a dedicated 2,000-square-meter bay inside the same building — with its own access control and racking — for a flat ₱150,000 monthly rent, the withholding would instead be 5% (₱7,500) under ATC WC100, because Northgate would then have beneficial use and control of an identified space rather than simply buying a fulfillment service.

What if one contract bundles rent and fulfillment services? #

Some logistics arrangements combine both elements — a dedicated storage area plus pick-pack-ship labor — under a single monthly invoice. Where the contract itemizes the components, withhold 5% on the portion that is genuinely rent for the controlled space and 2% on the portion that is service work, and issue the certificate(s) accordingly, the same way a combined customs-brokerage-and-forwarding invoice should be split by component. If the contract doesn’t separate the two, look at which element the arrangement substantively is: a service contract that happens to involve the provider’s own storage space is still a 2% service fee, while a lease that includes incidental handling services (e.g., basic loading assistance) generally stays a 5% rental if the space itself remains the dominant thing being paid for. Push the vendor to itemize on future invoices so the classification doesn’t have to be inferred each period — common BIR Form 2307 mistakes covers other classification errors that create the same downstream matching problems on a lessor’s or payee’s alphalist.

Does the 2025 Top Withholding Agent update change anything here? #

RR No. 24-2025 and RMO No. 46-2025 revised the Top Withholding Agent catch-all rates and ATCs under Section 2.57.2(I) of RR No. 2-98 — chiefly introducing a reduced 0.5% rate for specific goods categories (motor vehicles, pharmaceutical products, and fuel) bought by classified Top Withholding Agents, and new ATCs to track them. That update does not touch Section 2.57.2(B)’s 5% real property rental rate or Section 2.57.2(E)’s enumerated contractors’ 2% rate, so the warehousing-versus-logistics analysis in this guide is unaffected regardless of whether the paying business is a classified Top Withholding Agent.

Frequently asked questions #

Do I withhold 5% or 2% on a warehousing or logistics invoice? #

It depends on what you’re actually paying for. If you lease a specific, identifiable space in a warehouse and control access to it, that’s a real property rental withheld at 5% under RR No. 2-98 Section 2.57.2(B), as amended by RR No. 11-2018. If a third-party logistics (3PL) provider stores, picks, packs, and ships your goods using its own space and staff without giving you a dedicated area you control, that’s a service fee withheld at the flat 2% contractor rate under Section 2.57.2(E).

What is the beneficial-use-and-control test for warehousing payments? #

It asks who has the right to occupy, control access to, and exclude others from a specific physical space. A lessee with beneficial use and control of an identified space is renting real property, taxed at 5%. A customer who simply buys a storage-and-fulfillment service, with the provider retaining control over its own facility and moving inventory around at its own discretion, is paying for a service, taxed at 2%.

Which ATC code applies to a 3PL warehousing and fulfillment fee? #

For a service fee to a corporate 3PL provider under the contractor category, use ATC WC120; for an individual or sole proprietor provider, use WI120. For a real property rental to a corporate lessor, use WC100; for an individual lessor, use WI100.

What if one contract combines warehouse rental and fulfillment services? #

Split the invoice by component where the contract itemizes them: withhold 5% on the portion that is genuinely rent for a dedicated, controlled space, and 2% on the portion that is pick-pack-ship, inventory management, or other service work. If the contract does not itemize and one component clearly dominates the arrangement, apply the rate for whichever the payment substantively is — a service contract with incidental use of the provider’s own space is still a 2% service fee, not a rental.

Does the 2025 revision to Top Withholding Agent rates change the warehousing or rental rate? #

No. RR No. 24-2025 and RMO No. 46-2025 revised the Top Withholding Agent catch-all rates and ATCs under Section 2.57.2(I) — mainly for specific goods categories like vehicles, pharmaceuticals, and fuel bought by classified Top Withholding Agents. They did not change the 5% real property rental rate under Section 2.57.2(B) or the enumerated contractors’ 2% rate under Section 2.57.2(E), which is where warehousing and logistics service fees sit.

Summary #

Warehousing and logistics payments split on a beneficial-use-and-control test: a lease of a defined, controlled space is real property rental at 5% under RR No. 2-98 Section 2.57.2(B), while a bundled storage-and-fulfillment service from a 3PL — where the provider controls its own facility — is a contractor fee at 2% under Section 2.57.2(E), which specifically names warehousing operators among “other contractors.” Use ATC WC100/WI100 for the rental, WC120/WI120 for the service fee, and split a combined invoice by component whenever the contract allows it. See Withholding Tax on Rent for the rental rules in full, BIR Form 2307 for Freight Forwarders and Customs Brokers for the adjacent logistics scenario, and BIR Form 2307 for Purchases of Services: Top Withholding Agent 2% Rate Explained for how a general 2% services catch-all differs from this enumerated contractor category.