Expanded Withholding Tax Rates in the Philippines: A Consolidated Reference Table

Expanded withholding tax (EWT) in the Philippines runs from 2% to 10% depending on what’s being paid for, and the payor — not the payee — is responsible for deducting it, remitting it to the BIR, and issuing BIR Form 2307 as proof. This page consolidates the rates that come up most often in day-to-day business: professional fees, rent, and contractor payments, under Revenue Regulations (RR) No. 11-2018, which amended the governing rules in RR No. 2-98.

Why EWT exists and how the credit works #

Expanded withholding tax isn’t a separate tax on top of income tax — it’s a prepayment mechanism that collects a portion of a payee’s eventual income tax liability at the moment they’re paid, rather than waiting for them to file and pay it themselves months later. The payor deducts the applicable percentage, remits it to the BIR, and gives the payee a BIR Form 2307 certificate documenting the amount. When the payee files their own income tax return, they subtract (credit) the total EWT already withheld during the year from their computed tax due, so they’re only paying the difference — or claiming a refund or carryover if too much was withheld.

The core rates most businesses need #

Three categories of payment account for the large majority of expanded withholding tax a typical Philippine business handles: professional fees, rent, and contractor payments — each governed by its own subsection of RR No. 2-98 as amended by RR No. 11-2018. The table below lists the rate, the specific regulatory basis, and the condition that determines which rate applies where more than one exists.

The regulation itself frames the professional-fee threshold mechanism this way — RR No. 11-2018 requires that an individual payee claiming the lower rate:

“submit a sworn declaration of his/her gross receipts/sales, together with a copy of Certificate of Registration, to all the current income payor/withholding agents not later than January 15 of each year, or at least prior to the initial payment of the professional fee/talent fees, etc.”

Miss that declaration, and the payor is required to default to the higher rate for that payee, even if the payee’s actual gross receipts would otherwise qualify them for 5%.

Who has to withhold, and who’s exempt #

Not every payor is a withholding agent for every payment — the obligation generally attaches to corporations, government agencies, and individuals specifically designated by the BIR as Top Withholding Agents, rather than to every individual making a payment. A corporation paying a lawyer’s professional fee must withhold and issue BIR Form 2307 regardless of size. An ordinary individual who isn’t engaged in business, or who is but hasn’t been designated a Top Withholding Agent, generally does not withhold on personal or non-business payments. For specific scenario walk-throughs — including commission and broker payments with ATC codes — see this site’s guide to BIR Form 2307 for commissions and brokers.

Worked example: a law firm’s professional fee and office rent #

A corporation pays its retained outside counsel, an individual lawyer with a sworn declaration on file showing prior-year gross receipts of ₱2,400,000, a monthly professional fee of ₱60,000. The same corporation also pays ₱45,000 a month in office rent to an individual landlord.

The corporation remits a combined ₱5,250 to the BIR for the month using BIR Form 1601-EQ (or the applicable monthly/quarterly withholding return) and issues separate BIR Form 2307 certificates to the lawyer and the landlord. Each payee later attaches their own certificate to their annual income tax return and credits the amount shown against their computed tax due for the year — the lawyer credits ₱36,000 for the full year (₱3,000 × 12) against their income tax, not against the ₱60,000 monthly fee itself.

Summary #

Expanded withholding tax rates in the Philippines concentrate around a handful of common payment types: 5%/10% on professional fees to individuals depending on the ₱3,000,000 gross-receipts threshold and sworn declaration, 5% on rent, and 2% on contractor payments, all under RR No. 2-98 as amended by RR No. 11-2018. The payor withholds, remits, and issues BIR Form 2307; the payee credits the withheld amount against their own income tax due. For the certificate itself and how to generate one correctly, see this site’s guide to BIR Form 2307 for commissions and brokers and the broader BIR Form 2307 series hub.