Who Is a BIR Top Withholding Agent? TWA Rules and Obligations Explained

A BIR Top Withholding Agent (TWA) is a taxpayer the BIR has officially classified — based on gross sales, receipts, purchases, or deductible expenses — as required to withhold expanded withholding tax (EWT) on its local purchases of goods and services, under Revenue Regulations (RR) No. 2-98, as amended by RR No. 11-2018 and RR No. 7-2019. Once classified, a company must withhold 1% on goods and 2% on services from every local supplier it pays, and issue BIR Form 2307 to each one.

This guide covers who qualifies as a TWA, the current ₱12 million threshold, the withholding rates (including the reduced rate that took effect in late 2025), and what changes operationally the month a business receives a TWA notice.

What makes a taxpayer a Top Withholding Agent? #

A taxpayer becomes a Top Withholding Agent once the BIR publishes it on the official TWA list, based on meeting a revenue or expense threshold — not by self-declaration. Under RR No. 11-2018, TWA status originally covered large taxpayers, the top 20,000 private corporations, the top 5,000 individuals, medium taxpayers, and those under the Taxpayer Account Management Program (TAMP). RR No. 7-2019 replaced that tiered system with a single, simpler test.

Under RR No. 7-2019, a taxpayer is classified as a TWA if, during the preceding taxable year, its:

• Gross sales or receipts, or
• Gross purchases, or
• Claimed deductible itemized expenses

amounted to ₱12,000,000 or more. Meeting any one of these three tests is enough — a company doesn’t need to exceed the threshold on all three. The BIR periodically publishes and updates the list of classified TWAs; a company already on the list before RR No. 7-2019 remains classified until the BIR delists it for no longer meeting the criteria.

When does the withholding obligation start — and stop? #

The obligation to withhold as a TWA begins on the first day of the month following the month the BIR publishes the taxpayer on the list — never retroactively. RR No. 7-2019 sets the same rule in reverse for delisting: a company that drops below the ₱12 million threshold remains obligated to withhold until the BIR formally publishes it as removed from the list, not the moment its revenue falls.

This matters operationally because a company doesn’t self-assess its way into or out of TWA status. If a BIR notice or published list names a company as a TWA effective a given month, every local purchase of goods or services from that month forward is subject to withholding — purchases made before that effective date are not affected.

What withholding rate applies? #

A Top Withholding Agent withholds 1% on local purchases of goods and 2% on local purchases of services, under RR No. 2-98 as amended by RR No. 11-2018 and, most recently, RR No. 24-2025 (effective October 10, 2025), which kept the general rates but added a reduced rate for specific goods:

These ATC codes apply specifically to private-sector TWAs. They are distinct from the government-purchase codes (WC640/WI640 for goods, WC157/WI157 for services) used by national government agencies, GOCCs, and LGUs — see BIR Form 2307 for Government Money Payments for that separate GMP withholding category.

Worked example: a supplier company gets a TWA notice #

A mid-sized packaging distributor with ₱15 million in gross sales last year receives a BIR notice in March that it has been included in the updated list of Top Withholding Agents, effective April 1. Starting that date, every local purchase the company makes changes:

The company must now issue a BIR Form 2307 to each affected supplier, remit what it withholds monthly on BIR Form 0619-E and quarterly on BIR Form 1601-EQ, and list every payee on its Quarterly Alphalist of Payees (QAP) — see How to Convert Excel to BIR DAT File for QAP for how that alphalist is prepared and converted for eSubmission. Purchases made in January through March, before the April 1 effective date, are not affected retroactively.

Frequently asked questions #

What is a BIR Top Withholding Agent? #

A Top Withholding Agent (TWA) is a taxpayer the BIR has classified — based on gross sales, receipts, purchases, or claimed deductible expenses — as required to withhold expanded withholding tax on its local purchases of goods and services, even though those purchases would not otherwise be subject to withholding.

What is the current threshold to be classified as a Top Withholding Agent? #

Under Revenue Regulations No. 7-2019, a taxpayer is classified as a Top Withholding Agent if its gross sales/receipts, gross purchases, or claimed deductible itemized expenses amounted to ₱12,000,000 or more during the preceding taxable year.

What withholding tax rate does a Top Withholding Agent apply? #

A Top Withholding Agent withholds 1% on its local purchases of goods and 2% on its local purchases of services, under RR No. 2-98 as amended by RR No. 11-2018 and most recently RR No. 24-2025. A reduced 0.5% rate applies to gross payments to manufacturers or importers of motor vehicles, pharmaceutical products, and solid or liquid fuels intended for wholesale, effective October 10, 2025.

When does the obligation to withhold as a TWA begin? #

The obligation to withhold begins on the first day of the month following the month the BIR publishes the taxpayer’s inclusion in the list of Top Withholding Agents, per RR No. 7-2019. It is not retroactive to purchases made before that date.

Does being a Top Withholding Agent change how a company issues BIR Form 2307? #

Yes. A newly classified TWA must start issuing BIR Form 2307 to every local supplier of goods or services it pays, using ATC WC158/WI158 for goods and WC160/WI160 for services, and must begin including those suppliers on its Quarterly Alphalist of Payees (QAP).

Can a company stop being a Top Withholding Agent? #

Yes. A taxpayer that no longer meets the RR No. 7-2019 threshold is delisted once the BIR publishes an updated list, and the obligation to withhold ceases on the first day of the month following that publication — not automatically once revenue drops.

Summary #

TWA status turns on a published BIR list, not self-assessment: meet the ₱12 million threshold under RR No. 7-2019 on any one of gross sales, purchases, or expenses, and once published, withholding starts the first day of the following month at 1% on goods and 2% on services (0.5% for the specific wholesale goods added by RR No. 24-2025). The practical shift is operational — a company that never withheld on ordinary local purchases must now issue BIR Form 2307 to every affected supplier and fold them into its quarterly alphalist, so it pays to confirm TWA status (and its effective date) as soon as a BIR notice arrives rather than after the first missed certificate.