BIR Form 2307: Creditable Withholding Tax

BIR Form 2307 is the Certificate of Creditable Tax Withheld At Source. If a client deducted tax before paying you, this is the piece of paper that proves it, and without it you cannot claim the credit.

It sits inside the creditable withholding system, which the Tax Code sets up in Section 57(B) and which the TRAIN Act, Republic Act No. 10963, approved 19 December 2017, amended.

The rate band

The Code does not name one rate. It authorises the Secretary of Finance, on the Commissioner’s recommendation, to set rates within a band.

The 15% ceiling is the operative one now. The withheld amount is then credited against the income tax liability of the taxpayer for the taxable year, which is what makes it creditable rather than final.

The band applies to income payable to natural or juridical persons residing in the Philippines, and the duty to withhold falls on the paying corporation or person, not on the recipient.

What the band means on a real payment

Because the statute gives a range rather than a rate, the most it can tell you is the window your withholding must fall inside. Anything outside it is wrong on the face of the statute.

Those columns are arithmetic on the statutory band, not rates BIR prescribes for any particular payment. Your actual rate is set by regulation and will sit somewhere between the two.

Who counts as the withholding agent

TRAIN settles this in the text itself: the payor or person in control of the payment shall be considered the withholding agent. So the duty attaches to whoever controls the money at the moment of payment, which is why a client, not their bookkeeper or their bank, is the one who must issue your 2307.

What late payment costs

TRAIN’s Section 75 rewrote Section 249 of the Tax Code on interest. There shall be assessed and collected, on any unpaid amount of tax, interest at double the legal interest rate for loans or forbearance of money set by the Bangko Sentral ng Pilipinas, from the date prescribed for payment until the amount is fully paid.

One relief is written in beside it: deficiency interest and delinquency interest shall not be imposed simultaneously. The rate itself is not a fixed percentage in the statute, because it moves with the BSP rate, so no percentage for it is stated here.

The deadlines

Section 58’s rule is quarterly, so the four returns fall due at the end of April, July, October and January for the quarters that precede them. That mapping is arithmetic on the rule rather than a calendar BIR prints in the statute.

TRAIN also repealed Section 62 of the Tax Code outright, which removed the separate personal exemption allowed to estates and trusts.

2307 against the other certificates

The three certificates get confused constantly, and attaching the wrong one is a common reason a return is queried.

The Form 2316 guide covers the employee certificate in detail, including its own two deadlines.

Where the credit lands

A 2307 is only useful attached to something. The credit is claimed on the annual return, so the certificate flows into:

• Form 1701, the annual income tax return for individuals with business or professional income, including mixed income earners.
• Form 1700, for individuals earning purely compensation income, where a 2316 rather than a 2307 is usually the relevant certificate.

If you file through eBIRForms or eFPS, the certificate still has to exist and be retained even though the return itself is transmitted electronically.

What this page does not cover

This page does not carry the per-payee withholding rate table. The statute sets only the 1% to 15% band; the specific rate for professional fees, rentals, contractors and the rest is fixed by BIR Revenue Regulations, chiefly RR 11-2018, which is published on the BIR website. That site could not be read for this page, so rather than reproduce rates from memory this page states the statutory band and stops there. Check the current regulation, or your RDO, for the rate that applies to a specific payment.

Also not covered here: final withholding tax, which is not creditable and discharges the liability outright; expanded withholding on government payments; and the alphalist and reconciliation requirements that accompany the quarterly return.

Related

The freelancer tax guide covers the graduated and 8% options a 2307 credit is applied against, the income tax table carries the rates themselves, and the ITR filing guide covers the return the certificate is attached to.

• All BIR guides
• Calculators
• How figures on this site are sourced