In the freelancing world, the BIR Form 2307 is a common sight.
It is one of the most important forms that a freelancer will encounter since they are required to attach it with their 1701 or 1701Q form.
One of the many reasons why this form is needed is because it makes tax computations in the Philippines easier; however, its primary function is to ensure and record tax liability.
Learn more about the BIR Form 2307 below:
Why should you file BIR Form 2307?
The BIR Form 2307 is more commonly referred to as the Certificate of Creditable Tax Withheld at Source. This certificate exhibits the income that is subjugated to Expanded Withholding Tax (EWT) that is paid by a withholding agent.
In accounting books, the form is included under assets. The BIR Form 2307 is also considered as income tax pre-payments because it is being deducted from the income tax dues of a taxpayer during the quarterly and the annual income tax return.
For the payee, the Certificate of Creditable Tax Withheld is important when accomplishing the Income Tax Return because it provides legitimate proof of your withholding tax. Without it, taxpayers will not be allowed to claim their tax credit.
Do take note that taxpayers should ask their employers to provide the BIR Form 2307.
Who needs to file BIR Form 2307?
In most instances, freelancers are the ones who file the form. However, part-time freelancers and employers that hire project-based employees or freelance employees have to file the form as well.
This form should be submitted together with the quarterly and annual Income Tax Return, also known as the BIR Forms 1701/1701Q, for employees or BIR form 1702/1702Q for companies and corporations. Once filed, the amount of withholding tax will be accepted as a tax credit on the taxable quarter or taxable year in which it was earned.
What should you put on the BIR Form 2307?
Filling out the BIR Form 2307 is not as complicated as the other forms. However, one must be aware that there are certain items being subjected to withholding taxes such as professional fees & talent fees, payments to beneficiaries, government money payments to suppliers, and political contributions.
Experience hassle-free tax filing with Taxumo!
When do you need to file the BIR Form 2307?
As mentioned above, the BIR Form 2307 is usually filed along with other forms. To help you identify where else it is needed, here are the forms that the certificate is usually attached with, along with the date in which they need to be filed.
- Income Tax Returns require the BIR form 2307 when filing the quarterly and annual income tax return of both individuals and corporations. The deadlines for quarterly Income Tax Returns or BIR Form 1701Q are on the 15th of May, August, and November. For Annual Income Tax Returns, it should be filed on or before the 15th of April each year.
- EWT or Expanded Withholding Tax is to be issued on or before the 20th day of the month following the end of the taxable quarter. This needs to be provided upon the request of the payee, alongside the income payment. The deadline for the BIR form 1702Q is on or before the 60th day following the close of each of the quarters of the taxable year, and on or before the 15th of April following the close of a taxpayer’s taxable year.
- Percentage Taxes on government money payments require the BIR Form 2307 to be issued alongside the BIR Form 2551. This must be issued within 25 days after the end of each taxable quarter.
- VAT Withholding or the 2550 forms should be accompanied by the BIR Form 2307 and it should be issued no later than the 20th day following the end of each month.
Unlike the other BIR forms, this form is relatively easy to understand, provided you know the many items that are subject to withholding taxes. Freelancers, together with the people who hire freelancers or project-based employees, must know how to file this form. It not only makes tax computations in the Philippines easier, but it also qualifies freelancers to access their tax credits.
Are credit notes subject to EWT?
For my 1st qtr. 2020, can i add creditable percentage tax withheld per BIR form 2307
Thank you for this opportunity to ask you.
I work as a Contract of Service employee for a Government Agency in Manila.
I would like to ask if we are getting a Form 2307 from our employer, do we still need to file an Annual Income Tax Return?
Does having a Form 2307 received by us from our employer, signifies that our employer will be the one to file our Annual ITR or do we need to file this separately?
Please advise and thank you for your cooperation on this matter.
You need to file your Annual ITR separately.
What if the supplier both have supplies for goods and services for the installation, what will be the rate to use 1% for goods or 2% for services, or we should use both?
It would be best to check with our Partner CPAs to be sure. You can book some time with the Partner CPA of your choice here: https://www.taxumo.com/taxumo-consult/
Conservative approach is to use the higher percentage, but if breakdown is provide (the amount of goods and services) then you can use both.
You have to file it separately. Your first assumption is right. 1% for the goods 2% for the services.
There should be a separate computation for goods and services.
How do you compute that for 1702q sawt ?
SAWTs is basically a listing that you submit along with the 1702Q filing. It details the 2307s you received from your clients.
In Taxumo, the SAWTs are created (and submitted) automatically when people file their 1701/1701A/1701Q. We’ll have 1702 forms soon so hopefully we can help make that easier for you as well.
Pingback: How To File BIR Form 1701Q (A Complete Guide For 2020)
Can I just attach the form 2307 I have for the 3rd quarter on my 1701A (to be filed next year) instead of attaching it on 1701Q for the 3rd quarter?
when can 2307 be issued by the payor?upon accrual or upon payment?
Pingback: (2021 Updated) BIR Form 1701: How To File & Pay Annual Income Tax
As a withholding agent mandated by the BIR to withhold our payments to our payees, what document should we secure from the payees before we can issue them a BIR form 2307? Is it necessary for us to ask for sales invoice or official receipt before we issue BIR from 2307? or is it a rule that whenever we withheld them, we should issue BIR for 2307 even without O.R nor S.I?
Hi Eugine! The proper way is to issue the BIR Form 2307 to your contractor or supplier at the same time s/he provides the OR or SI. Make sure that you know their company details. 🙂
For a return purchase, is it correct to issue a negative BIR 2307 certificate?
Hi Abie! Thank you for reaching out to us. For your question, it would be best to seek the guidance of a Certified Public Accountant. You can book for a consultation session here:
If there is anything you need to ask about using Taxumo, feel free to reach out to us again.🙂
Thank you for this article. I have a question about Form 2307. What if I received this only once? It’s from a side project which will not be a constant source of income. This was tagged to my TIN. I am employed full time, but not registered as a mixed income earner. Am I required to register as mixed income even though these projects are rare and not really high paying? Will I be penalized for having signed 2307 without registering as a mixed income earner? Thank you.
Hi Pat! It is ideal that you register as a self-employed individual, mixed-income earner in order for you to declare the taxes withheld from you by your clients. Even though this is not a regular source of income. For implications for not being able to declare income as a freelancer, this may be explained best to you by a Certified Public Accountant. You can book for a consultation session here: https://www.taxumo.com/taxumo-consult/ If you have further questions, you may send us a message at email@example.com.
Good afternoon… Thanks for this opportunity to ask.
Our supplier has a Certificate from BOI as new operator of cold storage facility on a non-pioneer status.
We are also a TAMP taxpayer having a memorandum from the BIR to withhold all supplier of goods / services.
Are we allow to withhold expanded withholding tax?
We have an invoice to our customer last April 2021 due on May 2021. Then our customer only paid us this September 2021. As per our record since we issued an invoice last April 2021 recording of our AR-CWT will be April 2021. Now our customer just issue 2307 upon payment dated 2307. It is okay that our customer will withheld in the payment period and not in our invoice period? Are we not liable for any penalty for that? What about lets say Invoice is July 2020 due on September 2020 but customer only paid us Feb 2021 and issue a cwt with period of feb 2021.
Hi Gelo, companies usually issue 2307s on the date of their payment period. With this concern we suggest that you consult with a Certified Public Accountant who is also a Tax Accredited Agent in order for you to know more about the implications related to this. 🙂
Can a company put the Trade Name instead of Registered Name on BIR Form 2307?
Yes that is possible. Under it, you may just put the Full BIR registered name.
what if the store is refuse to sign the 2307 form or didn’t accept 2307?
You should still issue them the form 2307 if you are a withholding tax agent. May we ask the reason why they refuse to accept this form? Maybe we can further discuss this via email. Kindly send us a message via firstname.lastname@example.org.
is Zero rated Vat, goods suppliers subject for 2307?
Yes as long as the 2307 is issued by a withholding tax agent. 🙂