BIR Form 2307 Explained (Certificate of Creditable Tax Withheld)
What BIR Form 2307 is, who issues and receives it, how the payee credits the withheld tax, and how the certificate ties to your books and your SAWT.
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BIR Form 2307 — the Certificate of Creditable Tax Withheld at Source — is one of the most-handled documents in Philippine business. Every time a customer pays you net of withholding, or you pay a supplier and keep back a slice of tax, a 2307 should change hands. It's the paper (or PDF) that turns a deduction into something the payee can actually use: a credit against their own income tax. This guide explains what the 2307 is, who issues and receives it, what goes on it, and — the part most people get wrong — how it has to reconcile with your books and your SAWT.
The short answer
BIR Form 2307 is a certificate the payer issues to the payee showing the income paid and the creditable withholding tax kept from it. The payee uses it to credit that withheld amount against the income tax they owe — so the tax isn't lost, just collected early. Issue one for the right period, with the correct income payment, ATC, and tax withheld, and it lines up cleanly: the payee claims the credit on their return (supported by the SAWT), and your figures match theirs.
Who this guide is for
- Withholding agents — businesses that pay rent, professional fees, commissions, or covered goods and services — who must issue 2307s.
- Freelancers, professionals, and suppliers who receive income net of withholding and need their 2307s to claim the credit.
- Bookkeepers and accountants who prepare or reconcile 2307s against the books, the QAP, and the SAWT.
What BIR Form 2307 is
When you make a payment covered by expanded (creditable) withholding tax, you don't hand over the full amount — you keep back a percentage as withholding and remit it to the BIR on the payee's behalf. The 2307 is the certificate that documents that deduction. It names the payer and the payee, the period covered, the nature and amount of the income payment, the applicable ATC, and the tax withheld. In short, it answers: who paid whom, how much, under what tax code, and how much tax was kept.
Critically, the 2307 is for creditable withholding — the kind that's an advance on the payee's income tax, not a final settlement. If the withholding were final (FWT), the counterpart certificate would be BIR Form 2306 instead. Knowing which certificate you owe starts with knowing which kind of withholding applies — see EWT, CWT, and FWT explained.
Who issues it and who receives it
The direction trips people up, so be precise about it. The payer — the one making the payment and acting as withholding agent — is the party that issues the 2307. The payee — the supplier, professional, or lessor receiving the payment — is the party that receives it and later uses it. So you'll be on both sides at different times:
- When you pay a supplier or professional and withhold, you issue them a 2307.
- When a customer pays you net of withholding, they issue you a 2307 — and you should chase it if it doesn't arrive, because without it you can't claim your credit.
Why the 2307 matters
For the payee, the 2307 is money. The withholding their customers kept was an advance on their income tax; the 2307 is the proof that lets them subtract it from what they owe at filing time. Lose the certificate and you can struggle to claim a credit you genuinely earned — you effectively paid tax twice on the same income until it's sorted out.
For the payer, the 2307 is part of being a compliant withholding agent. The BIR cross-checks the certificates you issue against the QAP you file and against the SAWT your payees file. When those three agree, everyone's return reconciles; when they don't, it's a flag the BIR can raise on either side of the transaction.
What goes on the form
| Field | What it captures |
|---|---|
| Payee details | Name, TIN, and address of the income recipient |
| Payer / withholding agent | Name, TIN, and address of the one who withheld |
| Period covered | The quarter or period the income payment falls in |
| Nature of income payment | What the payment was for (e.g. professional fees, rentals) |
| ATC | The Alphanumeric Tax Code that sets the reporting line and rate |
| Amount of income payment | The income paid (the base the withholding is computed on) |
| Tax withheld | The creditable tax kept and remitted to the BIR |
Two of these deserve care. The ATC drives which line the income reports under and the rate that applies, so a wrong code quietly misstates everything downstream. And the base matters: for VAT-registered transactions, expanded withholding is generally computed on the amount net of VAT, not the VAT-inclusive total — so the income figure and the tax withheld have to be on a consistent base.
How to handle 2307s without the year-end scramble
- 1
Identify covered payments as you go
When you pay a supplier, professional, or lessor, decide if it's covered by creditable withholding and which ATC applies — at the moment of payment, not months later.
- 2
Withhold and book it
Keep the correct tax (on the right base — net of VAT where applicable), pay the supplier the remainder, and post the withholding-tax-payable liability to your ledger.
- 3
Issue the 2307 to the payee
Give each payee their certificate for the period, with figures that match exactly what you booked and withheld.
- 4
Collect the 2307s owed to you
For income you received net of withholding, gather the 2307s your customers issued — you'll need them to claim your credit.
- 5
Reconcile to the books and the support files
Confirm the 2307s you issued foot to your QAP, and the 2307s you hold foot to the SAWT you'll file, and that both tie to your ledger before you submit.
How this connects to your books
The 2307 is where records-first earns its keep. Every covered payment should already post a balanced entry — the gross cost on one side, the cash paid out plus a withholding-tax-payable liability on the other. When that's in your ledger as you go, the 2307 is just a printout of figures you already have, the QAP is a roll-up of the same entries, and the SAWT (for the 2307s you receive) is a roll-up on the other side. The trouble starts when the certificate is reconstructed at filing time from incomplete notes: the 2307 doesn't tie to the books, the QAP doesn't tie to the SAWT, and the mismatch surfaces exactly when you least want it. See how the certificates feed the SAWT.
Generate 2307s straight from your books
In mybizmate.io you record a purchase or payment at the gross you actually see, pick the withholding treatment, and it derives the tax, posts the withholding-tax-payable liability, and produces the 2307 from those same entries — so your certificate, QAP, SAWT, and ledger all reconcile.
Common mistakes
- Issuing the wrong certificate. A 2307 is for creditable withholding; a 2306 is for final tax — using the wrong one breaks the payee's filing.
- Picking the wrong ATC. The Alphanumeric Tax Code drives the rate and the reporting line; a wrong code misstates everything downstream.
- Computing on the wrong base. For VAT transactions, expanded withholding is generally on the net of VAT, not the gross — get the base consistent.
- Not chasing the 2307s owed to you. If a customer withholds but never issues your 2307, you can't claim the credit you earned.
- Issuing certificates that don't match the books. A 2307 whose figures don't foot to your ledger won't reconcile to your QAP — or your payee's SAWT.
- Reconstructing at year-end. If the withholding-payable liability isn't booked as you go, the certificates won't tie to the cash you remitted.
Who issues BIR Form 2307 — the payer or the payee?
The payer — the withholding agent who made the payment and kept the tax — issues the 2307 to the payee. The payee receives it and uses it as a credit. So when you pay a supplier and withhold, you issue it; when a customer pays you net of withholding, they issue it to you.
What's the difference between Form 2307 and Form 2306?
Form 2307 certifies creditable (expanded) withholding — an advance the payee claims back as a credit against their income tax. Form 2306 certifies final withholding — tax already fully settled, with no further credit to claim. Issue the one that matches the kind of withholding, not the two interchangeably.
How does the payee use a 2307?
The payee subtracts the creditable tax shown on the 2307 from the income tax they owe, supporting the credit on their income-tax return. They typically list their 2307s on the SAWT they file. Without the certificate, claiming the credit is difficult, so payees should collect every 2307 owed to them.
What if a customer withholds but never gives me a 2307?
You should request it — you need the certificate to claim the credit you're entitled to. Until you have it, that withheld amount is hard to recover, effectively meaning tax was paid on income you can't yet credit. Keep a list of expected 2307s and chase the ones that don't arrive.
Is the income on a 2307 the gross or net of VAT?
For VAT-registered transactions, expanded withholding is generally computed on the amount net of VAT, so the income figure and the tax withheld should be on a consistent net base. Because rules and exceptions change, confirm the correct base for your transaction against current BIR issuances or your accountant.
How does the 2307 relate to the SAWT and QAP?
They're three views of the same withholding. The 2307 is the per-transaction certificate; the QAP is the withholding agent's quarterly list of payees; the SAWT is the payee's list of the 2307s they're claiming as credits. The BIR cross-checks them, so all three must foot to the same totals — and to your books.
Official references
- BIR — Withholding Tax — Official withholding tax overview and issuances
- Bureau of Internal Revenue (BIR) — Forms, current rates, and the latest 2307 version
- BIR eServices — eBIRForms, eFPS, and validation tools
Always confirm current forms, rates, thresholds, and deadlines against official BIR issuances before you file.
This article is general information on Philippine bookkeeping and tax compliance, not legal, accounting, or tax advice. mybizmate.io is compliance-supporting software — it helps you prepare books, reports, and BIR-ready files, and is not a substitute for BIR registration, for filing your returns, or for advice from a qualified professional. Always confirm current BIR rules before you file.