Withholding Tax on Online Payments

Last updated: 2026-07-09 Summary:

• When your customer is a withholding agent, they pay you the amount net of expanded withholding tax (EWT) — even online.
• The withheld portion is not lost income; it becomes a creditable withholding tax (CWT) receivable that reduces your income tax due.
• The public invoice page asks the customer to issue BIR Form 2307 — the certificate that substantiates your CWT credit.

Online payment doesn’t change Philippine withholding rules. If your customer is a designated withholding agent buying a service subject to EWT, they must withhold the tax and remit it to the BIR in your name — whether they pay by bank transfer or through the online pay link.

Why the customer pays the net amount

For an invoice flagged as subject to EWT, the public pay page shows a breakdown:

• Gross — the invoice total.
• Less: EWT — the ATC code and rate, and the withheld peso amount.
• Net Amount Due — what the customer actually pays online.

The Pay button collects the net amount, because the customer keeps the EWT and remits it to the BIR themselves. Below the breakdown, the page displays a note: “Please issue BIR Form 2307 for [amount] (creditable withholding tax).”

What it means for your books

The withheld difference is a tax credit, not a shortfall. When the payment reconciles, eKapital books the withheld portion as a creditable withholding tax (CWT) receivable and still clears the full invoice — so the receivable shows as paid, not short. That credit reduces the income tax you owe when you file.

This mirrors exactly how a manually recorded customer payment with withholding behaves — see Receive a customer payment — and the mechanics are the same as the vendor side, just in the opposite direction (see Pay a vendor and issue the 2307).

The Form 2307 link

Your CWT credit is only as good as the certificate behind it. The customer owes you a BIR Form 2307 for the withheld amount, and the public page prompts them for exactly that. Track the certificate the same way you would for any withheld receivable; when you file, the 2307s are the support an examiner asks for. For the underlying rules and ATC codes, see Withholding tax & ATC codes.

Where people get tripped up

• Treating the net payment as underpayment. The customer paid in full — the EWT is a credit you claim, not money owed to you.
• Claiming the credit with no 2307. Chase the certificate. A CWT credit without a matching 2307 is the first thing questioned on audit.
• Assuming online skips withholding. It doesn’t. A withholding-agent customer still withholds; the pay page simply collects the net.

See also

• Withholding tax & ATC codes
• Pay a vendor and issue the 2307
• How online payment reconciliation works
• BIR compliance overview