Withholding Tax & ATC Codes: The Practical Basics

Expanded withholding tax (EWT) makes you a collection agent: when you pay certain suppliers, you keep back a slice of the payment, remit it to the BIR on the supplier’s behalf, and hand the supplier a certificate proving you did. The supplier then uses that certificate as a credit against their own income tax. Simple in concept — the work is in the codes, the calendar, and the paper trail.

ATC codes: the part everyone asks about

Every withholding transaction carries an Alphanumeric Tax Code (ATC) — the BIR’s catalog entry that says what kind of income payment this is and what rate applies. The code follows the transaction from the payment, to the remittance return, to the quarterly alphalist, to the certificate. Get the code wrong and everything downstream disagrees with everything else.

Some anchors practitioners use daily (rates per RR 11-2018, as amended):

Income payment	Typical rate
Professional fees to individuals	5% (with the sworn declaration of gross receipts) or 10%
Professional fees to corporations	10% or 15%
Rent (real property)	5%
Top Withholding Agents — purchases of goods	1% (codes WC158 / WI158)
Top Withholding Agents — purchases of services	2% (codes WC160 / WI160)

If the BIR has designated you a Top Withholding Agent (TWA), the last two rows apply to your regular purchases of goods and services — a much wider net than the standard categories (RR 11-2018 §2.57.2(I)).

In eKapital, the right ATC is resolved automatically from what you’re buying and who you’re paying, with a per-line override when a transaction is the exception. The full ATC catalog is built in, so the code on the payment is the code on the alphalist.

The filing cycle

Withholding runs on a months-1-and-2-plus-quarter rhythm:

Months 1 and 2 of each quarter: remit what you withheld on Form 0619-E (expanded) / 0619-F (final), on or before the 10th day of the following month (eFPS filers follow the staggered eFPS schedule).
Quarter end: file Form 1601-EQ (or 1601-FQ for final taxes) with the Quarterly Alphalist of Payees (QAP) attached, on or before the last day of the month following the quarter. The quarterly return picks up month 3 and reconciles the whole quarter.

The QAP is a structured data file in the BIR’s alphalist format — it lists every payee, ATC, income payment, and tax withheld for the quarter, and it has to tie to the return. eKapital generates both the 1601-EQ figures and the QAP file from the same posted payments.

Form 2307: both directions

When you withhold (AP side): you issue a Certificate of Creditable Tax Withheld at Source (Form 2307) to each supplier — the standing practice is within 20 days from the close of the quarter, or on demand. eKapital accumulates each supplier’s withholding across the quarter into one certificate per supplier-and-code, renders the prescribed PDF, and delivers it by email or a secure download link — no more month-end certificate marathon.

When customers withhold from you (AR side): the 2307s you receive are money. Each one is a creditable tax payment that reduces your income tax due (or VAT, for government withholding). Track them per customer payment, chase the ones that never arrive, and bring the total as a credit on your quarterly and annual returns. eKapital records the withholding per payment as it’s applied, so the credit you claim has a document trail.

Where filers get tripped up

One supplier, many codes. A supplier you pay for both goods and services gets withheld at different rates under different codes — and gets a certificate line for each. Don’t blend them.
The alphalist that doesn’t tie. The QAP total must equal the 1601-EQ figure. Hand-maintained spreadsheets drift; generate both from the same source.
Claiming credits without the certificate. An AR-side credit on your return with no 2307 behind it is the first thing an examiner asks for.

Frequently asked questions

What is an ATC code?

An Alphanumeric Tax Code — the BIR catalog entry identifying the type of income payment and its withholding rate. The same code must appear on the payment record, the remittance return, the quarterly alphalist (QAP), and the Form 2307 certificate.

When do I remit expanded withholding tax?

Months 1 and 2 of each quarter via Form 0619-E, on or before the 10th of the following month (eFPS filers follow the staggered eFPS schedule); then quarterly via Form 1601-EQ with the QAP alphalist, on or before the last day of the month following the quarter.

When should suppliers receive their Form 2307?

The standing practice is within 20 days from the close of the quarter, or upon the supplier’s request. Each certificate covers the supplier’s accumulated withholding for the quarter per tax code.

What do I do with the 2307s my customers give me?

Treat them as tax payments. Each certificate is a credit against your income tax (or VAT, for government withholding) — record it against the customer payment, keep the certificate, and claim the total on your quarterly and annual returns.