Quick answer: Expanded withholding tax (EWT) is income tax your client deducts from your professional fees and remits to the BIR for you. For individual freelancers and professionals the rate is 5% if gross income is ₱3,000,000 or less (with a sworn declaration) and 10% if more. The client gives you BIR Form 2307, and you credit the amount against your income tax. Compare your 8% and graduated tax →
This is different from the compensation withholding that employers apply to salaries, explained in withholding tax: how it works.
EWT vs withholding on compensation
| Withholding on compensation | Expanded (creditable) withholding | |
|---|---|---|
| Who is taxed | Employees | Freelancers, professionals, contractors |
| Who withholds | Employer | Clients that are withholding agents |
| Basis | BIR monthly, semi-monthly, weekly or daily table | Flat percentage of the payment |
| Proof | BIR Form 2316 | BIR Form 2307 |
| Final tax? | No, an advance | No, a creditable advance |
The rates on professional, talent and commission fees
Revenue Regulations 11-2018 sets the rates for professional fees, talent fees and commissions:
| Payee | Gross income for the year | EWT rate |
|---|---|---|
| Individual | ₱3,000,000 or less (sworn declaration submitted) | 5% |
| Individual | More than ₱3,000,000, or no sworn declaration | 10% |
| Juridical person (corporation) | ₱720,000 or less | 10% |
| Juridical person (corporation) | More than ₱720,000, or no sworn declaration | 15% |
These rates cover fees of licensed professionals (lawyers, CPAs, doctors, architects, engineers and similar), talent fees, management and technical consultants and other persons paid professional or promotional fees. Many freelancers are treated under these categories, but the client decides which one applies to your service, so confirm it before you invoice. Individual payees who are VAT-registered are also subject to the higher 10% rate, under later BIR rules. There are other EWT rates for rent, goods and services, so check the BIR list if your income is not professional or talent fees.
The sworn declaration
To get the lower 5% rate, an individual gives each client a sworn declaration of gross receipts or sales together with a copy of the Certificate of Registration. These are normally due to the client by January 15 of each year, or before the first payment if you start mid-year. The client in turn files its own sworn declaration and list of payees with the BIR.
When income below ₱250,000 is exempt
Under the same regulation, an individual payee is not subject to withholding only if both hold: the income does not exceed ₱250,000 and it comes from only one payor, supported by a sworn declaration. A freelancer with two or more clients is still subject to withholding even below ₱250,000.
Worked example: freelancer billing ₱50,000 a month
A freelance designer with one regular client earns ₱600,000 a year, submitted the sworn declaration and is therefore subject to 5%.
Each invoice: ₱50,000
EWT at 5%: − ₱2,500
You receive: ₱47,500 (plus a Form 2307 for ₱2,500)
Year total EWT: 12 × ₱2,500 = ₱30,000At year-end the designer compares the EWT credit with the real income tax:
| 8% option | Graduated rates (no expenses) | |
|---|---|---|
| Income tax | 8% × (₱600,000 − ₱250,000) = ₱28,000 | ₱22,500 + 20% × ₱200,000 = ₱62,500 |
| Less: EWT credits (Form 2307) | − ₱30,000 | − ₱30,000 |
| Result | ₱2,000 overpaid | ₱32,500 still payable |
Under the 8% option the credit more than covers the tax, leaving an overpayment that can be carried over to the next period or claimed as a refund, subject to BIR rules. Always tally every Form 2307 before filing.
How to use Form 2307
- Collect a Form 2307 from every client that withheld tax. Withholding agents generally issue it within 20 days after the close of each quarter.
- Check the details: your TIN and name, the payor’s TIN, the income paid, the tax rate and the amount withheld. Ask for a corrected form if any is wrong.
- Declare the income and credits in your quarterly returns (Form 1701Q) and annual return (Form 1701 or 1701A). See the ITR guide for deadlines.
- Attach the certificates to the annual return and keep copies for at least three years.
- Do not use the same 2307 twice for the same income payment and period.
Quarterly returns and the 8% election
Freelancers file Form 1701Q for the first three quarters (due May 15, August 15 and November 15) and the annual return by April 15. The 8% option is chosen in the first quarterly return of the year, and cannot be changed during that year. EWT credited in each quarter reduces the tax payable for that quarter. See Tax Table 2026 for the 8% and graduated comparison.
If a client over-withheld
If a client withheld at 10% when you qualified for 5%, the excess should be refunded by the client, the corrected Form 2307 reissued, and the old certificate returned. Give the sworn declaration on time to avoid it.
Common mistakes
- Forgetting to submit the sworn declaration, which pushes you to the 10% rate.
- Not collecting every Form 2307, and so overpaying your annual tax.
- Assuming EWT is your final tax. It is only a credit.
- Mixing up Form 2316 and Form 2307. The first is for employees, the second for professionals and contractors.
- Treating the ₱250,000 exemption as automatic when you have more than one client.
Related guides
- Income tax return (ITR) guide →
- How withholding tax works →
- Income tax in the Philippines: complete guide →
- Tax Table 2026: all BIR tables →
Source: Bureau of Internal Revenue (BIR), Revenue Regulations No. 11-2018 (Sec. 2.57.2 and transitory provisions on Form 2307), with the VAT-registered 10% rule per RR 14-2018 as reported by tax advisers. Last checked 17 October 2026. For guidance only; confirm rates with the BIR or your accountant.