Top 20,000 Corporations’ Withholding Tax Compliance



Top twenty thousand (20,000) private corporations shall include a corporate taxpayer who has been determined and notified by the Bureau of Internal Revenue (BIR) as having satisfied any of the following criteria:

  1. Classified and duly notified by the Commissioner as a large taxpayer under Revenue Regulation No. 1-98, as amended, or belonging to the top five thousand (5,000) private corporations under RR 12-94, or to the top ten thousand (10,000) private corporations under RR 17-2003, unless previously de-classified as such or had already ceased business operations (automatic inclusion);
  2. VAT payment or payable whichever is higher, of at least P100,000 for the preceding year;
  3. Annual income tax due of at least P200,000 for the preceding year;
  4. Total percentage tax paid of at least P100,000 for the preceding year;
  5. Gross sales of P10,000,000 and above for the preceding year;
  6. Gross purchases of P5,000,000 and above for the preceding year;
  7. Total excise tax payment of at least P100,000 for the preceding year.

Generally, withholding agents withhold taxes as follows:

  • Rental or Lease Payments – 5%
  • Professional Fees – 10 or 15%
  • Payments to Contractors – 2%
  • Payment to Advertising Agencies – 2%
  • Payment to Specialty Contractors – 2%

In addition to the withholding obligations above, these corporations are also required to withhold:

  • 1% creditable expanded withholding tax on the purchase of goods; and
  • 2% on the purchase of services from local suppliers where it regularly makes purchases.

Casual purchases are not subject to withholding tax unless the amount purchased involves P10,000 or more. Purchase of agricultural products in their original state is also subject to withholding tax but only the purchases in excess of P300,000 cumulative amount within the taxable year will be taxed.

Payments made by Top 20,000 Corporate Taxpayers are exempted from withholding tax:

  1. Payment to payee which does not constitute income;
  2. Payment to government agencies; and
  3. Payment to Income Tax-exempt entities

Taxes withheld by these corporations shall be remitted to the BIR on a monthly basis using BIR Form 1601-E via Electronic Filing and Payment System (eFPS). Filing of monthly withholding tax return must be done on or before the tenth (10th) day of the following month, likewise, it is the due date for the payment of the withheld tax. A Certificate of Tax Withheld (BIR Form No. 2307) shall be issued to the payees within 20 days following the close of such payees’ taxable quarter or upon its demand.

The Top 20,000 Corporations must submit a list of regular supplier of goods and/or services on a per semester basis under Electronic Filing and Payment System not later than July 31 and January 31.


This article is intended to equip the taxpayers or their bookkeepers in complying with the Bureau of Internal Revenue’s (BIR) and other Government rules and regulations.  It is not intended to teach the taxpayers the details of tax planning and avoidance or to commit tax evasion or any fraudulent tax activities. Certain advice, comments and opinions expressed in this article are based on specific situations, limited available definitive tax and other government rulings and the actual experience of the authors, and may not apply to the reader’s specific tax or business concern and should not be used to avoid tax under the National Internal Revenue Code (NIRC) or applicable tax laws and other government regulations without consulting an accountant or lawyer or secure a BIR ruling before using any suggested advice or strategy.



Tax Code of the Philippines

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