Expanded Withholding Tax (EWT) is a portion of a payment that you withhold and remit to the BIR on behalf of your supplier. Essentially, instead of paying your supplier the full amount, you set aside a certain percentage to pay as taxes to the government.
Issuing a 2307: Applies when you are paying a supplier for an expense.
Receiving a 2307: Applies when you receive income from a client who withheld tax from your payment.
Using EWT in Your Cashflow
When inputting expenses in your Cashflow, you will see a checkbox asking if the entry has a corresponding Expanded Withholding Tax.
💡 Pro-Tip: Once you check this box and submit the entry, Taxumo will automatically redirect you to the Withheld Tax – Issued tab. This is where your Form 2307 is generated for your supplier.
VAT vs. Non-VAT: How EWT is Computed
It is important to note that the computation for EWT changes depending on your tax profile. The system handles this automatically to ensure your filings remain accurate.
It's also important to note that the computation for Expanded Withholding Tax will differ between Non-VAT and VAT filers.
Tax Profile | EWT Computation Base | Description |
Non-VAT | Gross Amount | EWT is calculated based on the total amount paid. |
VAT |
Net of VAT
| VAT is deducted from the Gross Amount first, then EWT is calculated on the remaining value. |
Important Reminders for Accuracy
To keep your records compliant and your tax forms correct, please keep these two points in mind:
Always ensure you choose the tax code that appropriately fits your transaction.
Warning: Choosing the wrong tax code may result in incorrect withholding amounts.We recommend keeping the amounts exactly as they are calculated by the system. This ensures that the proper, compliant information is reflected on your official tax forms.
If anything feels confusing or if you're unsure which tax code to use, don’t hesitate to reach out—we’re happy to help! You can reach out to us through customercare@taxumo.com or through the chat bubble on the bottom-right corner of the screen.