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What are top withholding agents, and what must you do when you become one in the Philippines? Learn more about it in this blog!
Last reviewed on April 23, 2026
Businesses deal with government compliance requirements in their day-to-day operations. Apart from the usual employee benefits applications and business permit renewals, there’s also a need for tax accounting and proper filing of taxes throughout the year.
While some companies struggle to keep up with tax requirements, others manage to stay fully compliant. Filing taxes is a crucial responsibility for all businesses, regardless of industry. Failure to do so during audit season may cause you to face penalties, which can hamper your overall operations.
Consistently meeting your tax obligations while growing your business may result in classification as a Top Withholding Agent (TWA). But what does this designation really mean—and how does it affect your day-to-day operations?
The Bureau of Internal Revenue (BIR) previously defined “Top Withholding Agent” as taxpayers whose gross sales/receipts, gross purchases, or claimed deductible itemized expenses amounted to ₱12,000,000 during the prior taxable year.
Under Revenue Regulations (RR) No. 31-2020, a taxpayer who had gross sales or purchases during the previous taxable year that fall under one of the following minimum limits is also considered a top withholding agent.
Top withholding agents are divided into the top 20,000 private corporations, the top 5,000 individual taxpayers, the top 10,000 private corporations, and large taxpayers. Below are the features a taxpayer or business entity needs to meet for each category.
Large taxpayers:
Top 5,000 individual taxpayers:
Top 10,000 private corporations:
Top 20,000 private corporations:
Because there has been some misunderstanding over why some taxpayers with low incomes are put on the top withholding agent list, the BIR Operations Memorandum (OM) Order No. 20-2019 omitted the following taxpayers from the roster:
Revenue Memorandum Circular (RMC) No. 143-2019 highlighted that taxpayers couldn’t be forced to withhold the 1% and 2% creditable withholding tax if they don’t meet the ₱12 million threshold or if they’re excluded by OM Order No. 20-2019, regardless of whether they were included to the list or not.
For an updated list of Top Withholding Agents, you may visit the official BIR website at www.bir.gov.ph/list and navigate to the “Top Taxpayers” tab, where the BIR regularly publishes the current roster of TWAs, including newly added and delisted taxpayers.
If your company appears on the top withholding agent list, you’ve checked off one or more of the criteria listed above. It’s important to note that being a top withholding agent in the Philippines doesn’t require higher tax obligations. Instead, you’ll have to withhold 1% for products or 2% for services from all purchases, which means you have more accountability. These withheld taxes are remitted to the BIR.
Purchases only apply to goods and services bought from a provider at least six times a year. Top withholding agents must withhold 1% or 2% on all transactions of ₱10,000 or more, regardless of whether it was through a regular supplier.
Your company is responsible for remitting and turning the taxes to the BIR as the purchasing party. Any failure to remit these taxes, even online transactions, will be held against your business. The BIR may penalize your company and require you to pay deficiency taxes.
Tax compliance in the Philippines can be tricky, particularly with the comprehensive tax reform, here’s a list of tips to help you stay compliant with your taxes.
1. Record all transactions and purchases
Your business must have a thorough accounting of all sales and transactions. Additionally, you must obtain proper invoices and official receipts to prove these purchases if the BIR asks for them.
2. Stay updated with BIR announcements
The best way to stay compliant with any new tax reforms is by staying updated with BIR announcements. The agency also delists TWAs during a rollout for a new cluster, so it’s important to know news about these as they come.
3. Partner with the experts
Avoid burdensome penalties by outsourcing professional bookkeeping and accounting personnel that offer tax services. Working with experts in this sector can also help prepare your business for audit season, which is already demanding on its own.
Being included in the Top Withholding Agent list comes with greater accountability for tax compliance and reporting. It is part of every individual’s and business’s obligation to ensure accurate and timely tax remittances. Staying compliant helps avoid disputes with tax authorities and reduces the risk of penalties that could disrupt your operations.
Whether your business is listed as a Top Withholding Agent or not, compliance should always be a priority. At CloudCFO, we help startups and SMEs in the Philippines stay on top of their BIR obligations by providing comprehensive tax and accounting services.
Our team is ready to support you, whether you’re managing your TWA responsibilities or simply ensuring your business stays fully compliant. Get in touch with us today and let our professionals handle the compliance complexities, so you can focus on growing your business.
Stay BIR-compliant without the stress. Our tax team handles your filings, payments and tax planning every month.
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Questions about how this affects your business? Our team replies within one business day.
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