PayMongo does not deduct withholding tax from our merchants' sales. Unlike credit companies, we do not withhold 0.5% of your collections. We are a payment processing company, and BIR does not require us to withhold such tax (Alpha Tax Code or ATC WC156). Therefore, we will not provide you 2307 forms as we do not withhold tax.
However, if you are a top authorized withholding agent (TWA) of the BIR, we can refund back 2% of our VAT-exclusive service fees to you. This corresponds to ATC WC160: Income payments made by top 10,000 private corporations to their local/resident supplier of services. In this scenario, you are the withholding agent. This requires you to provide us with BIR form 2307 evidencing the refunded withholding tax amount.
Merchants who are tagged as authorized withholding agents on our system will receive the refund as part of their weekly payout.
A ₱1000 local card transaction will be charged an MDR of 3.5% + ₱15 or a total of ₱50 in fees. This transaction is subject to VAT, which amounts to ₱5.36.
VAT = Php 50 / 1.12 x 12% = Php 5.36
To compute the withholding tax refund for this transaction, get 2% of the ₱50 fee subtracted by ₱5.36 VAT. A total of ₱0.89 should be refunded to the merchant.
Withholding tax = (Php 50 - 5.36) x 2% = Php 0.89
A ₱1000 foreign card transaction will be charged an MDR of 3.5% + ₱15 and an additional 1% for the foreign fee for a total of ₱60 in fees. This transaction is subject to VAT, which amounts to ₱6.43.
To compute the withholding tax refund for this transaction, get 2% of the ₱60 fee subtracted by ₱6.43 VAT. A total of ₱1.07 should be refunded to the merchant.
To request for your withholding tax refund activation, you may click on the button below and submit your complete company name, TIN number, and a copy of your BIR 2303 (BIR Certificate of Registration). Email subject should be “Withholding agent - <Company Name>".
🚨VAT will be excluded from fees in the computation of withholding tax refund effective on February 1, 2021. Non-authorized withholding agents are not entitled to the 2% withholding tax refund. 🚨