Alphanumeric Tax Code assigned by the BIR to specific types of income payments and withholding rates. Used on BIR forms to identify the nature of the withholding.
ATC codes are the BIR's classification system for withholding tax transactions. Each code consists of letters and numbers (e.g., WE — Professional Fees for Individuals, WR — Rentals, WC — Contractor Payments) and determines both the applicable withholding rate and how the tax is categorized in BIR reporting. The ATC code appears on BIR Form 2307 and on withholding tax returns.
The full list of ATC codes is published in the BIR's withholding tax regulations and is updated periodically. Using the wrong ATC code — even if the correct amount is withheld — can cause discrepancies in BIR matching systems and trigger correspondence from the BIR.
In practice: Alab Creative Agency pays freelance copywriter Rica Santillana ₱30,000 for the month. Rica earns more than ₱720,000 annually, so the applicable rate is 15% professional fees (ATC code WE). Alab withholds ₱4,500, uses ATC WE on the remittance form, and enters the same code on Rica's BIR Form 2307. This ensures the BIR matches the withholding to the correct income type.
Why it matters: The ATC code is not just a label — it determines the withholding rate. Using the wrong code can mean under-withholding (making you liable for the shortfall) or over-withholding (causing the payee to overpay tax they then must recover through their ITR). Maintain a reference table of ATC codes for every type of payment your business regularly makes.
Key codes to know for SMEs: WC (2%, general contractors), WR (5%, rentals), WE (10%/15%, professional fees for individuals), WB (10%/15%, professional fees for corporations), WT (1%, goods purchases by Top Withholding Agents).