How to establish your business in the Philippines?

Type of company:

• Foreign Branch
• Foreign Representative Office
• 100% fully foreign owned Domestic Corporation
• 60/40 owned Domestic Corporation

There are available consultancy firm that can assist and help assess those who need investment vehicle best for the owner and the company. Such services will be provided:

• Procedure
• Planning
• Registration to relevant Philippine government agencies (e.g Securities and Exchange Commission, Department of Trade and Industry, Bureau of Internal Revenue, etc.)

Added services will be as follows:

• Determine Capital Requirement
• Assist in the opening of local bank account
• Register and secure company name with Securities and Exchange Commission or with Department of Trade and Industry
• Identify Shareholders, Directors, Nominees and Incorporator
• Draft Articles of Incorporation and By-Laws
• Process documents with Securities and Exchange Commission, Board of Investment, Philippine Economic Zone Authority, Bureau of Internal Revenue, Social Security System, etc
• Process Mayor Permit and Business Permit
• And whole lot more depending on capacity of the firm and where in the Philippines it is intended to establish its office/s.

Please be advice to get only credible and honest consultancy firm to avoid loss of time and money. The consultancy firm will also mention the existing realities and limitation with concerns to facility, national economic status, negative reports and things to expect.

Eligible businesses may then register their businesses with Philippine Economic Zone Authority, Board of Investment, etc. Incentives such as income tax holidays and special tax regimes are available to foreign investment.

Most foreign investors usually start through a Domestic corporation or a Branch. We recommend to register as corporation as there are administrative regulations. Branches, which may be more advantageous tax wise, cannot be used if the activities to be undertaken are included in the Foreign Investment Negative list. Corporations can accommodate Philippine ownership.

Forming or registering a corporation has to comply with the following requirement:

• Minimum of 5 incorporator, each of whom must be actual persons and hold at least a single share in the company.
• Majority of the incorporator must be Filipino.
• A Corporation must have between 5 and 15 directors, each of whom must have at least one share of stock.
• Majority of the directors (or trustees) must be Philippine residents.
• All Domestic Corporations (those incorporated in the Philippines) must obtain their license with the Securities and Exchange Commission
• Philippine Securities and Exchange Commission requires the following:

– Has to reserve and register a company name
– Has to submit proposed Articles of Incorporation and By-Laws in compliance with the Corporation Code of the Philippines
– Proof of minimum capitalization required to every industry or business the corporation is engaged in
– Has to have the minimum paid-up capital requirement for a corporation or where the foreign equity exceeds 40% is US$200,000, which must be remitted into the Philippines
– Must employ at least 50 employees.

All other details related to start-up, branch establishment and export oriented firms will be explained further by the consultancy firm. The issuance of a certificate of incorporation from the SEC signifies the commencement of corporate existence and juridical personality for a company.

Businesses must also register with the following agencies:

• Bureau of Internal Revenue
• Social Security System
• Home Development Mutual Fund
• Philippine Health Insurance Corporation
• And the local government unit where its principal office will be located.

If the business wish to operate as sole beneficial owner of the business, it should be  registered to the Department of Trade and Industry and with the Beureu of Internal Revenue and must also register its business name with the Department of Trade and Industry through the Bureau of Trade Regulation and Consumer Protection.

Other details will be explained further by the consultancy firm or the entrepreneur.  You can inquire directly to Department of Trade and Industry.

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4 Comments

  1. April 5, 2010 at 1:18 pm

    Pretty good information but a little incomplete. I think for foreigners using a branch office or a representative office, even establishing a regional headquarters is a good way to establish your Philippines entity without having to provide any ownership or Filipino directors.

  2. April 22, 2010 at 9:11 am

    I totally agree in getting a credible and honest consultancy firm to avoid loss of money and time. Forming and registering a company is not an easy task. So choose wisely.. By the way, this is a nice post..informative!:)

  3. May 14, 2010 at 2:05 am

    I agree that this establishing business here is a very good idea. I would like to ask..what is the minimum capital needed for this starting sbusiness.


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