Business Registration and Incorporation in the Philippines

Our corporate and tax lawyers will carefully assess your future business in the Philippines to determine the investment vehicle best suited for you and your company. We will assist with formation procedure, planning, and registration with the relevant government agencies such as the Philippines SEC, DTI, BIR and other Philippine government agencies in Metro-Manila, Davao, Santa Rosa (Laguna), Cebu, Clark and Subic. Investment incentives such as income tax holidays and special tax regimes are available to foreign investors engaged in activities that significantly contribute to national industrialization and socio-economic development, or are considered export-oriented enterprises such as BPOs, call centers, software and IT companies. Eligible businesses may apply for incentives with Philippine government agencies such as PEZA and BOI.

Types of company registration in the Philippines:

• Branch Office
• Representative Office
• Domestic Corporation
• Subsidary Domestic Corporation
• Regional Headquarters (RHQ)
• Regional Operating Headquarters (ROHQ)

K&C tax & corporate lawyers will perform the following:

• Determine company formation
• Determine Capital Requirement
• Open corporate bank account
• Register and secure company name with SEC
• Draft Articles of Incorporation and By-Laws
• Register company with SEC, BIR, SSS, etc
• Determine eligibility for incentives with BOI, PEZA
• Process Mayor's Permit, Business Permit and Barangay Clearence

Business Registration for Most Foreign Companies

Foreign investors typically register and start a business in the Philippines through a Domestic corporation or Branch Office. Either entity has advantages and disadvantages. Corporations are more favorable in terms of administrative regulation. Branches may be more advantageous taxwise, but cannot be used if the activities undertaken by the business are included in the Foreign Investment Negative list (FINL) since they are considered completely foreign owned . The FINL prescribes the Philippine equity participation necessary for various businesses restricted from full foreign ownership by law or the Constitution. Corporations are able accommodate the necessary Philippine equity requirements.

Where a business entity exports goods or services and generates revenue from abroad exceeding 60% of its gross sales it may be fully foreign owned and it is exempted from the regular $200,000 inward capital remittance requirement. These qualified entities are considered Export Enterprises under the Foreign Investments Act. Branches and domestic corporations considered export enterprises can be registered with as little as P5,000 paid up capital. Philippines business however, must open a local bank account and most banks require P25,000 - P50,000 as an opening balance.

Domestic Corporation (Subsidiary) Registration in the Philippines

Forming and registering a corporation requires a minimum of 5 incorporators, each of whom must be actual persons that must hold at least a single share in the company. Majority of the incorporators must be Filipino residents. A Corporation may have between 5 and 15 directors (or trustees if a non-stock corporation), each of whom must hold at least one qualifying share of stock. Majority of the directors (or trustees) must be Philippine residents. All Domestic Corporations (those incorporated in the Philippines) obtain their license from and are registered with the Securities and Exchange Commission. The SEC will require a prospective Corporation to reserve and register a name, submit proposed Articles of Incorporation and By-Laws which are compliant with the requirements of the Corporation Code of the Philippines, and meet the minimum capitalization requirements pertaining to the industry or business the it is engaged in. Under the Foreign Investment Act , the minimum paid-up capital requirement for a corporations considered Domestic Market Enterprise (DME) or one whose foreign equity exceeds 40% is US$200,000, which amount must be remitted into the Philippines. The registration requirements do not apply to export-oriented enterprise or involve advance technology and will employ at least 50 employees.

Branch Office Registration in the Philippines

A Branch of a Foreign Corporation operating in the Philippines must obtain a "license to do business" from the SEC. The foreign corporation's head office must prove its legal existence in its country of origin, its financial solvency, and provide authenticated authorization to set up a branch in the Philippines. The Head Office must appoint a resident agent in the Philippines who will be in charge of receiving summons and legal processes for its branch. This allows the SEC and other entities to obtain jurisdiction over the foreign company.

Starting and setting up a branch normally involves remitting US$200,000 as capital investment. Branches engaged in activities involving advance technology, or that employ at least 50 direct employees, are required to inwardly remit a reduced amount of US$100,000 as assigned capital. Branches considered export enterprises are NOT subject to minimum assigned capitalization requirements of $200,000 or $100,000. Special rules apply for certain types of branch operations. It is advisable for companies to register their remittance with Central Bank of the Philippines or Bangko Sentral ng Pilipinas and obtain a BSRD .

The failure of a foreign corporation to obtain a license to do business prevents it from filing suit in Philippine courts. The issuance of a certificate of incorporation from the SEC signifies the commencement of corporate existence and juridical personality for a company however, before commencing actual operations, businesses must also register with the Bureau of Internal Revenue (BIR), the Social Security System (SSS) , the Home Development Mutual Fund (HDMF) , the Philippine Health Insurance Corporation (Phil-Health) , and the local government unit where its principal office will be located. View SEC & Other Government Fees for Registration.

DTI - Department of Trade Industry Registration

Individuals may choose to operate businesses through a sole proprietorship. This is common in small retail trade operations or independent contractors of services. A Sole Proprietorship must register with the BIR and register their business name with the DTI through the Bureau of Trade Regulation and Consumer Protection.

BIR - Bureau of Internal Revenue Registration

All persons subject to internal revenue taxes are required to obtain a Taxpayer Identification Number (TIN) and register and keep Books of Account. Persons with gross sales or receipts exceeding P150,000 in any quarter must submit audited financial statements with their tax returns. The SEC requires stock corporations with paid-up capital of at least P50,000 upon registration, including branches of foreign corporations, to file the report of an independent certified public accountant (CPA) with their financial statements.

Registration, Formation and Company Setup of Foreign Owned Company

• Register BPO, KPO or Outsourcing Company
• Register Backoffice Company
• Register Offshore or Offshoring Company
• Register Shared Services Company
• Register Call Center Company
• Register IT, Software or Web Development Company
• Register Animation Development or Design Company
• Register Online Casino, Betting and Gaming Company
• Register Internet / e-commerce Company
• Register Medical Transcription Company
• Register Legal Transcription Company
• Register Import, Export or Trading Company
• Register Manpower Recruitment Company
• Register Mining Company
• Register Power or Energy Company
• Register Shelf Corporation
• Register Non-Profit, Non-Stock Company
• Register Manufacturing Company

Tax and Incentives Registration

• PEZA - Philippine Economic Zone Authority
• BOI - Board of Investments
• CEZA - Cagayan Economic Zone Authority
• BCDA - Bases Conversion and Development Authority
• SBMA - Subic Bay Metropolitan Authority
• CDC - Clark Development Corporation

Locations of Business Incorporation, Formation and Registration

• Metro-Manila (Makati, Ortigas, Fort Bonifacio)
• Cebu
• Davao
• Santa Rosa, Laguna
• Clark
• Subic

Contact Kittelson & Carpo Consulting