A Brief Overview of BIR Filing Rules for Philippine Corporations Businesses

Philippines Tax Filings BIRBureau of Internal Revenue Tax Filings

Upon registering your corporation, branch office or business with the Philippine Bureau of Internal Revenue (BIR), you will be required to attend a seminar that will orient you on your company’s basic tax obligations in the Philippines.

While most corporation owners would send their accountants to this seminar rather than attend it themselves, it is wise and prudent for you to be aware of the information given there as well. So here, in a nutshell, are the basic rules of Philippine tax filing that you, as a business owner, should know.

What to pay

1. Sales tax. There are two kinds of businesses in the Philippines: value added tax (VAT) payers and percentage tax payers, or non-VAT.

VAT payers are required to pay monthly and quarterly sales taxes equivalent to 12% of their gross sales, while non-VAT payers pay 3% monthly.

When to pay: on or before the 20th day of the following month (monthly) and the 25th day after the close of the quarter (when applicable)

Forms to use: 2551-M (monthly) for non-VAT; 2550-M (monthly) and 2550-Q (quarterly) for VAT

Who are Required to File VAT Returns

  • Any person or entity who, in the course of his trade or business, sells, barters, exchanges, leases goods or properties and renders services subject to VAT, if the aggregate amount of actual gross sales or receipts exceed One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00).
  • A person required to register as VAT taxpayer but failed to register
  • Any person, whether or not made in the course of his trade or business, who imports goods

2. Income taxes withheld at source. Businesses are required to withhold taxes from their building lessors (5% of total monthly rent), hired freelancers (10–15% for professionals and 2% for subcontractors), and regular employees (rates depend on salary), and remit these taxes to the BIR every month. The BIR Form 2307 should be issued to these withholdees to serve as their proof of creditable income tax withheld at source.

When to remit: on or before the 10th day of the following month

Forms to use: 1601-C (compensation) for employees; 1601-E (expanded) for lessors and freelancers

3. Income tax. As a general rule, income tax rates for corporations in the Philippines are at 30% of net taxable income, while the optional standard deduction rate, which can be used in lieu of itemized deductions, is 40% of the company’s gross income.

However, several conditions, such as BOI or PEZA registrations, special tax treatises, etc., may significantly lower the amount of taxes due from a corporation. Our company can guide you on what steps to take to legally minimize your company’s tax duties in the Philippines.

When to pay: on or before May 30 (q1), August 29 (q2), November 29 (q3), and April 15 (annual)

Forms to use: 1702-Q (quarterly) and 1702-RT (annual)

4. Registration fee. This is a ₱500 fee that needs to be paid every year as a renewal of one’s BIR registration.

When to pay: on or before January 31

Form to use: 0605 (payment form)

If the deadlines for filing fall on a holiday or weekend, then your company may still file and pay without incurring penalties on the next working day.

Additional notes

The deadlines listed above are for manual payers only. Users of the eFiling and Payment System (eFPS) usually have their due dates set one to five days after the manual payers, depending on the industry that their business is engaged in. The companies that are required to use the eFPS include corporations with paid-up capital stocks of at least ₱10 million pesos, taxpayers with computerized accounting systems, PEZA members, and BOI-certified companies.

Payments should be made at authorized agent banks within the revenue district under which your business is registered. Payments made in banks outside your own revenue district will be subject to 25% penalty.

If you would like to learn more about the tax environment and exemptions for local- or foreign-owned corporations in the Philippines, we at Dayanan Consulting can help you. Call us today and let’s talk. We’d be happy to be of service.

 

Philippine Congress studies bill creating E-Peso

Philippine epeso bitcoinPhilippine congresswoman Kimi Cojuangco has filed House Bill no. 4914, or the Electronic Peso or E-Peso Act of 2014, the objective of which is to create digital legal tender that can be used as cash, as opposed to credit cards, for the purchase of goods and services on the Internet.

Although digital in nature, E-Pesos are to be valued, minted, circulated, and retired by the Bangko Sentral ng Pilipinas (BSP; Philippine Central Bank) just like physical money. Authenticity verification shall be through a transaction ledger system called a log chain, with each newly minted E-Peso being assigned its own log chain to prevent multiple bookings of a single transaction.

As legal tender, the E-Peso cannot be refused by government and business establishments as a valid mode of payment for goods, services, debts, and taxes. In addition, all business establishments in the country shall be required to exclusively use E-Peso denominations in all their official e-payment and money transfer systems.

All Philippine-based banks will also be required to have E-Pesos as 0.5% of their total cash on hand. The E-Peso may also be used for international transactions, though the process will involve currency exchange.

“The E-Peso, in convenient general circulation, will be an additional path to boost the country’s transaction velocity, economic growth rate, and that it will also serve to be a major convenience for all our people,” Cojuangco says.

Inspired by Bitcoin

For the technology to be used in the minting and transfer of E-Pesos, the BSP shall study “the technology of bitcoin and post-bitcoin cryptocurrencies,” the house bill says.

Bitcoin is a forerunner of digital currencies. Like regular money, it can be transferred directly from person to person without having to go through third-party entities like Paypal. This eradicates transaction fees for business payments, and it minimizes transaction fees for physical cash withdrawals.

Unlike credit card payments, Bitcoin payments can be accepted by establishments without them having to install complex digital and physical infrastructure. Web apps for accepting digital currencies can be downloaded online and installed in any Android or IOS device.

Since digital currencies such as Bitcoin are not bank accounts or credit card accounts, they do not require a maintaining balance or annual fee.

Reloading of digital currency accounts can be done through money order and direct bank transfers. This could also inject new life into the Philippine postal system, which already offers electronic money order services for safe and convenient money transfers even from overseas.

The major bitcoin exchanges in the Philippines are coins.ph, buybitcoin.ph, coinxchange.ph and coinage.ph.

Steps in Registering Your Corporation with the BIR

BIR RegistrationThe Bureau of Internal Revenue (BIR) is the Philippines’ primary taxation agency. It is authorized to assess and collect taxes from all income-generating entities in the country.

Before any business can commence operations, they are required to register with the BIR or be penalized in accordance with Philippine law.

Here are the steps to registering your corporation with the BIR:

1. Fill out the required application forms, specifically,

• BIR Form 1903, or the Application for Registration for Corporations/Partnerships;
• BIR Form 0605, i.e., the Payment Form, for tax type RF (i.e., registration fee); and
• BIR Form 2000, for documentary stamp tax.

2. Submit the required documents at the revenue district office (RDO) in charge of the area where your office is located. These documents include

• your filled-out BIR Form 1903;
• your SEC certificate;
• your business/mayor’s permit; and
• your contract of lease.

You may also be asked for a sketch of your head office location.

Note that in some RDOs, you will need to bring your original business permit plus a photocopy of the same, while in others, even just the official receipts (OR) of the payments you made for your business permit application will suffice.

You may also be asked for a sketch of your head office location.
Note that in some RDOs, you will need to bring your original business permit plus a photocopy of the same, while in others, even just the official receipts (OR) of the payments you made for your business permit application will suffice.

3. Pay the annual registration fee. This is a fixed cost of ₱500 every year.

You will also need to pay for documentary stamps; the BIR will advise you on the exact amount you will need to pay for that.

In some places, RDOs will accept these payments onsite; in others, you will be asked to make the payments at the nearest authorized agent bank (AAB).

Each RDO has a list of its own AABs – but not all AABs actually do accept BIR payments.

4. Attend the BIR seminar. Some days after you submit your application requirements, your Certificate of Registration (COR) will be ready for pickup. Before the RDO will release this certificate, you or your authorized representative will need to attend a 1–2 hour seminar about your tax duties, the different kinds of taxes you need to file and pay, and the various tax deadlines. CORs will be given out after the seminar.

5. Register your accounting system. With your COR on hand, you are practically done registering your business.

The next step is to register your accounting system using the BIR Form 1900 (Application for Authority to Use Computerized Accounting System or Components thereof/Loose-Leaf Books of Accounts).

Or if you will be using manual books of accounts fill out BIR Form 1905.

6. Get your receipts and invoices printed. This involves another application process, and it should be done promptly because you need to begin issuing ORs and sales invoices (SI) within 30 calendar days from the date of registration indicated in your COR.

To get BIR-authorized ORs and SIs, you need to apply for an Authority to Print receipts using the BIR Form 1906. Submit this to your RDO along with a clear sample of the receipts you intend to get printed.

ORs and SIs must be printed by BIR-authorized printers only. These receipts will be valid for a period  five years from the date of printing, after which any unused ones will need to be destroyed and you will need to obtain a new authority to print.

The BIR registration is the last step in legalizing your corporation’s business presence in the Philippines. Your next steps – registrations with the Department of Labor and Employment, etc. – will come when you are hiring your first employees.

 

Steps in Securing Your Corporation’s Business Permit at the City Hall

Philippines Business PermitOnce you’ve obtained your Securities and Exchange Commission (SEC) certificate of incorporation and your barangay permit, the next step in registering your Philippine-based corporation is to get a business permit – also called the mayor’s permit – from city hall.

The process of business permit application tends to vary among localities. In some places, the actual processing time can be as short as one hour, but the queues can be long, especially in January, when all businesses flock to the city hall for their annual permit renewal.

And then, there are localities where the process is more convoluted – but still navigable.

Requirements

The basic documents necessary for business permit application are your

• SEC registration;
• barangay clearance;
• your community tax certificate, which you can get at the city hall; and
• your office lease contract.

Now depending on where your company office is located, you may also be required to present your homeowner’s clearance, business insurance, etc. The city hall will inform you of these additional requirements.

Steps

1. Get an application form at the city hall’s Business Permits and Licensing Office, and fill it out.

2. Submit your application form for the computation of your basic fees and the encoding of your data. The fees are based on your stated business capitalization and size of your office.

Now you will pay the fees, or you may be instructed to visit other offices first and get your required clearances.

Be sure to have your application printout photocopied. If you’ve already paid for something, photocopy the official receipt as well before going to the next step.

3. Make the rounds to secure other necessary clearances. You’ll need to visit

• the engineering office for your certificate of occupancy or building permit,
• the city planning and development council for your location clearance,
• the health center for your sanitary permit, and
• the fire department for your fire safety clearance.

Some of these offices may require additional fees and inspections. They may also issue you a temporary clearance, pending on-site investigation, just so you can finish your registration at the city hall. If that is the case, you will need to secure the actual clearances within 90 days after registration.

5. Submit your papers (clearances, receipts, and application printout) back at the city hall. You will be informed when to return to claim your permit. This could be within the day, but in some cases, it will be after a few days or even a few weeks. Make sure to get a contact number so you can call ahead and confirm that your permit is indeed ready before you return to claim it.

With your business permit (or at least, your official receipt) on hand, you may now proceed to the Bureau of Internal Revenue (BIR) for the last step in your business registration process.

Avoid the hassle of multiple visits and long lines at city hall. Hire Dayanan Business Consultancy to obtain your permits from city hall for you.

Steps in Registering Your Corporation in the Philippines: A Brief Overview

Philippines Business RegistrationOnce you have decided that the Philippines is a good place for setting up business, it’s time to begin the process of registering your corporation.

Here are the steps to registering a corporation in the Philippines:

1. Register your company name with the Philippine Securities and Exchange Commission (SEC) . This is the government agency under whose jurisdiction falls all corporations, associations, and partnerships established in the country.

SEC registration involves at least 5 steps, which begin with the online verification and reservation of the company’s proposed name, and ends with your claiming your SEC license/certificate in person at the SEC office.

2. Get clearance from the barangay hall. A barangay is a Filipino local government unit usually composed of several villages. Several barangays make up a municipality.

To get barangay clearance, go to the barangay hall of the area where you intend to put up your main office. Submit your SEC certificate, site map of your company’s intended location, your approved articles of incorporation and bylaws, and your application form. Then, pay the application fee, and receive your signed barangay certificate that very same day or next day.

3. Secure your municipal permit. Municipal permit application can be complex for two reasons: (1) municipalities vary widely in their requirements, and (2) before you can get your municipal permit, you will need to get supporting certificates from other government agencies outside the municipal hall, like the Bureau of Fire Protection, the municipal health center, etc.

Once you have secured all of your required certificates, bring them back to the municipal hall, pay the fees stated in your application form, then wait a week or two (or more) for your certificates to be ready.

4. Register with the Bureau of Internal Revenue (BIR). The BIR is the last stop in your business registration process. Armed with all the papers and certificates you have so far secured from the SEC, barangay hall, and municipal hall, plus all the other requirements you submitted to be able to secure those permits, go to the BIR revenue district office (RDO) in charge of the area where your business is located.

You may or may not need all the paper you bring with you. Like the municipal halls, RDOs can vary slightly in their requirements for registration.

At the RDO, fill out BIR forms 1903 (Application for Registration for Corporations) and 0605 (payment form for the registration fee).

Submit your application form and all required supporting documents, pay the registration fee and documentary stamps, and you’re done for the day. The BIR will tell you when you should call back to confirm whether your certificate of registration (COR) is ready.

Once your COR has been issued, you have 30 days to have your official receipts and sales invoices printed.

6. Register with the Social Security System (SSS), Home Development Mutual Fund (HDMF), Philippine Health Insurance Company (Philhealth), and the Philippine Department of Labor and Employment (DOLE). Registration with the DOLE becomes mandatory when you have 5 or more employees in your payroll. On the other hand, companies with even just one employee are required to register as employer with the SSS, HDMF, and Philhealth, so that their employee/s may enjoy the benefits of these agencies.

At present, the Philippine government is revising SOPs and putting up infrastructure and to speed up and simplify the system of business registration in the country.

Frustration among registrants is usually caused by the lack of communication from the involved government offices. For instance, it is not uncommon for registrants to discover that the requirements for business permit that are published in a municipality’s website are not complete, and the registrant ends up having to go back and forth to complete the required documents. Many a registrant has also experienced falling in line at a certain window, following instructions indicated by a flowchart posted on the wall, only to find out half an hour later that the flowchart is inaccurate and they are in the wrong queue.

Dayanan Business Consultancy is well versed in the ins and outs of the Philippine business registration process. We’ll be happy to guide you in every step of your company registration in the Philippines. Call us now to learn more about our services.

2014 Investment Priorities Plan (IPP)

BPO Philippines BOI Registration IPPIn an effort to attract prospective investors in the Philippine economy, the Department of Trade and Industry (DTI) has submitted the 2014 Investment Priorities Plan (IPP) to Malacañang for approval last July 2014. Unlike previous years where the IPP changed on a yearly basis, the 2014 IPP will be valid until 2016 or 3 years.

The IPP identifies sectors and economic activities that can qualify for government fiscal incentives. The plan is based on recommendations from the government and private sectors.

This year, there are seven preferred economic activities that will benefit potential investors. These sectors are the following:

1. Manufacturing

• This covers motor vehicle assembly, engineered products such as body panel stamping and engines; chemicals including fertilizers, pesticides, oleochemicals, and petrochemicals, and derivatives.

2. Agro business and fishery

• This covers activities including extraction of natural ingredients, mechanized agricultural support services, and agricultural support infrastructure.

3. Services

• This covers integrated circuit (IC) design, ship repair, testing facilities, and charging stations for e-vehicles.

4. Economic and low cost housing

• This covers both horizontal and vertical housing development.

5. Energy

• This covers exploration and development of energy resources and power generation plants.

6. Public infrastructure and logistics

• This covers development in airports, seaports including RO-RO ports for both cargo and passengers. This may be limited to newly bought ships, aircraft, and seaplanes.

7. Public-Private Partnership (PPP) projects.

This year’s proposed IPP did not include some of the preferred activities included in the previous year, including creative industries or knowledge-based services, research and development, green projects, hospital and medical services, and disaster prevention, mitigation, and recovery projects.

Meanwhile, under existing laws, the following activities are also covered by the 2014 IPP. These are included in the mandatory list of the proposed IPP:

1. Industrial tree plantation
2. Mining, limited to capital equipment incentives
3. Oil refining
4. Storage and distribution of petroleum products
5. Tourism
6. Rehabilitation self-development and self-reliance of persons with disability
7. Publication and printing of books

Last year’s IPP included the exploration, mining, quarrying, and processing of minerals, which is revised in this year’s plan to only include capital equipment incentives. Likewise, the 2013 IPP covered clean water projects and renewable energy, both of which are not included in this year’s mandatory list.

There were no changes in the Exports list, which covers manufacturing of export products and exportation of services and activities in support of exporters. The 2014 proposed IPP also did not indicate the priorities in the Autonomous Region in Muslim Mindanao (ARMM).

Incentives

Once approved, prospective investors looking at establishing their presence in the Philippines will benefit from fiscal incentives and tax breaks, including three to eight year income tax holiday, as provided under the Omnibus Investments Code of 1987.

How to qualify for the incentives

To qualify for the 2014 IPP, an economic activity should meet these criteria:

1. Potential to create employment
2. Potential to move up the value chain
3. Potential to create horizontal and vertical spillover effects
4. Backward and forward linkages and output multipliers
5. Potential to create a competitive market

To learn if your company qualifies for this year’s IPP and to know the process of registering a business in the Philippines, contact Dayanan Business Consultancy for more information.

Tax Withheld for Employees BIR Form 2316

BIR Form 2316Doing business in the Philippines and hiring Filipino talent requires compliance with the revenue regulations of the Bureau of Internal Revenue (BIR). This applies to all companies, whether local or foreign owned BPOs, or engaged in any other kind of business and have already registered with the BIR.

Revenue Regulations No. 11-2013

Other than submitting documents to the government, companies in the Philippines are required to provide its employees a hard copy of BIR Form 2316 or the Certificate of Compensation Payment/Tax Withheld. Employers should:

1) Provide its employees with BIR Form 2316 on or before January 31 and
2) Provide the terminated employee with the form on the day of giving the last payment of compensation.

Minimum wage earners (MWEs) are not exempted from this rule. Employers of MWEs should issue BIR Form 2316 (June 2008 Encs version) to their employees on or before January 31 as well.

Several rules should be followed when employers issue the Certificate of Compensation Payment or Tax Withheld form to its employees. Employers should provide the original and duplicate copies of BIR Form No. 2316 with the following information:

1) Name and address of the employer;
2) Employee’s Tax Identification Number (TIN);
3) The amount of exemptions claimed, amount of premium payments on health and/or hospitalization insurance not exceeding P2,400;
4) The sum of compensation paid including nontaxable benefits;
5) The amount of statutory minimum wage receieved by MWEs;
6) Overtime, holiday, night shift differential, and hazard pay received by MWEs;
7) The amount of tax due;
8) The amount of tax withheld during the calendar year; and
9) Other information in the form that needs to be filled out.

For cases covered by substituted filing, employers should provide the employees with the original copy of BIR Form No. 2316 and file the duplicate copy with the BIR not later than February 28 following the close of the calendar year.

Penalties

If an employer or a withholding agent fails to comply with this revenue regulation within the required time, there will be a corresponding fee of P1,000 for each penalty committed. The aggregate amount for all penalties should not exceed P25,000. The fee will be waived unless the failure is due to reasonable cause and not willful neglect.

Furthermore the employer or withholding agent will be punished with a fine of P10,000 and at least one year imprisonment if it fails to pay any tax, make any return, keep any record, or supply correct and accurate information, withhold taxes, or refund excess taxes for two consecutive years.

Understanding the Philippines Local Government Unit System for Foreign Businesses Operators

The Barangay

So you want to do business in the Philippines, but you don’t know how to get a business license in the Philippines or deal with the government.

Any foreigner wanting to do business in the Philippines needs to understand the legal process and national and municipal requirements particular to the country. There are reams of information available online and on Philippine Government web sites. Moreover, hiring a local business consultant will help you navigate through the red tape.

There is one part of setting up a business in the Philippines that is not discussed too often in detail by Business Consultancies – and that is – the Barangay.

The barangay is the smallest administrative sub-division in the Philippines. It is the basic unit of government, and under the administrative supervision of cities and municipalities.

Makati Barangays
The 33 Makati Barangays

Consider the Barangay as a village within a city. Generally, small, with as little as 15 families and covering just a couple of city blocks, the largest barangay in the Philippines covers 524 hectares and has over 245,000 residents. As of 2014, there are 42,028 barangays in the Philippines.

Why Should I Care?

It is somewhat important to understand this part of Filipino life because after all is said and done getting a business established in the Philippines, the Barangay is where the business will be operating. You are essentially a guest in their house.

Organization

The Chief Executive of the village is The Punong Barangay, properly addressed as Kapitan, also known as the Barangay Captain or Barangay Chairman. Think of them as the chief of the village. It is a good idea to get to know them somewhat. Barangays are permitted to accept donations from businesses, so helping the Barangay to build a basketball court can be great for public relations.

The Sangguniang Barangay (the Barangay Council) has seven Councilors (Barangay Kagawad) and the chairman of Youth Council or Sangguniang Kabataan (SK), for eight Sangguniang Barangay Councilors.

Elections for the Barangay Captain and the councilors take place every three years. The non-partisan barangay elections tend to be taken quite seriously as the posts are highly coveted.

The Barangay Hall – Your Community Center

Barangay Hall
Barangay Hall

 

The barangay hall is seat of local government and is the center for many community activities. They usually have a basketball court or at least one somewhere nearby, as this is one of the favorite pastimes of the Filipinos, along with cockfighting. Depending on the size of the barangay, they have a number of unarmed police officers called Tanod that take care of law and order issues within the neighborhood.

 

Funding the Barangay

The Barangay is funded by revenues collected from local and external sources. Local sources include tax revenues from the Real Property Tax (RPT), taxes on businesses, and non-tax revenues from fees and charges. They also receive a share of taxes collected nationwide by the Bureau of Internal Revenue – The Internal Revenue Allotment (IRA).

Local Revenues

Real Property Tax

The barangays get a percentage of the RPT collected by the municipality where they are located. Real property includes all forms of land, buildings, improvements, and machinery. Exemptions exist for properties owned by government, charitable, institutions, churches, and cooperatives. Companies that supply water and electric power are also not subject to taxes as well as equipment used for pollution control and environmental protection.

Non-Tax Revenues

Barangays can collect fees for:

•    Barangay Clearance to start a business
•    Fines  for the violation of barangay ordinances (not to exceed P 1,000)
•    Use of barangay property or facilities
•    Commercial breeding of fighting cocks and on cockpits and cockfights
•    Places of recreation with admission fees
•    Outdoor advertisements such as billboards, signboards, neon signs and others

They may also collect fees for the use of any system funded and constructed by the barangay:

•    Public roads
•    Piers or wharfs
•    Waterways
•    Bridges
•    Ferry’s
•    Telecommunications  Systems

They may also obtain revenue from:

•    Operation of public utilities and barangay enterprises such as markets and slaughterhouses
•    Proceeds from the sale or lease of barangay property or from loans and grants secured by the barangay

Internal Revenue Allotment

The IRA is a 20% share of taxes collected 3 years earlier by the Bureau of Internal Revenue. The Internal Revenue Allotment (IRA) that each barangay receives is calculated by a formula of 60 percent (60%) population and 40 percent (40%) equal sharing. In 2014, they will share an IRA of P68.3 billion, a P7.8 billion increase from 2013s P60.5 billion IRA.

In addition to the IRA, the General Appropriations Act provides another source of revenue called the ALGU (Allocation to Local Governments). These are “special shares of local government units in the proceeds of national taxes” and include revenues such as:

•    Tobacco excise taxes
•    Proceeds from natural wealth such as mining sites and power sources
•    Gross income taxes paid by establishments within economic zones in their areas
•    Value-added taxes
•    Special privilege taxes
•    Share of budget of Metropolitan Manila Development Authority

Katarungang – Filipino for Justice

The Barangay has a Justice System or Katarungang Pambarangay. The barangay captain heads a committee called the “Lupon Tagapamayapa” (Justice of the peace) to mediate and settle disputes at the Barangay level. They do not have judicial powers as a court does, but rather attempt to resolve issues so the parties can avoid going to court.

If your company has a complaint against some other business or persons, such as for example – they are building a fence or other structure on what you consider your property, you may take it to the Justice of the Peace of the Barangay.

When the chairperson of the committee, usually the Kapitan, receives a complaint, Barangay law requires him to inform the parties and set a meeting for mediation the following day. If after 15 days there is no resolution, than a more formal hearing involving the pangkat or body, must be set. If there is still no end to the dispute in another 15 days, then the complainant may file the case in the regional trial court.

Obtaining Barangay Clearance

In order to set up any business in the Philippines, you will need Barangay Clearance from the Barangay where your business will be located.

Required documents to obtain Barangay Clearance:

1.    Application form
2.    SEC Certificate of Incorporation and approved articles of incorporation and bylaws
3.    Location plan/site map and contract of lease.

Fees will vary in each Barangay since they have the discretion to impose their own fees and charges as long as these fees are reasonable, and within the limits set by the Local Government Code and city ordinances.

If you are interested in starting a business in the Philippines and want help from professionals, contact the DBC Team now for a free consultation. We have extensive experience with dealing with barangays and going through the process of establishing businesses in the Philippines.

The Philippines – A Prime Location for International Business

Philippines Asian Business Gateway
While many Asian countries claim to be the Gateway to East Asia –
The Philippines really is the most centrally located.

At the Crossroads – Gateway to East Asia

The Philippines is the perfect base for any company that wants to do business internationally. Being strategically located between two great trade routes – the Pacific Ocean and the South China Sea, the country is placed at the crossroads of international shipping and airlines. The Philippines is a vital entry point for over 500 million people in the ASEAN Market and a natural gateway to the East-Asian economies.

The government and the private sector is taking advantage of the Philippines prime location, continuously promoting and developing different areas of industry and targeted economic zones, with many incentives for foreign companies to bring operations here.

One of the driving forces behind this may be that the government is having difficulty keeping up with the ever-increasing demands on its budget. Whether it is for this reason or just a good business move, it is creating great opportunities for foreign investments and doing business in the Philippines.

Public-Private Partnership

The Government redefined its role through the Public-Private Partnership Program (PPP Program) in 1990. Privatization allows the private sector to participate in developing infrastructure and many services that previously were the government’s domain.

Public-Private Partnerships have become a primary source of capital in key areas such as:

• Airports
• Electricity
• Ports
• Toll-Ways
• Tourism
• Water Distribution

Since the PPP Program was started, limits on returns have been eliminated and the scope of projects available for investment has increased, and continues to do so.

Now – In 2014, they have many innovative Build-Operate-Transfer (BOT) arrangements and other variants of the BOT including:

• BLT – Build-Lease-Transfer
• BOO – Build-Own-Operate
• BTO – Build-Transfer-Operate
• CAO – Contract-Add-Operate
• DOT – Develop-Operate-Transfer
• ROO – Rehabilitate-Own-Operate
• ROT – Rehabilitate-Own-Transfer

Protecting Investments – Guaranty on ROI

All business ventures involve some risk. To persuade investors to do business with the government of the Philippines, they will offer support through subsidies, guarantees and others to lower the risk factors. They will also guarantee supplies, provide logistical support with things such as raw materials, make energy resources available, and give right-of-way in certain situations.

For the right projects, they will guaranty a continuous revenue stream, and in some instances, they will even provide loans. To attract as many investors as possible, the Philippine Government will allow the concessionaire to use public sector resources to pay debt service, capital costs, and operating expenses. They can also protect the investors from competition.

There are many more incentives for long-term investment in business in the Philippines. Take advantage of this prime location for business and make the move that will lead to tremendous growth opportunities for your business.

If you are interested in starting or expanding a business in the Philippines and want help from professional consultants, contact the DBC Team now for a free consultation. We have extensive experience with navigating through the process of establishing businesses in the Philippines.

Starting a Business in the Philippines

Starting Business PhilippinesWhy would anyone want to start and do business in the Philippines?

The bureaucratic and legal hurdles a company or entrepreneur must overcome to incorporate and register a new firm here can be frustrating. However, with the help of a business consultant, that has extensive experience in Philippines business registration and setting up foreign owned businesses here, such as Dayanan Business Consultancy, that is not an issue.

The fact that so many foreign companies have regional headquarters, representative offices, foreign branch offices and other business setups in the Philippines, speaks volumes that it is well worth wading through the red tape to have operations here.

English Speaking and Talented Human Resources

One of the biggest advantages of doing business in the Philippines is that it has a higher level of English proficiency than any other Asian country. There is also an immense pool of talented Filipino graduates and experienced workers providing cost effective human resource solutions.

In addition, the Philippine Government offers incentives through a dozen Investment Promotion Agencies (IPAs) promoting “Economic Zones” in selected areas of the country. Incentives include various tax exemptions, tax holidays, special investor’s visas, and others to promote investment in businesses.

These include:

•    The Philippine Board of Investments (BOI)
•    The Philippine Economic Zone Authority (PEZA)
•    The Tourism Infrastructure and Enterprise Zone Authority (TIEZA)
•    Aurora Special Economic Zone Authority
•    Authority of the Freeport Area of Bataan (AFAB)
•    Bases Conversation Development Authority (BCDA)
•    Clark Development Corporation
•    Cagayan Economic Zone Authority (CEZA)
•    PHIVIDEC Industrial Authority
•    Philippine Retirement Authority
•    Regional Board of Investments (ARMM)
•    Subic Bay Metropolitan Authority (SBMA)
•    Zamboanga Economic Zone Authority

These secure ready-to-occupy world-class, environment-friendly, and competitively priced Special Economic Zones are waiting for various types of businesses, both commercial and industrial, to take advantage of them.

Depending on which Investment Promotion Agency is being utilized; these can include manufacturing, BPO, tourism, agri-business, IT services and more.

For example, the Philippine Board of Investments is focused on BPOs, the electronics industry, shipbuilding, and renewable energy. PEZA’s priorities are focused more on manufacturing and industrial agricultural manufacturing for export and BPO’s, as well as overall economic zone development and operation. There is some overlap in the kinds of businesses to which the IPAs will grant incentives.

It’s More Fun in The Philippines!

The Tourism Infrastructure and Enterprise Zone Authority of course – “encourage local and foreign investments in our tourism industry through the establishment of Tourism Enterprise Zones (TEZs) in strategic areas of the country.”

The tourism industry opens up a tremendous amount of opportunities for businesses, especially in the small to medium range.
TIEZA is giving incentives for the development of tourism related businesses such as:

•    Travel and tour services
•    Transport services – land, sea, and air
•    Adventure sports such as mountaineering, spelunking, and scuba diving
•    Convention organizers
•    Accommodation establishments – hotels, resorts, condotels, Inns, motels and homestay operators that cater to tourist
•    Tourism estate management services
•    Restaurants, shops, and department stores
•    SPAs
•    Health and Wellness facilities
•    Museums and Galleries (Especially in cultural heritage zones)
•    Theme Parks
•    Convention Centers
•    Zoos

To learn more about the procedures, time, and cost involved in starting a business in the Philippines, business contact the DBC Team now for a free consultation.