How to Setup a Call Center or BPO in the Philippines.

There are two legal entities which can be used to register a call center, BPO, KPO or outsourcing company in the Philippines.

The choice is limited to a Branch Office or a Domestic Corporation. Both can be 100% foreign owned as long as at least 60% of its services. A Representative Office can not be used for BPO, outsourcing or back office operations.

A Philippines corporation is the entity that resembles the most an LLC.

A Domestic Corporation is required to have a minimum of 5 directors. Each director must own at least one share of the corporation. Three of the directors must be residents of the Philippines.

A Branch Office must have a resident agent whose main responsibility is to receive legal summons from the government. Liability lies with the Parent Company as the branch is only an extension of its parent. Within 60 days of having receiving its license to transact business a Branch Office is required to give the SEC a security deposit of PHP100,000.00.

Once the Certificate of Incorporation or the License to Transact Business has been issued it’s time to apply for the for the local business permits. After which registration with the Social Security System can be done.

The Philippines government offers various Income Tax Holidays for most outsourcing businesses. PEZA and BOI are the agencies which grant Tax Incentives.

Philippines Business Registration.

Philippines Call Center Setup Startup

Philippines Foreign Ownership of Resorts

There are a few legal options to owning and managing a resort in the Philippines.

Because of the restrictions on foreign ownership of land which is in Article XII of the
1987 Philippine Constitution, one solution is to lease/rent the land needed for the resort.

Foreign individuals and business entities may lease land for a period of 25 years
renewable for another 25 years. (P.D. No 471, Fixing a Maximum Period for the
Duration of Leases or Private Lands to Aliens). Tourism projects with a minimum
investment of USD five million may be able to qualify for a lease of 50 years renewable
for another 25 years (Republic Act No. 7652, otherwise know as the Investors’ Lease
Act).

To ensure the rights of the lessee it is good practice to have the lease annotated on the
land title.

For those who wish to own the land on which the resort will operate, a corporation which
is 60% Filipino owned and 40% Foreign may be incorporated to purchase the property.
This corporation may then lease the land to another 100% Foreign Owned Corporation
which may own the buildings and other infrastructure and manage the resort.

Foreigners married to Filipinos: this is controversial, as a foreigner may not own land
many think that buying property (land) in their spouse’s name is a solution; this is far
from being true. Any contract or side deal for control of the land will most probably be
considered a circumvention of the law. Even a long term lease contract may or may not
be held valid by the courts.

There is a Supreme Court decision pertaining to the rights of foreign spouses land
ownership and the equal partition of conjugal property.

http://sc.judiciary.gov.ph/jurisprudence/2006/august2006/G.R.%20No.%20149615.htm

In this case the Supreme Court declared that the foreign spouse had the property titled in
his Filipino spouse’s name knowing the Constitutional prohibition of foreign ownership
of land and can not claim reimbursement of the funds used to purchase neither the land
nor the house built on it.

Foreigners should not use nominees
to purchase land on their behalf or use nominee
shareholders and directors in a corporation that will own real property. Doing so, is
a circumvention of the laws that prohibits land from being 100% foreign owned and
would be a violation of the Anti Dummy Law.

Philippines Sole Proprietorship

The definition of a Sole Proprietorship or “single proprietorship”in the Philippines – is a business structure owned by an sole individual who has full control/authority of its own and owns all the assets, personally owes and answers to all liabilities and losses. A sole proprietorship must apply for a business name and be registered with the DTI-National Capital Region (NCR). In the provinces, application may be filed with the DTI regional/provincial offices.

The major disadvantage of a sole proprietorship is the unlimited liability of the owner. Creditors will not only try to obtain the assets of the business but also the personal property of the owner as payment for debts.

The sole proprietorship uses the TIN of its owner and must apply for all the usual business permits required by a business in the Philippines.

There are minimal capital requirements for Filipino citizens.

Some types of business may need other endorsements from various government agencies.

General information needed to apply for a sole proprietorship.

A. Business Details

1. Location. Indicate the barangay, city/municipality, and region where business is/will be located.

2. Tax Identification Number (TIN). Indicate TIN duly issued by BIR to you as individual taxpayer.

B. Owner’s Details

– First Name, Middle Name, Last Name, Suffix (if applicable).

– Date of Birth. Owner must be of legal age (at least eighteen [18] years old).

– Citizenship. For Filipino applicants, present two (2) primary ID or a combination of one (1) primary and one (1) secondary ID. Foreign Nationals must present the original and submit clear certified copy of the following, if applicable, namely: Certificate of Authority to Engage Business in the Philippines pursuant to Foreign Investment Act (Republic Act No. 7042 as amended); Certificate of Authority to Engage in Retail Trade per Republic Act No. 8762 (Retail Trade Liberalization Law), or such other applicable laws, as the case may be.

C. Owner’s Address

– House/Building No. This information include building name and floor number, Lot, Phase and Block numbers, and Subdivision, among others. Street, Barangay and Town/City, Province.

– Zip Code. Check the Philippine Postal Service Web site for proper Zip Code

DBC will assist you in obtaining all the necessary documents needed to apply for a Philippines sole proprietorship business registration and acquire all the necessary business permits. Contact DBC for a free assessment.

A sole proprietorship is only recommended for very small business due to the unlimited liability of the owner. We recommend setting up a corporation for most business and for foreign investors.

 

Philippines sole proprietorship

Philippines Business Registration Back Office Operations Setup

The Philippines is a popular destination for Back Office Business Process Outsourcing (BPO). Back Offices are usually setup for data entry, accounting, bookkeeping, human resources, financial services, marketing, software development and anything that could be competently at a lower cost in the Philippines.

100% foreign ownership of back office operations is allowed in the Philippines. The business may be setup as a Branch Office or a Philippines Domestic Corporation. Both are required to register with the SEC before starting operations. Back office operations are considered an export business and therefore can be started with a lower paid-in capital than required by companies serving the domestic market.

The advantages of starting a back office in the Philippines
are to expand quickly with lower manpower costs. And with a highly educated, trainable, English speaking workforce that is available in most of the country.

Many large foreign banks such as Citibank and JP Morgan have sizable back office operations in the Philippines and employey thousands of qualified employees.

We will examine what you intend to operate and advise you on the best way to start your company in the Philippines. Certain BPO operations are eligible for tax incentives from either the Board of Investments or PEZA. DBC will help you in setting up your back office operations in the Philippines, guide you through the red tape and make sure you obtain all the business permits you need to operate legally.

Contact DBC now for a free assessment of your outsourcing operations in the Philippines.

Philippines Back Office BPO

Philippines BPO KPO Registration Incorporation

Philippines Business Process Outsourcing Registration Incorporation

Starting a Back Office, KPO, Business Process Outsourcing or Call Center in the Philippines requires that you register your operations with the SEC. Outsourcing is deemed an export business and can be one hundred percent (100%) foreign owned (Fully Foreign Owned Domestic Corporation). To qualify as an export oriented enterprise at least 70% of its products/services must be exported.

Philippines offers tax incentives for companies providing outsourcing services. The benefits of tax breaks are given to outsourcing business once their application for registration with either PEZA (Philippines Economic Zone Authority) or the BOI (Philippines Board of Investments) has been approved.
The Philippines is recognized as being the leading outsourcing destination for:

• Cartoon 3D Animation
• Call Center (Inbound, Outbound, Chat)
• Website Design and IT Development
• SEO Search Engine Optimization
• Legal Process Outsourcing
• KPO (Knowledge Process Outsourcing)
• BPO (Business Process Outsourcing)
• Architecture (Cad Cam)
• Computer Programming
• Data Entry
• Human Resources (HR)
• Financial & Accounting Outsourcing
• Medical Transcription
• Virtual Assistants

Filipinos are well educated and speak excellent English with minimal accent. By setting up an outsourcing company for others or your own back office operation in the Philippines you will benefit from a highly trainable workforce at salaries which will give you considerable savings.

Dayanan Business Consultancy is at your service to recommend the best corporate structure for your operations in the Philippines and assist with the registration of your company with the appropriate government authorities to avail of tax incentives.

Philippines Incorporation

Philippine Branch Office

PEZA BOI Comparison

PEZA vs BOI Registration for your Company     PEZA Philippines Economic Zone Authority

The Government of the Philippines has put in place several incentive programs and tax breaks to attract foreign and local investors. The two main agencies implementing those incentives are  BOI and  PEZA. Dayanan Business Consultancy will assist you in choosing and registering with the correct agency for your business to receive the appropriate benefits. There are several things to take into consideration, such as whether your main activities will be export or domestic oriented, if they are part of the Investment Priorities Plan (IPP)  in effect, and where your project will be located and operated.

Requirements and Registration Procedure

  • Corporate Location:
    In order to register with PEZA a company must be located in one of the PEZA assigned Ecozones, whereas the BOI does not have any location requirements (if not part of the IPP program).
  • Registration :
    • PEZA:
      • Required Documents part of PEZA application:
      • Project brief
      • Anti-graft certificate
      • Board Resolution commissioning the designation of a representative
      • SEC Certificate of Registration
      • Project feasibility study
      • Evaluation of Application, this step can be relatively quick depending on the availability of the the board.
      • Presentation to PEZA for review by the board, which will decide on the exact incentives granted to the project.
    • BOI:
      • Required Documents part of BOI application:
      • Three copies of the BOI application Form 501
      • Three copies of the project report and supporting documents
      • Feasibility Plan
      • 5 year financial outline
      • Preparation of Project Evaluation report by the Project Evaluation and Registration Department Project (PERD) and its presentation to the BOI management committee
      • The registration procedure can take from 2 to 3 weeks depending on the project.

Filing Fees
Required application fees:

  • PEZA
    • Application of a New Non-Pioneer Project                     P3,600.00
    • Application of a New Pioneer Project                              P6,000.00
    • Additional registration fee for all new projects              P6,000.00
  • BOI
    There are both an application and a registration fee to be paid, the amounts of which depend of the size of the initial investment for the project. Application fee summary:

    • Project cost below P3 million                                                              P1,500.00
    • Project cost exceeding P3 million (but not over P4million)            P1,500.00
    • Project cost exceeding P4 million (but not over P20 million)        P3,000.00
    • Project cost exceeding P20 million (but not over P50 million)      P4,500.00
    • Project cost exceeding P50 million                                                     P6,000.00

Export Commitment
In order to register with the PEZA or BOI there are some specific export commitments to respect.

  • PEZA
    • For an IT company there is no export commitment required
    • A company majority owned by Filipino citizens, must export a minimum of 50% of its total service/products annually
    • A company majority owned by foreigners, must export a minimum of 70% of its services/products annually
  • BOI
    • For Filipino owned companies there is no export commitment necessary
    • A business that is majority foreign owned (40% and more), must export at a minimum of 70% of its services/products annually
    • A business engaged in pioneer activities has no export commitment and hence may sell all of its services/products in the Philippines, as long as it complies with the Foreign Investment Act’s (FIA) requirements.

Tax Incentives
A company registering with the PEZA or the BOI can avail from a number of tax incentives and benefits.

  • PEZA
    • Offshore profit remittances, which is not subject to remittance tax.
    • Income Tax Holiday (ITH) for 4 years for Non-Pioneer IT Enterprises, or 6 years for Pioneer IT Enterprises.
    • After the ITH period is over, companies can opt  to pay a special 5% tax on gross income instead of all national/local taxes.
    • This does not apply to real property taxes for developers-owned land.
    • Exemption on import duties/taxes on imported machinery, equipment and raw materials.
    • Supplementary deduction equivalent to 50% of training expenses, which is chargeable against the 3% share of the national government of the special 5% tax on gross income;
    • Permanent resident status is granted to foreign investors when they make an initial investments of US$50,000.00 or more.
    • Exemption from Branch Profit Remittance tax for PEZA-registered branches of foreign firms.
    • Other incentives can also be granted as determined by the PEZA Board.
  • BOI
    • 3 to 8 years Income Tax Holiday (ITH)
    • 4 to 6 years exemption from local business taxes for pioneer and non-pioneer industries
    • Exemption from Taxes and Duties on imported spare parts
    • Exemption from Wharf Dues, Export Tax, Duty, Impost and Fees
    • Tax Exemption on Breeding Stocks and Genetic Materials
    • Tax Credits
    • Additional Deductions from Taxable Income

Industries Supported
PEZA and BOI each want to attract investments from the following industries in order to expand  the economic development of the Philippines.
The industries supported are :

  • PEZA
    • Software Development and Application
    • IT-enabled Services (Call centers, Data Encoding, Transcribing and Processing, Directories…)
    • Content Development for the Internet and other forms of media
    • Knowledge Based and Computer Enabled Support Services (Engineering, Architectural design services, and Consultancies)
    • Business Process Outsourcing (BPO)
    • IT research and other IT related services
  • BOI
  • Investment Priority Plan (IPP):
  • Agriculture/Agribusiness and Fishery
  • Infrastructure
  • Manufactured Products
  • Business Process Outsourcing (BPO)
  • Creative Industries
  • Strategic Activities
  • Green Projects
  • Disaster Prevention, Mitigation and Recovery Projects
  • Research and Development and Innovation
  • Mandatory List:
  • Forestry
  • Mining
  • Printing, Publication and Content Development of Books or Textbooks
  • Downstream Oil Industry
  • Ecological Solid Waste Management
  • Clean Water
  • Magna Carta for Disabled Persons
  • Renewable Energy
  • Tourism
  • Export Activities:
  • Production and Manufacture of Export Products
  • Export Services
  • Activities in Support of Exporters