Many tax exemptions have been removed:
1. On 26 March 2021, the president signed into law Republic Act No. 11534 or the CREATE Act which amends Republic Act No. 8424 or the National Internal Revenue Code of 1997, as amended:
Regional operating headquarters (ROHQ): ROHQs shall be subject to the regular corporate income tax beginning 1 January 2022.
2. On 19 December 2017 the president signed into law Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) where he vetoed the provisions granting preferential tax treatment to employees of RHQ’s, ROHQs, and OBUs who are now taxed the same as any individual deriving an income in the Philippines.
A ROHQ can only be established and run by a multinational corporation, which has subsidiaries, branches, affiliates and clients in the Asia-Pacific Region and other foreign markets and as long as they exist under laws other than those of the Philippines.
A ROHQ may engage in any of the following qualifying services to its affiliates, subsidiaries and branches in the Philippines:
– General administration and planning
– Business planning and coordination
– Sourcing/procurement of raw materials components
– Corporate finance advisory services
– Marketing control and sales promotion
– Training and personnel management
– Logistics services
– Research and development services and product development
– Technical support and maintenance
– Data processing and communications
– Business development
An ROHQ is allowed to derive income in the Philippines by delivering the above mentioned services.
ROHQ is allowed to offer qualifying services only to its affiliates, branches, or subsidiaries as declared in its registration with the Philippines Securities and Exchange Commission (SEC). It is not allowed to directly or indirectly engage in the sale and distribution of goods and services whether on behalf of their mother company, branches, affiliates, subsidiaries, or any other company
Philippines ROHQ Regional Operating Headquarters Registration
ROHQ Capitalization Requirements:
The ROHQ must remit into the country within 30 days from the receipt of the Certificate of Registration with SEC not be less than US$200,000 or its equivalent in other currencies. This should be evidenced by a Bank Certificate of Inward Remittance.
A local agent is mandatory.
Documentary Requirements for Philippines RHOQ (Regional Operating Headquarters) registration:
– Name Verification Slip issued by the SEC
– Certification by the Philippine Consulate/Embassy or the Philippine Commercial Office or from the equivalent office of the Philippines Department of Trade and Industry (DTI) in the applicant’s home country that said foreign firm is an entity engaged in international trade with affiliates, subsidiaries or branch offices in the Asia PaScific and other foreign markets; in case the certification is issued by the equivalent of the Philippine DTI, the same shall be authenticated by the Philippines Consulate/Embassy
– A certificate from principal officer of the foreign entity that the said foreign entity has been authorized by its board of directors or governing body to establish its regional or area headquarters in the Philippines
– Endorsement by the Board of Investments (BOI).
ROHQs of banking and financial institutions are also required to secure licenses from the Securities and Exchange Commission and the Bangko Sentral ng Pilipinas, upon the favorable recommendation of the Board of Investments.
– Bank certificate: Proof of inward remittance of USD200,000
Tax Incentives for Philippines ROHQ
- Exemption from all kinds of local taxes, fees or charges imposed by a local government unit, except real property tax on land improvements and equipment.
- Tax and duty free importation of equipment and materials for training and conferences needed and solely used for the RHQ functions, and which are not locally available, subject to prior BOI approval.
- Equipment disposed of within 2 years after importation subject to payment of taxes and duties
- Importation of brand new motor vehicle but subject to payment of taxes and duties.
- Note: ROHQ’s are subject to 12% VAT, 10% corporate income tax and 15% branch office profit remittance when profit remitted to parent company
For Expats and Filipinos
Withholding tax of 15% on compensation applicable to foreign executives holding managerial and technical positions. (Revenue Regulation 11-2010)*
Non Fiscal Incentives for Expats
- Special Multiple Entry Visa
- Expatriates, including spouse and unmarried children below 21 years old will be issued this type of visa
- Multiple entry visa will be processed within 72 hours from submission of documents to the Bureau of Immigration
- Valid three (3) years extendible for another three (3) years
- Exempt from securing Alien Certificate of Registration (ACR) from the Department of Labor and Employment (DOLE)
- Tax and duty-free importation of used household goods and personal effects
- Travel tax exemption
- Personnel and their dependents
Other business entities which may be 100% foreign owned are RHQ, branch offices, representative offices and Domestic Corporations. Contact DBC now for more information on Philippines Regional Operating Headquarters or ROHQ and Philippines Business Registration.