There are more than 500 software development companies in the Philippines according to the PSIA. Their clients are from North America, Asia and Europe. These companies are expected to reach at least $1.16 billion in revenue by the end of 2013, which mainly comes from the outsourcing of software development, web development and IT operations. Metro Manila and Cebu City are now in top ten list of outsourcing destinations.
To attract foreign companies to set up software development businesses, the Government of the Philippines has put in place fiscal, and non fiscal tax incentives. Companies can apply with the Board of Investments (BOI) or with the Philippine Economic Zone Authority (PEZA) to avail of tax holidays. To qualify for incentives certain capitalization or investments may be necessary.
Business Registration
When starting a business in the Philippines, you will need to look at the advantages and disadvantages of the various legal entities that can be registered with the SEC. We suggest one the following depending on your business model: Domestic Corporation, Branch Office, RHQ or ROHQ.
There are no restrictions on foreign ownership of outsourcing companies and BPOs as they fall under the category of export enterprises which must derive a minimum of 70% of their revenue from overseas and be paid in foreign currency.
Why Start a Software Development Company in the Philippines.
The main advantage of opening a software development company in the Philippines is the savings. The majority of the saving will be on labor costs. Salaries of developers in the Philippines can be as low as 25% of a similarly skilled programmer in Europe or North America. Another savings is the package given to your expat manager, the cost of living in the Philippines is one of the lowest in Asia.
DBC will assist you in choosing the legal entity which best suits your business model to register with the SEC, as well as advising you on compensation, payroll and bookkeeping.
Don’t want to setup your own company but still want to save on software development? Let us put you in touch with quality software development and web development companies.
About David Elefant
Philippines business consultant specializing in assisting companies setup their operations in the Philippines.
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