Doing Business in the Philippines

Philippines Business Registration
Ayala Avenue Makati City Central Business District

Dayanan Business Consultancy assists individuals and foreign companies of all sizes in setting up their business operations in the Philippines. Doing business in the Philippines has many advantages as well as a large amount red tape.

Once we know your goals and the kind of business you want to launch in the Philippines,  DBC will recommend the best structure for your KPO, Call Center, IT or Web Development Outsourcing, Back Office Operation or Import and Export. DBC will advise you how to register your investment with PEZA or BOI to obtain tax incentives.

Get the Leading Business Process Outsourcing in the Philippines

We will also ensure that you will get the best Business Process Outsourcing in the Philippines. BPO is a cost-saving measure which is a method of subcontracting business-operations to a third party. One category of BPO is outsourcing of back office services, and Dayanan can help you starting from your business registration in the country.

DBC’s knowledge of the Philippine’s business environment and government agencies allows DBC’s clients to reach their objectives quickly. Personalized service is our commitment, whether your intention is to establish a:

Once the SEC has issued your License to Transact or Certificate of Incorporation, DBC will still be there to help get local business permits and licenses and register with other government agencies when necessary.

Other services DBC provides Business Development and Marketing, Business Plans, Visa Processing, Bookkeeping and Payroll.

Your Business Registration in the Philippines will be done quickly and professionally through Dayanan Business Consulting services.

Contact the DBC Team now for a free consultation.

BPO Philippines BOI Registration

Tax incentives offered by the BOI to BPOs are another enticement to register a business in the Philippines. The Philippine government allows Business Process Outsourcing companies to file an application with the Board of Investments to register for tax incentives.

Multiple tax and non tax incentives are given to businesses in the IT / BPO sector. The major benefits are a four year income tax holiday (normal corporate income tax is 30%), exemption from 12% VAT, duty free importation of capital equipment and special visas for foreign employees.

BOI registration is comparable to dealing with any other Philippines government agency.

BPO Philippines BOI Registration

BPO’s in general qualify for BOI incentives. Only a domestic corporation may apply for incentives, a foreign branch office may not register with the Board of Investments. If the proposed activity is not listed in the BOI Investment Priority Plans (IPP), the main prerequisite is that the applicant export at least 50% of their products/services if Filipino owned and export at least 70% if foreign owned. Call centers and other IT related outsourcing business are required to invest a minimum of USD 2,500.00 per seat. As any BPO consultant knows, USD 2,500 is a small amount once you start adding up what is needed for an IT startup.

Documents to be Submitted to the BOI

1. Properly accomplished Application Form

2. Project Study/Project Report

3. Copy of the DTI Reg. (for sole proprietor) or SEC Cert. of Reg., Articles of Incorporation/Partnership, and By-laws (for partnerships and corporations)

4. Board Resolution authorizing an officer to transact, execute, and sign in behalf of the applicant enterprise

5. Proof of publication of the “Notice of the filing of Application”

6. AFS and ITR for the past 3 years or for the period the applicant has been in operation if less than 3 years (for existing firms); or Sworn Statement of Assets & Liabilities of Major Stockholders (for new corporations)

7. Other documents that may be required by the specific activity in the IPP

BPO Philippines BOI Registration
BPO Philippines BOI Registration

 BOI Registration Process

1. Checklisting of application document

2. Publication of the NOTICE

2. Official filing

3. Evaluation of application / project

4. Presentation to the ManCom/Board for decision

5. Notify applicant of Board action

6. Compliance with the pre-registration requirements

7. Issuance of Certificate of Registration

DBC is here to assist you with BPO, IT outsourcing, call center registration with the BOI. And any other Philippines Business Registration Contact us now

Things You Need to Know When Setting Up A Call Center 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
Call Center Setup

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 employ 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

Philippine REITs set to take off in 2010

By Julius Guevara

The Philippines joins the list of Asian countries that have recently introduced the real estate investment trust as a viable investment vehicle. The Philippine REIT Summit held in Manila last July featured local and multinational fund managers such as ING, RREEF, Citibank and First Metro as well as local developers Ayala Land, Robinsons Land, SM Prime and regional REIT players Axis REIT and Ascendas as they discussed how the new Philippine REIT law could be best implemented to the Philippine market.

“REITs (in the Philippines) is a financial product whose time has come,” said Francisco Sebastian, President of First Metro Investment Corp. Pointing out the lack of good investment options and the Filipinos’ high savings rate of 30%, Mr. Sebastian surmised that REITs will enable savings to be channeled into productive economic capital.  Paul Joseph Garcia, Chief Investment Officer of ING Philippines, also added that “as investment managers, we are actually very excited for this asset class. The Philippine property market is in the process of undergoing a significant breakout… property prices have not even breached the previous all-time highs that we’ve seen in the ’90s prior to the Asian financial crisis, and for me that’s a good sign.”

Local developers also welcomed the introduction of REITs to the country. Frederick Go, President and COO of Robinsons Land commented that “(REITs) are a very efficient way for developers like ourselves to raise capital, and most of the funds that we generate will be employed back into developing more properties.”

Fueled by the tremendous growth in business process outsourcing (BPO) industry as well as remittances from 3 million overseas Filipino workers, the Philippine real estate industry has been on an upswing for the past few years. While the Philippines was also affected by the global financial crisis in 2008, the real estate industry and the economy as a whole have rebounded strongly. “The Philippines is a very defensive market,” noted David Fan, Managing Director of CBRE Investors Japan. “People continued to shop, rents were stable, there was a little bit of correction with housing prices, but now things are looking quite positive.”

Philippine REIT (P-REIT) proponents are counting on these strengths to further propel the REIT market in the country. The Philippines is second only to India in terms of providing offshore BPO-related services worldwide, and would continue to provide steady demand for office space. In 2009, revenues for BPO-related services amounted to US$7.2 Billion, an increase of almost 20% from the previous year. Because of strong growth, BPO demand for office space resulted in single digit vacancy rates for Metro Manila’s CBD’s during 2004 to 2007.

The growing number of Overseas Filipino Workers (OFWs) is also propping up demand for real estate-related products, particularly in housing and retail. As these OFWs send money back home to their families, the funds are invested in condominiums or used to purchase consumer goods.  Eight million Filipinos are currently working abroad, with an additional 3,000 leaving the Philippines daily for jobs abroad. Total remittances from OFWs amounted to US$ 17.3 Billion in 2009, and are expected to increase by 6% in 2010.

Philippine REIT Structure

The Philippine REIT Act was introduced in December 2009, and implementing regulations are currently being drafted. In order to achieve REIT status, at least 75% of the entity’s income should come from income-producing real estate.  As in other countries, the P-REIT allocates 90% of its distributable income as dividend to its investors. The company should also be listed on the Philippine Stock Exchange with a minimum of 1,000 public shareholders holding at least 50 shares each and who in aggregate own at least one-third of the outstanding capital stock of the REIT. While P-REITs are technically considered as corporations, they are referred to as real estate investment trusts in order to adhere to internationally accepted definitions.  Since the REIT operates under the Corporation Code, it is still subject to income taxes but is not subject to the minimum income tax of 2% of gross income. Other transactions taxes are either reduced or waived.

Furthermore, P-REITs are modeled after other REITs in the region, following an externally advised structure which requires the services of an independent fund manager and property manager to ensure transparency and fulfillment of fiduciary duties to the REIT shareholders. The fund and property managers can charge up to one percent each of the REIT’s net asset value as management fees.

One limitation that may prevent the growth of the P-REIT industry is the implementation of the limitations on foreign ownership of property to only 40%. Another possible setback is that the P-REIT is not allowed to develop property unless it plans to hold the property for at least two years after completion. Furthermore, the Bureau of Internal Revenue still has to come up with implementing rules and regulations, and has appealed for some revisions to the REIT law that would balance their tax revenues and REIT profitability.

Opportunities for P-REITs
Most of the local developers opined that P-REITs would first be introduced in the retail sector. Mr. Go of Robinsons Land indicated that they are preparing for retail REIT issuances “primarily because they have been the most stable, the most consistent revenue generators of the company in the last two decades.” Jaime Ysmael, Chief Financial Officer of Ayala Land, also pointed out that “the Philippines is a consumption-led economy,” with personal consumption expenditure comprising over 70% of the local GDP. He added that half of the US$17.3 Billion in remittances from overseas Filipinos benefits the real estate industry. “’Malling’ is a way of life for Filipino families… Manila’s large malls have average foot traffic of 200 to 500 thousand visitors a day.” This translates to strong demand for retail, which has had an annual growth rate of 10% for the past 10 years and has had occupancy rates of more than 90%. Rental rates have also increased by 4% annually since 1996.

The participants also pointed out opportunities in the residential sector, with the country’s burgeoning population growth and a housing backlog of 2 million housing units. Increasing purchasing power due to OFW remittances would also support demand for housing. Similarly, representatives from CBRE and Ascendas pointed out that the increased demand for consumer goods bodes well for the industrial sector, particularly in warehousing and logistics. Opportunities also exist for BPO-related office facilities going into a REIT structure, as demand continues to grow. Lastly, there are opportunities for infrastructure funds to participate in public-private partnerships with the Philippine government through the REIT structure.

“I think the launch of the REIT in the Philippines is a tremendous first step,” said Ascendas South East Asia’s Loh Wai Keong as he shared his experiences in the Singapore market. “The next step would be to see how the industry would help grow the quality of the fund managers and asset managers. Once you launch your REIT, most will be first attracted to the yield, but at the later stage when your REIT is traded on the stock market, the investors will reward you with good yield compression if you can show a good track record of growth in your revenues. That gives you a very cheap source of equity for you to raise more funds, and you can go on to develop new property. That’s a very important virtuous cycle that you need to hold on to.”