business registration

BOI Tax Incentives in the Philippines: How Smart Businesses Legally Reduce Taxes and Accelerate Growth

“The difference between a profitable business and a highly profitable business is often not just revenue—it is knowing which incentives you are entitled to.”

Every year, businesses in the Philippines pay millions of pesos in taxes, duties, and regulatory costs. What many entrepreneurs, investors, and even seasoned executives don’t realize is that the Philippine government actively offers generous fiscal incentives to encourage investments, create jobs, and stimulate economic growth.

Through the Board of Investments (BOI) and the country’s investment incentive framework under the CREATE Act and CREATE MORE Act, qualified businesses may enjoy tax holidays, enhanced deductions, VAT incentives, duty-free importation, and other benefits that can significantly improve profitability.

If you’re planning to establish a manufacturing facility, export business, technology company, logistics operation, renewable energy project, or another priority industry, understanding BOI incentives could save your business millions of pesos.

What is the Board of Investments (BOI)?

The Board of Investments (BOI) is the Philippines’ primary investment promotion agency under the Department of Trade and Industry (DTI).

Its mandate is to attract investments that support national development, job creation, exports, innovation, sustainability, and regional economic growth.

The BOI administers incentives available to businesses engaged in activities listed under the Strategic Investment Priority Plan (SIPP), which identifies industries the government considers important for economic development.

Common BOI-registered industries include:

  • Manufacturing
  • Export services
  • Information technology
  • Renewable energy
  • Healthcare
  • Logistics
  • Infrastructure
  • Agribusiness
  • Research and development
  • Tourism-related enterprises

The government uses these incentives as a way to encourage businesses to invest in sectors that create jobs and generate economic activity.

Did You Know?

A company does not need to be a multinational corporation to qualify for BOI incentives. Many medium-sized businesses, exporters, and growth-stage companies may qualify if they operate within priority sectors.

Understanding BOI Tax Incentives

The Philippine incentive framework revolves around several major fiscal benefits:

1. Income Tax Holiday (ITH)

An Income Tax Holiday allows a registered enterprise to pay zero income tax for a specified period.

Depending on the project’s location and industry classification, businesses may receive:

  • 4 years
  • 5 years
  • 6 years
  • Up to 7 years

of income tax exemption.

For many startups and capital-intensive projects, this provides valuable breathing room during the critical growth phase.

2. Special Corporate Income Tax (SCIT)

After the ITH period, qualified export enterprises may transition to the Special Corporate Income Tax regime.

Under SCIT, businesses pay:

5% tax on Gross Income Earned (GIE)

instead of the regular corporate income tax system.

This simplified tax structure can significantly reduce tax liabilities for eligible export-oriented companies.

3. Enhanced Deductions Regime (EDR)

Rather than receiving a special tax rate, enterprises may opt for Enhanced Deductions.

Examples include additional deductions for:

  • Labor expenses
  • Research and development
  • Training expenses
  • Power costs
  • Domestic input purchases
  • Depreciation allowances

This system rewards companies that continuously invest in their operations and workforce.

4. Tax and Duty-Free Importation

Qualified enterprises may import:

  • Capital equipment
  • Machinery
  • Spare parts
  • Accessories
  • Raw materials

without paying customs duties and certain import taxes.

For manufacturers, this can dramatically lower project startup costs.

5. VAT Incentives

Certain BOI-registered projects enjoy:

  • VAT exemption on imports
  • VAT zero-rating on local purchases

provided the goods and services are directly attributable to the registered project.

6. Local Tax Incentives

Some enterprises may receive exemptions from local taxes, fees, and charges during specific incentive periods.

This can reduce operational expenses at the local government level.

Did You Know?

For capital-intensive projects, tax savings from duty-free importation alone can amount to tens or even hundreds of millions of pesos during project implementation.

Understanding the BOI Incentive Matrix

One of the most important distinctions under the CREATE framework is the size of the investment and whether the enterprise serves export or domestic markets.

The incentive structure varies depending on:

  1. Whether the enterprise is an Export Enterprise or Domestic Market Enterprise.
  2. Whether the project is approved by:
    • The Fiscal Incentives Review Board (FIRB) for investments exceeding ₱15 billion, or
    • Investment Promotion Agencies (IPAs) such as the BOI for investments of ₱15 billion and below.

A. Registered Export Enterprises

Investments Above ₱15 Billion (FIRB Approval)

Eligible enterprises may receive:

  • Income Tax Holiday (ITH) of 4 to 7 years
  • SCIT or EDR for up to 20 years
  • Tax and duty-free importation
  • VAT exemption and VAT zero-rating
  • Local tax incentives under qualifying conditions

Total incentive periods may reach approximately 24 to 27 years, depending on project classification and location.

Investments ₱15 Billion and Below (IPA/BOI Approval)

Eligible enterprises may receive:

  • Income Tax Holiday (ITH) of 4 to 7 years
  • SCIT or EDR for up to 10 years
  • Tax and duty-free importation
  • VAT exemption and VAT zero-rating
  • Local tax incentives

Total incentive periods may range from approximately 14 to 17 years.

B. Domestic Market Enterprises

Investments Above ₱15 Billion (FIRB Approval)

Benefits may include:

  • Income Tax Holiday (ITH) of 4 to 7 years
  • Enhanced Deductions Regime (EDR) for up to 20 years
  • Duty-free importation
  • VAT incentives for High-Value Domestic Market Enterprises (HVDMEs)
  • Local tax benefits during incentive periods

Investments ₱15 Billion and Below (IPA/BOI Approval)

Benefits may include:

  • Income Tax Holiday (ITH) of 4 to 7 years
  • Enhanced Deductions Regime (EDR) for up to 10 years
  • Duty-free importation
  • Limited VAT benefits
  • Local tax incentives during the availment period

Quick Comparison

IncentiveExport EnterpriseDomestic Market Enterprise
Income Tax HolidayYesYes
SCITYesNo
EDRYesYes
VAT IncentivesBroadly AvailableLimited
Duty-Free ImportationYesYes
Local Tax IncentivesYesYes

Deep Dive: ITH vs. SCIT vs. EDR

Income Tax Holiday (ITH)

Best for:

  • New projects
  • Startups
  • Capital-intensive ventures

Benefit:

  • Zero income tax during incentive period

Example:

A manufacturing company earning ₱50 million annually may save approximately ₱12.5 million per year assuming a 25% corporate income tax rate.

Special Corporate Income Tax (SCIT)

Best for:

  • Export-oriented enterprises
  • Businesses with strong profit margins

Benefit:

  • 5% tax on Gross Income Earned

Example:

A company earning ₱200 million in gross income may significantly reduce taxes compared to the regular corporate income tax regime.

Enhanced Deductions Regime (EDR)

Best for:

  • Companies investing heavily in people and innovation
  • R&D-driven organizations
  • Manufacturers with significant operating costs

Benefit:

Additional deductions lower taxable income and reduce overall tax exposure.

Did You Know?

For some businesses, EDR may provide greater long-term savings than SCIT because it rewards continuous expansion and reinvestment.

Real-Life Business Scenarios

Case 1: Export Manufacturing Company

A company establishes a semiconductor manufacturing plant in Batangas.

Investment:
₱8 billion

Potential incentives:

  • 4–7 years ITH
  • SCIT or EDR up to 10 years
  • Duty-free importation of equipment
  • VAT zero-rating on local purchases

Potential savings:
Hundreds of millions of pesos over the project’s life cycle.

Case 2: IT-BPM Service Exporter

A technology company exports software development services.

Potential incentives:

  • Income Tax Holiday
  • SCIT or EDR
  • VAT benefits on qualified purchases

Result:

Lower operating costs and increased competitiveness in the global outsourcing market.

Case 3: Domestic Food Manufacturer

A company builds a food processing facility serving the Philippine market.

Potential incentives:

  • Income Tax Holiday
  • Enhanced Deductions
  • Duty-free machinery importation

Result:

Faster recovery of capital expenditures and improved cash flow.

Case 4: Foreign Investor Establishing a Philippine Subsidiary

A foreign-owned manufacturing company enters the Philippine market through a BOI-registered project.

Potential incentives:

  • ITH
  • Duty-free importation
  • Enhanced Deductions
  • VAT incentives where applicable

Result:

Lower market entry costs and improved investment returns.

Common Misconceptions About BOI Incentives

Myth #1: Only Giant Corporations Qualify

False.

Many medium-sized enterprises qualify if their activities fall within the Strategic Investment Priority Plan.

Myth #2: BOI Is Only for Exporters

False.

Domestic market enterprises can also qualify for incentives.

Myth #3: Foreign-Owned Companies Cannot Register

False.

Many foreign-owned enterprises may qualify, subject to applicable investment and industry regulations.

Myth #4: Incentives Mean No Taxes Forever

False.

Most incentives are time-bound and subject to compliance requirements.

How to Apply for BOI Registration

Step 1: Determine Eligibility

Verify whether your activity is listed under the Strategic Investment Priority Plan (SIPP).

Step 2: Prepare Documentation

Typical requirements include:

  • Business plan
  • Financial projections
  • Project description
  • Corporate documents

Step 3: Submit Application

Applications are filed through BOI’s registration process.

Step 4: Evaluation

BOI reviews:

  • Economic impact
  • Employment generation
  • Industry classification
  • Compliance with SIPP requirements

Step 5: Registration Approval

Upon approval, the enterprise receives registration and incentive entitlement.

Step 6: Maintain Compliance

Registered enterprises must meet reporting and compliance obligations to continue enjoying incentives.

Final Thoughts

The Philippine government has created one of the most comprehensive investment incentive systems in Southeast Asia through the BOI, CREATE Act, and CREATE MORE Act.

For qualifying businesses, the combination of:

  • Income Tax Holiday (ITH)
  • Special Corporate Income Tax (SCIT)
  • Enhanced Deductions Regime (EDR)
  • Duty-free importation
  • VAT incentives
  • Local tax benefits

can substantially improve project economics and accelerate growth.

Whether you’re a startup founder, exporter, manufacturer, foreign investor, or CFO evaluating expansion plans, BOI registration is worth exploring. The tax savings generated over the life of a project can often be measured not in thousands—but in millions or even billions—of pesos.

For assistance in registering and applying for the BOI incentives contact us at Dayanan Business Solutions Inc.
https://www.dayananconsulting.com/contact-us/

US Companies Expanding to the Philippines: Why BIR and SEC Compliance Should Be Your First Priority

Expanding internationally is a strategic milestone for any organization. For many U.S. companies, the Philippines has become one of the most attractive destinations for growth in Southeast Asia.

With its highly skilled English-speaking workforce, competitive labor costs, and strong service sector, the Philippines offers a compelling environment for outsourcing, shared services, tech operations, and regional headquarters.

However, while market entry may look straightforward on paper, regulatory compliance in the Philippines — particularly with the Securities and Exchange Commission (SEC) and the Bureau of Internal Revenue (BIR) — is where many foreign companies face unexpected complexity.

Before hiring employees or generating revenue, your financial and regulatory foundation must be properly structured.

Why US Companies Are Expanding to the Philippines

Several factors continue to drive U.S. expansion into the Philippine market:

  • Access to a skilled and cost-efficient workforce
  • Strong BPO and IT infrastructure
  • Favorable time zone overlap with the United States
  • Growing domestic consumer market
  • Strategic ASEAN positioning

But expansion success depends not only on operational setup — it depends on regulatory compliance.

Understanding the Role of the Philippine SEC for Foreign Companies

The Philippine Securities and Exchange Commission (SEC) regulates corporate registration and business entities in the Philippines.

For U.S. companies expanding to the Philippines, registration with the SEC is mandatory when establishing:

  • A Domestic Corporation (subsidiary)
  • A Branch Office
  • A Representative Office
  • A Regional Headquarters

The SEC is responsible for:

  • Approving your Articles of Incorporation
  • Issuing your Certificate of Registration
  • Regulating corporate governance compliance
  • Monitoring reportorial requirements

Failure to comply with SEC reportorial requirements can result in penalties, suspension, or revocation of registration.

For foreign companies, structuring the correct entity type at the beginning is critical — as it directly affects taxation, liability, and operational flexibility.

The Bureau of Internal Revenue (BIR): Tax Compliance Starts Immediately

Once SEC registration is completed, registration with the Bureau of Internal Revenue (BIR) follows.

The BIR oversees:

  • Taxpayer registration
  • Issuance of Authority to Print official receipts
  • Books of accounts registration
  • Tax identification numbers (TIN)
  • Monthly, quarterly, and annual tax filings

This is where many U.S. companies underestimate the administrative requirements.

Even newly registered entities — including those not yet profitable — may have ongoing filing obligations.

Common BIR Compliance Requirements Include:

  • Registration of manual or computerized books of accounts
  • Monthly VAT or percentage tax filings
  • Withholding tax reporting
  • Annual income tax returns
  • Financial statement submission

Non-compliance may lead to:

  • Financial penalties
  • Accrued interest charges
  • Audit exposure
  • Business permit renewal issues

For U.S. companies unfamiliar with Philippine tax procedures, professional bookkeeping support becomes essential.

Why Outsourced Bookkeeping Is Critical for US Companies Expanding to the Philippines

When entering a new regulatory environment, financial clarity is not optional — it is infrastructure.

Outsourcing bookkeeping in the Philippines provides several strategic advantages:

1. Immediate Local Compliance Expertise

Philippine tax and accounting processes differ significantly from U.S. GAAP reporting systems.

A local outsourced bookkeeping team ensures:

  • Proper transaction recording aligned with BIR standards
  • Accurate tax calculations
  • Timely filing of statutory reports
  • Maintenance of compliant books of accounts

This prevents costly corrections later.

2. Cost-Efficient Market Entry

Hiring in-house finance staff during early expansion increases fixed overhead.

Outsourcing eliminates:

  • Full-time salary commitments
  • Employment benefits and statutory contributions
  • Recruitment and onboarding costs
  • Infrastructure setup

This allows U.S. companies to allocate capital toward revenue-generating activities instead of administrative overhead.

3. Alignment Between US Headquarters and Philippine Operations

One of the biggest challenges for multinational companies is reconciling local statutory reporting with consolidated global reporting.

Professional outsourced bookkeeping ensures:

  • Clean financial records
  • Organized documentation
  • Reporting that can be easily integrated into parent company financial statements

This supports transparency for leadership, investors, and auditors.

4. Reduced Regulatory Risk

BIR audits and SEC compliance checks are part of operating in the Philippines.

Proper bookkeeping ensures:

  • Financial records are audit-ready
  • Required reports are submitted on time
  • Tax computations are properly documented

Risk mitigation begins with accurate records.

Structuring Your Philippine Expansion Correctly from Day One

For US companies expanding to the Philippines, the correct sequence typically includes:

  1. SEC registration of the chosen entity type
  2. BIR registration and tax mapping
  3. Books of accounts registration
  4. Setup of accounting systems
  5. Ongoing bookkeeping and compliance monitoring

Skipping steps or delaying compliance can create operational bottlenecks that slow growth.

Why Dayanan Business Solutions Supports International Companies

At Dayanan Business Solutions, we assist U.S. and international companies entering the Philippine market by providing:

  • SEC registration support
  • BIR registration guidance
  • Outsourced bookkeeping services
  • Ongoing tax and financial compliance management

We understand that foreign-owned entities require:

  • Regulatory clarity
  • Accurate financial reporting
  • Cost-efficient operational support
  • Confidence in local compliance

Our goal is to ensure your Philippine operations are compliant, structured, and financially organized from the beginning.

Frequently Asked Questions (FAQs)

1. What are the first steps for US companies expanding to the Philippines?

The first step for US companies expanding to the Philippines is choosing the appropriate legal structure (subsidiary, branch office, representative office, or regional headquarters). After selecting the entity type, registration must be completed with the Philippine Securities and Exchange Commission (SEC), followed by registration with the Bureau of Internal Revenue (BIR) for tax compliance. Proper bookkeeping systems should also be established immediately to ensure regulatory compliance from day one.

2. Do US companies need to register with both the SEC and BIR?

Yes. Foreign companies must register with the SEC to legally establish their entity in the Philippines. After SEC registration, the company must register with the BIR to obtain a Tax Identification Number (TIN), register books of accounts, and comply with tax filing requirements. Both registrations are mandatory for legal operations.

3. What is the difference between a Philippine subsidiary and a branch office?

A subsidiary is a separate domestic corporation incorporated under Philippine law, even if fully foreign-owned. A branch office, on the other hand, is an extension of the foreign parent company and is not considered a separate legal entity. The choice between the two affects taxation, liability, and capital requirements, making professional guidance essential.

4. What taxes must foreign companies file in the Philippines?

Depending on the structure and business activity, foreign companies may be required to file:

  • Corporate income tax
  • Value-added tax (VAT) or percentage tax
  • Withholding taxes
  • Annual financial statements

Filing obligations often apply even if the company has not yet generated revenue.

5. Is bookkeeping required even if the Philippine entity is not yet profitable?

Yes. Even newly registered companies without active revenue may have ongoing filing and reporting obligations with the BIR and SEC. Proper bookkeeping ensures that all transactions are recorded accurately and that compliance deadlines are met, preventing penalties.

6. Why should US companies outsource bookkeeping when expanding to the Philippines?

Outsourcing bookkeeping provides immediate access to local compliance expertise without the cost of hiring a full-time finance team. It ensures accurate financial records, timely tax filings, reduced risk of penalties, and better alignment between Philippine operations and US headquarters reporting systems.

7. How long does it take to register a foreign-owned company in the Philippines?

The timeline varies depending on the entity type and document readiness, but SEC registration typically takes several weeks. BIR registration follows thereafter. Delays can occur if documentation is incomplete or compliance requirements are misunderstood, which is why professional assistance can streamline the process.

8. Can US companies own 100% of a business in the Philippines?

In many industries, 100% foreign ownership is allowed. However, certain sectors remain restricted under Philippine foreign investment regulations. It is important to verify whether the intended business activity falls under any ownership limitations before registration.



Final Thoughts: Expansion Is Strategic. Compliance Is Foundational.

The Philippines presents tremendous opportunities for U.S. companies seeking operational efficiency and regional growth.

But expansion success depends on more than talent and market strategy.

It depends on:

  • Proper SEC registration
  • Full BIR compliance
  • Accurate bookkeeping systems
  • Ongoing regulatory alignment

If your company is planning to expand to the Philippines, ensure that your financial and regulatory foundation is established correctly from day one.

Because in international expansion, compliance is not an afterthought — it is a competitive advantage.

Dayanan Business Solutions is here to help you navigate through the Philippines Corporate Compliance landscape. Contact us.

Doing Business in the Philippines: Foreign Ownership, Capital Requirements, and Legal Framework

Philippines Foreign Investment Law

A Practical Guide for Foreign Investors

(RA 7042, as amended by RA 8179 and RA 11647)

Introduction

The Philippines continues to pursue a more liberal and competitive foreign investment regime, aligned with regional ASEAN standards. Legislative reforms over the past decades have reduced entry barriers, clarified ownership rules, and strengthened investor protection while maintaining constitutional safeguards.

The legal framework governing foreign investment is primarily anchored on the Foreign Investments Act of 1991 (Republic Act No. 7042), as amended by Republic Act No. 8179 and Republic Act No. 11647. These amendments significantly modernized the law, particularly with respect to capital requirements, market access, and ease of doing business.

Legal Framework: The Foreign Investments Act (RA 7042)

RA 7042 establishes the State policy to attract, promote, and welcome productive foreign investments that contribute to employment generation, technology transfer, and national economic development.

Key Legislative Amendments

🔹 Republic Act No. 8179 (1996)

RA 8179 introduced early liberalization measures, including:

  • Removal of technology-transfer and Filipino employment requirements as conditions for market entry
  • Greater flexibility for foreign-owned enterprises serving the domestic market
  • Simplification of registration and ownership rules

🔹 Republic Act No. 11647 (2022)

RA 11647 represents a major pro-investment reform. Key changes include:

  • Lower minimum paid-up capital requirements for foreign-owned domestic enterprises
  • Expanded powers of Investment Promotion Agencies (IPAs)
  • Enhanced ease-of-doing-business mechanisms to attract SMEs and professional firms

Foreign Ownership Rules and the Negative List

Foreign ownership is governed by the Foreign Investment Negative List (FINL), which identifies sectors subject to restrictions.

List A – Constitutionally or Statutorily Restricted Activities

Foreign equity limitations apply to sectors such as:

  • Mass media
  • Land ownership
  • Exploitation of natural resources
  • Certain public utilities and professions

Foreign ownership is typically capped at 40%, unless otherwise provided by law.

List B – National Interest and SME Protection

These activities are restricted for reasons of national security, public health, or protection of small and medium enterprises.

All sectors not included in the FINL are generally open to up to 100% foreign ownership.

Minimum Paid-Up Capital Requirements (Updated)

One of the most significant changes introduced by RA 11647 is the substantial reduction in minimum paid-up capital thresholds for foreign-owned domestic market enterprises.

Domestic Market Enterprises

A domestic market enterprise is one that sells goods or services primarily within the Philippines.

Minimum Paid-Up Capital:

Ownership StructureMinimum Paid-Up Capital
50-100% Foreign-Owned (Generally)USD 200,000
With advanced technology or endorsed as startupUSD 100,000
Employing at least 15 Filipino employeesUSD 100,000
Businesses engaged in RetailPHP 25,000,000 (and 10,000,000 per store)

Export Enterprises

An export enterprise is defined as one that exports at least 60% of its output.

Minimum Paid-Up Capital:

  • No minimum paid-up capital requirement* but suggested to have a sufficient paid-up capital that is to be used for pre-operating costs, corporate bank accounts, office equipment and etc.
  • May be 100% foreign-owned, subject to sectoral restrictions

This structure is particularly attractive for BPOs, manufacturing exporters, and offshore service providers.

Enterprises Engaged in FINL-Listed Activities

Enterprises operating in restricted or regulated sectors must comply with:

  • Applicable foreign equity caps
  • Industry-specific capital and licensing requirements
  • Constitutional and special law limitations

Capital requirements vary depending on the sector and regulatory agency involved.

Investment Incentives and Registration

Foreign investors may register with:

  • Board of Investments (BOI)
  • Philippine Economic Zone Authority (PEZA)
  • Other Investment Promotion Agencies (IPAs)

Incentives May Include:

  • Income Tax Holidays (ITH)
  • Special Corporate Income Tax (SCIT)
  • Duty-free importation of capital equipment
  • Full repatriation of profits and capital

RA 11647 strengthened coordination among IPAs to improve investor assistance and processing efficiency.

Registration and Compliance Process

Foreign-owned entities are generally required to:

  1. Determine FINL applicability
  2. Confirm ownership and capital eligibility
  3. Register with the Securities and Exchange Commission (SEC)
  4. Secure secondary licenses and local permits
  5. Comply with ongoing reporting and regulatory requirements

Professional advisory support is recommended to ensure proper structuring and regulatory compliance.

Practical Advisory Notes

  • Early structuring is critical — capital and ownership decisions affect future scalability
  • Overlapping laws apply, including the Public Service Act and Retail Trade Liberalization Act
  • Periodic FINL updates may affect long-term business plans
  • Restructuring post-registration can be costly and time-consuming

Frequently Asked Questions

Can foreign investors own land?
No. Land ownership remains constitutionally restricted. Long-term leases are permitted under applicable laws.

Is 100% foreign ownership now easier?
Yes. RA 11647 significantly lowered capital requirements for domestic enterprises not covered by the FINL.

Does RA 11647 override constitutional limits?
No. Constitutional restrictions remain in force.

Is BOI or PEZA registration mandatory?
Registration is optional but required to avail of incentives.

Where can I see the Foreign Investment Negative List?
https://www.dayananconsulting.com/12th-regular-foreign-investment-negative-list-a-b/

Conclusion

The Foreign Investments Act (RA 7042), as amended by RA 8179 and RA 11647, reflects the Philippines’ continued commitment to liberalizing foreign investment while protecting national interests. With reduced capital barriers, clearer ownership rules, and strengthened institutional support, the Philippines presents compelling opportunities for foreign investors — provided that businesses are properly structured and compliant from the outset.

Foreign investment in the Philippines offers significant opportunities—but proper structuring and compliance are critical from the outset. Ownership limitations, capital requirements, and regulatory approvals can materially affect your investment outcomes if not addressed early.

Dayanan Business Solutions assists foreign investors with:

  • Investment structuring and ownership analysis
  • Capital requirement assessment under RA 7042, as amended
  • SEC registration and regulatory compliance
  • BOI and PEZA registration for incentives
  • Ongoing corporate and compliance advisory

If you are considering establishing or expanding a business in the Philippines, speak with our consultants to evaluate your options and ensure full regulatory compliance.

Contact Dayanan Business Solutions today Contact Us to schedule an initial consultation.

The Simplified Roadmap: How Foreign Companies Register in the Philippines

How to start your business in the Philippines

Why the Philippines?

The Philippines has become one of Asia’s most promising investment destinations. With its young, English-speaking workforce, competitive costs, and strategic location, it’s no wonder foreign investors are drawn here.

But here’s the truth: navigating Philippine business registration can feel like trying to read a map with missing labels. Between agency requirements, document authentication, and tax registrations, it’s easy to get lost in translation — both figuratively and literally.

This guide is your simplified roadmap to setting up your foreign company in the Philippines with clarity and confidence.

Step 1: Understand Your Options — Choose the Right Registration Type

Before diving into paperwork, decide how your business will legally operate in the country. The structure you choose will determine your obligations, tax treatment, and operational scope.

1. Branch Office

  • A branch office is an extension of your foreign company operating in the Philippines.
  • It can engage in revenue-generating activities but is not considered a separate legal entity from its parent company.
  • The parent company is fully liable for all obligations and debts of the branch.

This setup is ideal if your goal is to directly conduct business in the Philippines under your existing brand and management.

2. Representative Office

  • A representative office can promote the parent company’s products or services but cannot generate income locally.
  • All operating expenses must be funded by the head office.
  • This is perfect for market research, liaison activities, or quality control operations.

If you’re still testing the waters, this structure provides a low-risk way to establish presence and build relationships without committing to full commercial operations.

3. Regular Domestic Corporation

Why Choose a Regular Corporation?

If your goal is to establish a Philippine-registered business entity that can grow locally, attract investors, and operate independently from a parent company, this is your best option. It also offers more flexibility for ownership, capital raising, and long-term expansion.

• Ownership Structure: Composed of 2 to 15 incorporators (shareholders), who may be individuals or corporate entities.
• Liability: Each shareholder’s liability is limited to the amount of their capital investment.
• Capital Requirements: There is no general minimum capital requirement, except for certain regulated industries.
• Management: Governed by a Board of Directors, elected annually by the shareholders.
• Lifespan: Perpetual existence (unless otherwise stated in the Articles of Incorporation).

Key Features:

A regular stock corporation (also called a domestic corporation) is the most common type of business entity in the Philippines. It is a separate legal entity from its owners (called shareholders), meaning the corporation can own property, incur debts, and enter into contracts in its own name.

Step 2: Secure Name Verification and Endorsement

Your company name must be verified and reserved through the Securities and Exchange Commission (SEC). This step ensures that no other entity in the Philippines is using your chosen name.

What You’ll Need:

  • Verified corporate name
  • Proof of parent company’s existence (authenticated by the Philippine Consulate or via Apostille)
  • Board resolution authorizing the Philippine operations

Basic Incorporation Steps:

1. Reserve a Corporate Name – Verify and reserve your company name through the SEC Company Registration System (CRS).
2. Prepare Incorporation Documents – Articles of Incorporation, By-Laws, Treasurer’s Affidavit, Cover Sheet, and other SEC Forms.
3. File with the SEC – Submit all requirements either online or at the SEC office. Once approved, you’ll receive your Certificate of Incorporation.
4. Register with Other Agencies – Obtain your local business permits (Barangay, Mayor’s, and BIR) and register with SSS, PhilHealth, and Pag-IBIG if you’ll employ staff.

Step 3: Submit Registration Documents to the SEC

Once your name is cleared, it’s time to file your application for registration.

Required Documents:

  • SEC application form (Branch or Representative Office)
  • Certified copy of Articles of Incorporation and By-laws
  • Audited financial statements of the parent company
  • Board resolution approving the establishment of a Philippine office
  • Appointment of a local resident agent

Step 4: Obtain Local Business Permits and Tax Registration

Once your SEC registration is approved, you must comply with local government and tax requirements. These steps legitimize your operations and enable you to hire staff or open a local bank account.

Key Permits to Secure:

  • Barangay Clearance (local community permit)
  • Mayor’s/Business Permit (from the city or municipality)
  • BIR (Bureau of Internal Revenue) registration and tax identification
  • Registration with social agencies (SSS, PhilHealth, Pag-IBIG) if hiring employees

Why This Step Matters:

Skipping or delaying local registrations can lead to penalties or suspension of operations. Completing these early helps you establish banking relationships and ensures smooth payroll and tax compliance later on.

Step 5: Open a Corporate Bank Account and Begin Operations

After registration and permits, open a corporate bank account with an accredited Philippine bank. You’ll need your SEC Certificate of Registration, local permits, and authorized signatories’ IDs.

Once set up, you can officially conduct transactions, remit funds from abroad, and start hiring or onboarding local staff. This is where your business journey in the Philippines truly begins.

Timeline: How Long Does It Take?

For most foreign entities, the process typically takes 4 to 8 weeks, depending on document readiness and government processing times.

  • Name verification: 1–3 business days
  • Document authentication and filing: 2–3 weeks
  • SEC approval and post-registration: 2–4 weeks

Preparation is key — delays usually happen when documents aren’t properly authenticated or when signatories are based abroad and hard to coordinate. (Note timeline may vary and the timeline listed above only applies to a regular domestic corporation. For branch office and representative office it will take longer.)

Frequently Asked Questions

1. Can a foreign company own 100% of a Philippine business?

Yes, in most industries. However, certain sectors like retail, media, and land ownership have restrictions under the Foreign Investments Negative List.

2. What’s the minimum capital requirement?

  • Branch Office: Typically USD 200,000, but can be lower if exporting at least 60% of products/services.
  • Representative Office: USD 30,000, remitted to fund operations.
  • Regular Domestic Corporation: no minimum capital requirement depending on the industry.

3. Do I need a Filipino partner?

Not necessarily. Many foreign companies/foreigners can operate 100% foreign-owned businesses without a local equity partner. (With some restrictions or limitations)

4. How can Dayanan Consulting help?

Dayanan provides end-to-end assistance — from incorporation, SEC filings, to post-registration compliance, annual company maintenance, bookkeeping, payroll and HR support — ensuring your business is set up legally, efficiently, and without guesswork.

Conclusion: Start Strong with Expert Guidance

Registering a foreign company in the Philippines may seem daunting, but with the right roadmap and experienced partners, the process becomes straightforward and predictable.

At Dayanan Consulting, we’ve guided hundreds of foreign companies — from tech startups to multinational enterprises — through every stage of Philippine business registration. We know the challenges, the shortcuts, and the best practices that make your setup faster and compliant.

Ready to establish your presence in the Philippines?
Book a consultation today and start your journey with Dayanan.
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Pros and Cons of Starting Foreign Companies in the Philippines

Infographic summarizing the Pros and Cons for foreign companies in the Philippines

Like it or not, today’s business landscape is incredibly competitive and will continue to be so. It’s no wonder that companies scramble to build, maintain, and expand their edge over competitors. To get that proverbial edge, the savviest of entrepreneurs are exploring strategies that they have never pursued before.

Among these strategies is establishing businesses overseas. After all, one can make money anywhere in the world. In recent years, the Philippines has become a favored destination for aspiring moguls and tycoons. Opening foreign companies in the Philippines allows them to be successful even outside of their home countries.

Any businessman worth his salt would do his research before investing his hard-earned money in another country. After all, doing business in the Philippines is not for the faint-hearted. If you have ever thought of branching out abroad, you must be aware of the benefits and risks of doing so. To guide you, here is a short list of the pros and cons of starting your own business in the Philippines as a foreigner:

Pros:

Cons:

Pros of Starting Foreign Companies in the Philippines

A Large Market

With a population of over 100 million, the Philippines offers numerous opportunities for any enterprising businessman to sell his products and services. Filipinos have an affinity for Western culture and are famously consumer-driven. Foreigners would have an easier time adjusting here compared to other Southeast Asian countries like Thailand and Indonesia.

Despite the great income disparity between population sectors, a smart entrepreneur can profit by honing in on and marketing to specific segments. In addition, locating your business in the Philippines allows you to take advantage of the greater ASEAN and Asia-Pacific markets.

Low-Cost, Talented Labor

Naturally hardworking, Filipinos are the dream employees of every company. Each year, the country’s universities and colleges add thousands of graduates to an already large labor pool. This has been – and still is – a boon to the business process outsourcing (BPO) sector, with the average Filipino’s good command of the English language and excellent communication skills.

Salaries in the country are also much lower compared to North America and European countries. With the exchange rate hovering at around PhP 50 to USD 1, foreign companies in the Philippines definitely get more bang for their (payroll) buck.

Good-Enough Infrastructure

Despite being an archipelagic country, the main islands of the Philippines are surprisingly well-connected to each other and the outside world. Large cargo shipments mostly utilize the seaports, while smaller ones go through the various airports dotting the major cities.

Within the greater metropolitan Manila area, the key business hubs are Makati City, Bonifacio Global City (BGC), and Ortigas Center. Rivaling the likes of Hong Kong and Singapore, these places boast of state-of-the-art, eco-friendly communities that bring residents and businesses together.

While there remains a lot to be done to improve the country’s infrastructure, President Rodrigo Duterte has recently initiated the “Build, Build, Build” program to fast track major infrastructure projects that would benefit both local and foreign companies in the Philippines.

Incentives from the Government

The Philippine government, through the Board of Investments (BOI) and Philippine Economic Zone Authority (PEZA), provides several incentives to attract foreign investments, especially into priority areas and industries marked for development.

Fiscal incentives include income tax holidays, tax exemptions and deductions, and preferential rates on the final tax of gross income (for PEZA-registered companies). Among the non-tax incentives are simplification of customs procedures for imported products, issuance of resident visas to foreign investors and their families, and the privilege to operate a bonded trading or manufacturing warehouse.

If it’s your first time to open an foreign-owned company in the Philippines, don’t forget to avail of these goodies!

Cons of Starting Foreign Companies in the Philippines

More Holidays in the Philippines

The Philippines has 18 official non-working holidays. Many of these are of great cultural significance, such as Christmas, New Year, the Christian Holy Week, and All Souls’ Day.

On the other hand, these holidays provide a ready-made, annually-occurring boon to consumer-oriented businesses. Marketing your products and services could not become any easier, with the extended Christmas season in the Philippines that unofficially starts in September and ends in February.

The Law Favors the Laborer

Most of the labor laws in the Philippines are geared to favor employees over management. For example, companies cannot simply fire underperforming employees at will. Before fully terminating someone, the employer has to prove first that the staff member concerned was at fault or failed to pass the standards of his/her probationary period. Companies are also mandated by Philippine law to provide severance pay and 13th-month pay.

These conditions may seem unfair to some, but overall such laws have contributed to higher morale and a lower turnover rate among Filipino employees compared to their foreign counterparts. That is something any smart businessman would appreciate.

Heavy Traffic

Sad to say, the Philippines lacks any kind of efficient mass transportation system. According to the Asian Development Bank, Metro Manila tops the list of 278 most congested cities in developing Asia. The sheer volume of public utility buses, jeepneys, and private vehicles on its roads during work hours leads to slow-moving traffic at best and outright gridlock at worst.

The good news is that various skyways and expressways, as well as a new train line in the northern part of Metro Manila, are being built to ease the traffic situation. It may take some time, but things are bound to get better.

Despite the government-provided incentives mentioned above, some foreign businessmen still hesitate to shortlist the Philippines as an investment destination because of the restriction on foreign ownership of land. They may, however, own 40 percent of a corporation that owns land. Most businesses are allowed to be 100% foreign-owned. The Foreign Investment Negative List contains the limitations of foreign ownership mandated by the constitution and specific laws.

It must be noted that 100% foreign ownership of a company catering to the Philippine local market is allowed, subject to having a minimum paid-in capital of USD 200,000.00. An exemption may be obtained for foreign companies in the Philippines that employ a minimum of 50 direct employees or use advanced technology, for a minimum paid-in capital of USD 100,000.00.

Need Help with Starting Your New Business?

You may be discouraged by some of the cons we enumerated, but don’t be. The Philippines has been one of the fastest-growing economies in Asia, and it will continue to expand in the coming years. With its friendly people and climate, you have even more incentives to build your dream business here.

If you don’t know where (and how) to start, we at Dayanan Business Solutions Inc. are here to help. Contact us today.

A Quick Guide to the One Person Corporation (OPC) in the Philippines

Republic Act No. 11232 or the Revised Corporation Code of the Philippines now allows for the registration of a simplified version of a corporation.

Currently, the majority of corporations registered in the Philippines use nominee incorporators and directors. The new legal entity called One Person Corporation (OPC) will now allow for a sole shareholder, thus eliminating the need for nominees.

Many of the larger corporations in the Philippines will not do business with a Sole Proprietorship. The OPC erases this disadvantage while also including the benefit of limited legal liability.

Who Can Register an OPC

Only a natural person, trust, or an estate may form a One Person Corporation.

Who Cannot Register an OPC

Banks and quasi-banks, pre-need, trust, insurance, public and publicly-listed companies, and non-chartered government-owned and -controlled corporations may not incorporate as One Person Corporations. A natural person who is licensed to exercise a profession may not organize as a One Person Corporation for the purpose of exercising such profession except as otherwise provided under special laws.

Registration Requirements

Cover Sheet, Articles of Incorporation, written consent documents from Nominee and Alternate Nominee

By-laws are not required.

Corporate Officers

The single stockholder shall be the sole director and president of the One Person Corporation.
A treasurer and corporate secretary are also needed. In the case that the president also acts as treasurer, s/he shall give a surety bond to the SEC.

The president may not assume the role of corporate secretary. Both the treasurer and corporate secretary must be residents of the Philippines. The corporate secretary shall be a Filipino citizen.

Roles Played by Nominee and Alternate Nominee

The single stockholder shall designate a nominee and an alternate nominee who shall, in the event of the single stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage the corporation’s affairs.

In case of death of the single stockholder, the nominee will manage the corporation only until the heirs designate his replacement.

Corporate Name

A One Person Corporation shall indicate the letters “OPC” either below or at the end of its corporate name.

OPC Conversion

An Ordinary Corporation may be converted to an OPC, and vice-versa.

One Person Corporation

The Revised Corporation Code 2019 of the Philippines or Republic Act No. 11232

Does a One Person Corporation (OPC) only need one individual to register?
Read below to find out the requirements to register an OPC.

 

One Person Corporation

1. Incorporators

A one person corporation (OPC) is a corporation with a single stockholder, who can only be a natural person, trust or estate.

The incorporator of an OPC being a natural person must of be of legal age.

2. Corporate Name

The suffix “OPC” should be indicated by the one person corporation either be-low or at the end of its corporate name.

3. Single Stockholder as Director and Officer

The single stockholder shall be the sole director and president of the OPC.

4. Designation of Nominee and Alternate Nominee

The single stockholder is required to designate a nominee and an alternate nominee named in the Articles of Incorporation who shall replace the single stockholder in the event of the latter’s death and/or incapacity. The written consent of both the nominee and alternate nominee shall be attached to the application for
incorporation.

5. Only Articles of Incorporation Needed

The OPC shall file its Articles of Incorporation (AI) in accordance with the requirements of Section 14 of the Revised Corporation Code of the Philippines. The AI must set forth its primary purpose, principal office address, term of existence, names and details of the single stockholder, the nominee and alternate nominee and the authorized, subscribed and paid-up capital and such other matters consistent with law and which may be deemed necessary and convenient.

6. Bylaws

The OPC is not required to submit and file its Bylaws.

7. Minimum Capital Stock Not Required

The OPC is not required to have a minimum authorized capital stock except as otherwise provided by special law.

Further, unless otherwise required by applicable laws or regulation, no portion of the authorized capital is required to be paid-up at the time of the incorporation.

8. Officers

Within fifteen (15) days from the issuance of its Certificate of Incorporation, the OPC shall appoint a Treasurer, Corporate Secretary, and other officers, and notify the SEC thereof within five (5) days from appointment, using the Appointment Form as may be prescribed by the SEC.

The single stockholder shall not be appointed as Corporate Secretary but may assume the role of a Treasurer.

9. Bond Requirement for the Self-Appointed Treasurer

The single stockholder who assumes the position of the Treasurer shall post a surety bond to be computed based on the authorized capital stock (ACS) for the OPC as shown in the Table below:

ACSSurety Bond Coverage*
1.00 to 1,000,000.001,000,000.00
1,000,001 to 2,000,000.002,000,000.00
2,000,001 to 3,000,000.003,000,000.00
3,000,001 to 4,000,000.004,000,000.00
4,000,001 to 5,000,000.005,000,000.00
P 5,000,001.00 and above = Amount of surety bond coverage shall be equal to the OPC’s ACS.

* Subject to renewal every two (2) years or as may be required, upon review of the annual submission of the Audited Financial Statements/Financial Statements certified under oath by the company’s President and Treasurer.

** The bond is a continuing requirement for so long as the single stockholder is the self-appointed Treasurer of the OPC.

*** The bond may be cancelled upon proof of appointment of another person as the Treasurer and Filing of the Amended Form for the Appointment of Officers.

10. Change of Nominee or Alternate Nominee

The single stockholder may, at any time, change its nominee and alternate nominee by submitting to the Commission the names of the nominees and their corresponding written consent. The Articles of Incorporation need not be amended.

11. Incapacity or Death of the Single Stockholder

In case the single stockholder becomes incapacitated, the nominee can take over the management of the OPC as director and president. At the end of the incapacity, the single stockholder can resume the management of the OPC.

In case of death or permanent incapacity of the single stockholder, the nominee will take over the management of the OPC until the legal heirs of the single stockholder have been lawfully determined and the heirs have agreed among themselves who will take the place of the deceased.

12. Who are Not Allowed to Form OPC’s

Banks, non-bank financial institutions, quasi-banks, pre-need, trust, insur-ance, public and publicly companies, non-chartered government-owned and controlled corporations (GOCCs) cannot incorporate as OPC.

A natural person who is licensed to exercise a profession may not organize as an OPC for the purpose of exercising such profession except as otherwise provided under special laws.

13. Foreign National

A foreign natural person may put up an OPC, subject to the applicable capital
requirement and constitutional and statutory restrictions on foreign participa-tion in certain invest areas or activities.

• Minimum required paid-in capital for a corporation with more than 40% foreign ownership catering to the Philippines domestic market USD200,000.00.

• Export Enterprises; minimum recommended paid-in capital PHP250,000.00.

• Export enterprises located in Philippine Economic Zone Authority approved IT Buildings are required to have a paid-in capital equivalent to 25% of the total project cost.

Required documents/information:

  • Company Name
  • Nature of Business
  • Filipino Director: Name and Address, 2 x Government IDs, Tax Identification Number (TIN).
  • Foreign Director: Name and Address, copy of passport
  • Office Address
  • Name and Address of Treasurer in Trust

TAX ID

Every shareholder, director and officer of the company is required to obtain a Philippines Tax Identification Number (TIN). A Special Power of Attorney is required, authorizing Dayanan to file the TIN application.

All documents signed overseas must be authenticated by a Philippine Embassy/Consulate or with an apostille affixed thereto.

Startup Founders Business Registration Questions Part 2

founders vesting share holders agreementShould startup founders sign a shareholders agreement (SHA)?

Yes, startup founders should sign a shareholders agreement which should include most of the following items. The shareholders agreement should be written in clear language, definitions of words should be included to avoid ambiguities and disagreements among the founders, during the life of the company.

 

  1. Capital – this section states the authorized, subscribed and paid-in capital, par-value and founder share allocations.
  2. Non-compete – during and for a period of time following termination of employment in the company, the resigned/terminated founder will not engage in any way with any business that provides services or products similar/competitive being produced or under development by the company.
  3. Vesting – Shares in startups are usually allocated upfront to founders at incorporation for a nominal value. Vesting prevents a co-founder who decides to leave or did not contribute what was expected of him from leaving a startup at an early stage with a large block of shares. When a co-founder leaves the startup for whatever reason, the startup buys back the unvested shares for a nominal value as agreed upon in the SHA.

Most founder’s shares vest over a 4 year period with a one year cliff. The SHA may also include milestones where shares may also vest.

Single or double triggers clauses may also be included for accelerated vesting of part or all of unvested shares.  A single trigger could be the acquisition or a change of control of the company.

A one year cliff means, no shares vest until the founder has been with the startup for a year after which shares vest monthly.

  1. Intellectual Property – assignment of IP (existing IP) & Invention Assignment Agreement (for IP developed while working for the company), can be in a separate agreement.
  2. Funding by founders – how will the funds be treated, loan, capital etc….
  3. Founder Roles – description of each founders main tasks and responsibilities in the company.
  4. Dispute Resolution – how will disputes be resolved, arbitration, governing law.
  5. Company Management – management of the business and affairs of the company.
  6. Limitations of Transferability Rights of Shares

a. Pre-emptive: when a corporation issues new shares of stock, every shareholder has the right to purchase a portion of the issue, in proportion to their respective shareholdings in the corporation, unless the articles of incorporation provide otherwise.

b. Tag-along: when the majority shareholders sell their holdings to a third party Tag-along rights allow the minority shareholders to sell if they so desire their shares at the same price, terms, and conditions as the majority shareholders to the third party.

c. Drag-along: this is a clause that forces the minority shareholders to sell their shares to a third party should the majority shareholders sell their holdings at the same price, terms and conditions.

d. First-refusal: gives the other shareholders or the company the right but not the obligation to purchase shares that an existing shareholder proposes to sell to a third party at the same terms and conditions.

Drag-along and Tag-along rights generally terminate on public offering.

Some of the clauses of the SHA must also be included in the articles of incorporation and by-laws.

Corporation Code of the Philippines:

Section 98. Validity of restrictions on transfer of shares. – Restrictions on the right to transfer shares must appear in the articles of incorporation and in the by-laws as well as in the certificate of stock; otherwise, the same shall not be binding on any purchaser thereof in good faith. Said restrictions shall not be more onerous than granting the existing stockholders or the corporation the option to purchase the shares of the transferring stockholder with such reasonable terms, conditions or period stated therein. If upon the expiration of said period, the existing stockholders or the corporation fails to exercise the option to purchase, the transferring stockholder may sell his shares to any third person.

Section 100. Agreements by stockholders. –

  1. Agreements by and among stockholders executed before the formation and organization of a close corporation, signed by all stockholders, shall survive the incorporation of such corporation and shall continue to be valid and binding between and among such stockholders, if such be their intent, to the extent that such agreements are not inconsistent with the articles of incorporation, irrespective of where the provisions of such agreements are contained, except those required by this Title to be embodied in said articles of incorporation. (extract)

This is an overview of shareholder agreements between startup founders before business registration with the Philippines SEC, many other items may be included in a SHA that will allow a startup to grow while minimizing disputes between founders.

Dayanan Philippines Business Consultants answers startup founders business registration questions. Contact us now for a consultation.

Startup Founders Business Registration Questions Part 1

Philippines Startup Corporation Share Certificate
Startup Corporation Share Certificate

The most common questions from startup founders before business registration with the Philippines SEC are:

  1. How do I keep control of my company, while still issuing shares to investors?
  2. How many shares should my company have?

Example Incorporation

A corporation was registered with an authorized capital of PHP One Hundred Thousand (100,000) divided into Ten Million (10,000,000) shares with a par value of One Centavo (PHP0.01) each.

For those of you, who think that the above is written in a foreign language, at the bottom of this article are the definitions of some financial terms that a startup CEO must know.

Philippine law (The Corporation Code of the Philippines) requires at incorporation that at least twenty five percent (25%) of the authorized capital stock of the corporation has been subscribed and at least twenty five (25%) of the subscribed has been paid.

Stockholders who only paid-in the 25% of 25% of their subscription will owe the corporation the remaining 75%. Best to have the all subscribed shares fully paid before selling unissued shares to investors.

How many shares to Founders?

Founders may allocate to themselves from 50% to 70% of the authorized capital leaving the remaining capital stock for investors and employee stock options.

E.g. Founders will subscribe to 5,000,000 shares with par value of PHP0.01 each or PHP50,000.00. This equals 50% of the authorized capital and 100% of the outstanding capital stock.

The Startup takes an Investor

Now what happens, when the company sells shares to an investor?

Let’s say an angel investor wants to invest PHP5,000,000 for 5% of the company.

We find ourselves with:

  1. Founders owning 95% of the company with 5,000,000 shares who invested PHP50,000
  2. Angel Investor owning 5 % of the company with 263,157 shares who invested PHP5,000,000.

The Pre-Money Valuation was PHP50,000 and  we now  have a Post-Money Valuation of PHP5,050,000 with 5,263,157 outstanding shares.

The shares issued to the angel investor are from the unissued capital stock, the investment will form part of the corporation’s capital.

The corporation now has a valuation of PHP5,050,000 or PHP0.96 per share, quite an increase from the PHP0.01.

Did the par-value increase?

No, the par-value per share has not changed. The par-value only changes if amended in the corporation’s Articles of Incorporation.

The corporation now has a paid-up capital of PHP5,050,000 composed of 5,263,157 shares with a par-value of PHP0.01 each. The increase in the valuation represents additional paid-up capital.

The startup still has 4,736,843 shares to offer future investors.

Documentary Stamp Tax (DST) must be paid to the BIR on all shares of stock issued by the corporation. The DST is calculated on the par-value of the shares and not on the price paid by the investors.

Definitions of terms to understand a corporation’s articles of incorporation:

  1. Par Value
    The par value of a share of stock is the minimum value that a corporation may sell a share of its stock.
  2. Authorized Capital
    The authorized capital is the maximum number of shares of stock that a company can issue with a specified par value. The authorized capital may be increased with the approval of at least two thirds of the shareholders.
  3. Subscribed Capital

The subscribed capital are the shares of stock that people or legal entities have promised to purchase from a corporation.

  1. Paid-in Capital

The paid-in capital (paid-up capital) is the actual amount of money stockholders have paid on the shares of capital stock for which they have subscribed.

  1. Outstanding Capital
    The outstanding capital means the total shares of stock issued under binding subscription agreements to subscribers or stockholders, whether or not fully or partially paid, except treasury shares.

Other terms:

Pre-Money: The pre-money valuation refers to the company’s valuation before the investment.

Post-Money: Post-money valuation is the value of a company after an investment has been made. This value is equal to the sum of the pre-money valuation and the amount of new equity.

Do you have questions about Startup Founders Business Registration? Post them on our face book page and we will answer them in part 2 of this article. Dayanan Business Solutions Inc. Facebook

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.