SEC

Steps in Registering Your Corporation in the Philippines: A Brief Overview

Philippines Business RegistrationOnce you have decided that the Philippines is a good place for setting up business, it’s time to begin the process of registering your corporation.

Here are the steps to registering a corporation in the Philippines:

1. Register your company name with the Philippine Securities and Exchange Commission (SEC) . This is the government agency under whose jurisdiction falls all corporations, associations, and partnerships established in the country.

SEC registration involves at least 5 steps, which begin with the online verification and reservation of the company’s proposed name, and ends with your claiming your SEC license/certificate in person at the SEC office.

2. Get clearance from the barangay hall. A barangay is a Filipino local government unit usually composed of several villages. Several barangays make up a municipality.

To get barangay clearance, go to the barangay hall of the area where you intend to put up your main office. Submit your SEC certificate, site map of your company’s intended location, your approved articles of incorporation and bylaws, and your application form. Then, pay the application fee, and receive your signed barangay certificate that very same day or next day.

3. Secure your municipal permit. Municipal permit application can be complex for two reasons: (1) municipalities vary widely in their requirements, and (2) before you can get your municipal permit, you will need to get supporting certificates from other government agencies outside the municipal hall, like the Bureau of Fire Protection, the municipal health center, etc.

Once you have secured all of your required certificates, bring them back to the municipal hall, pay the fees stated in your application form, then wait a week or two (or more) for your certificates to be ready.

4. Register with the Bureau of Internal Revenue (BIR). The BIR is the last stop in your business registration process. Armed with all the papers and certificates you have so far secured from the SEC, barangay hall, and municipal hall, plus all the other requirements you submitted to be able to secure those permits, go to the BIR revenue district office (RDO) in charge of the area where your business is located.

You may or may not need all the paper you bring with you. Like the municipal halls, RDOs can vary slightly in their requirements for registration.

At the RDO, fill out BIR forms 1903 (Application for Registration for Corporations) and 0605 (payment form for the registration fee).

Submit your application form and all required supporting documents, pay the registration fee and documentary stamps, and you’re done for the day. The BIR will tell you when you should call back to confirm whether your certificate of registration (COR) is ready.

Once your COR has been issued, you have 30 days to have your official receipts and sales invoices printed.

6. Register with the Social Security System (SSS), Home Development Mutual Fund (HDMF), Philippine Health Insurance Company (Philhealth), and the Philippine Department of Labor and Employment (DOLE). Registration with the DOLE becomes mandatory when you have 5 or more employees in your payroll. On the other hand, companies with even just one employee are required to register as employer with the SSS, HDMF, and Philhealth, so that their employee/s may enjoy the benefits of these agencies.

At present, the Philippine government is revising SOPs and putting up infrastructure and to speed up and simplify the system of business registration in the country.

Frustration among registrants is usually caused by the lack of communication from the involved government offices. For instance, it is not uncommon for registrants to discover that the requirements for business permit that are published in a municipality’s website are not complete, and the registrant ends up having to go back and forth to complete the required documents. Many a registrant has also experienced falling in line at a certain window, following instructions indicated by a flowchart posted on the wall, only to find out half an hour later that the flowchart is inaccurate and they are in the wrong queue.

Dayanan Business Consultancy is well versed in the ins and outs of the Philippine business registration process. We’ll be happy to guide you in every step of your company registration in the Philippines. Call us now to learn more about our services.

2014 Filing Dates of Annual Financial Statement SEC Philippines

2014 Audited Financial StatementAll corporations, including branch offices, representative offices, regional headquarters and regional operating headquarters of foreign corporations must file their Annual Financial Statements with the Securities and Exchange Commission depending on the last numerical digit of their SEC registration or license number, as follows:

Filing Dates

Filing DateLast Digit of SEC Registration/License
April 14, 15, 16, 17, 18“1” , “2”
April 21, 22, 23, 24, 25“3” , “4”
April 28, 29, 30, May 2“5” , “6”
May 5, 6, 7, 8, 9“7” , “8”
May 12, 13, 14, 15, 16“9” , “0”

The above filing schedule does not apply to the following:

a) Those whose fiscal years on a date other than December 31, 2013. These entities shall file their AFS within 120 calendar days from the end of their fiscal year;

b) Those whose securities are listed on the Philippines Stock Exchange. These entities shall continue to observe the due date of filing of their AFS as attachment to their Annual Reports;

c) Those whose AFS are currently being audited by the Commission on Audit (COA).

d) Prior to April 14, 2014 all corporation may file their AFS regardless of the last numerical digit of their registration or license number.

The SEC will only accept AFS, other than consolidated financial statements which have been stamped “received” by the Bureau of Internal Revenue or its authorized banks.

Late filings will be accepted starting May 19, 2014 and shall be subject to the prescribed penalties calculated from the last date of the filing schedule.

Philippines SEC Name Reservation

The first step in registering a business in the Philippines is to reserve a name by either visiting the SEC or through their online reservation system http://iregister.sec.gov.ph/MainServlet.

First time of users of the system will need to signup as a new user. Once you have an account you will be able to verify and reserve proposed company names.

The 8 Steps to Philippines SEC Name Reservation

Step 1. Accept Terms and Conditions

click Accept

Step 2. Select Type of Company

The choices are:

SEC Name Reservation Philippines

  1. Stock Corporation
  2. Non-stock Corporation
  3. General Partnership
  4. Limited Partnership
  5. Professional Partnership
  6. Foreign Stock
  7. Foreign Non-Stock
  8. Foreign Partnership

Step 3. Select Type of Industry
This list displays the industries that require endorsement from other government agencies. Select the industry listed to classify your company. If your company’s classification does not fall under any of the listed industries, click Continue.

(for industries that do not require endorsement from other government agencies see below)

Select the type of industry listed to classify your company. If the list indicates that there is more than one page, click Next or Last to view the other industries. You may select the page number from the dropdown box and click Go To Page to view your selected industry page. You may enter a keyword in the Search Industry field below and click Search to look-up for industries to match your keyword.

(you may have to drill down the industry by clicking 5 or 6 times to get to the next step)

Step 4. Verify Company Name
Enter your Proposed Company Name at the field provided. Then select the appropriate Company Suffix of your Company Name by clicking on the drop-down box below. The Company Suffix you selected should not be included at the Proposed Company Name you entered. To verify Proposed Company Name, click Continue. To go back to the previous page, click Back.

For a domestic corporation you have the following choices: Inc., Incorporated, Corp., Corporation.

If the system accepts the name you will see the following:

– Checking your proposed name against:
>> Offensive words … PASSED
>> Internationally known foreign corporations … PASSED
>> Registered names … PASSED
>> Reserved names … PASSED
>> Company-owned words … PASSED
>> Restricted words in accordance to existing laws … PASSED

–    Proposed Company Name is Available!

Step 5. New User Profile

Provide information for the following Profile details. Click Continue to complete your other Profile details. To return to the previous page, click Back.

Step 6. Reserve Company Name

Select the duration of reservation and method of payment for your company name. Enter the name of the person who is reserving the current company name on the Reserved By field.

SEC Teller or UnionBank Teller payments should be in the form of Cash, Cashier Checks, Manager Checks or Certified Checks.

Funds Transfer payments require you to have a UnionBank account. If you do not have a UnionBank account, open one at the nearest UnionBank branch. To use the funds transfer facility, enroll first by clicking the UnionBank Funds Transfer Enrollment link below. If you are already enrolled, click Continue button to proceed.

A name can be reserved for a maximum of 90 days. Extensions are possible.
The cost is PHP40 per 30 days. It is best to pay the reservation fee at the SEC Teller as the bank API is not always able to update the SEC Name Reservation Database.

Step 7. Review Reservation Summary

Make sure that your Reservation Details are correct. Click Submit to finalize the reservation. If you want to make changes, click Back.

Step 8. Print Reservation Notice

It’s important to keep the original printout as you will have to present it to the SEC.

Notes:

You may also reserve Doing Business As names as they will also need to be indicated in the Articles.

Foreign companies may be required to make three name reservations.

Ex: Head office; name Abcxyz Limited – Abcxyz Limited Manila Branch – Abcxyz Limited under the name Abcxyz Limited Manila Branch.

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.

SEC Amends GIS Requirements

Every business registered with the Philippines SEC is required to submit a General Information Sheet (GIS) every year to the Securities and Exchange Commission.

The amended GIS requirements can be found in SEC Memorandum Circular 10 Series of 2013.

The changes are:

1. Number of copies to be submitted reduced to 4 from 5
2. Tax Identification Number (TIN) for all foreign nationals who are directors/trustees, officers, stockholders/members and resident agents of both domestic and foreign corporations
3. Inclusion of Gender in the page for directors, trustees and officers
4. Inclusion of page I-A pursuant to Anti-Money Laundering Act, as amended

There are four different GIS forms that may be submitted according to the kind of legal entity:

A. Domestic Corporation to be submitted within thirty (30) calendar days from the date of the annual stockholders’ meeting.
B. Non-Stock Corporation to be submitted within thirty (30) calendar days from the date of the annual members’ meeting as stated in the by-laws.
C. Foreign Corporation (Branch Office, Representative Office) to be submitted within thirty (30) calendar days from the anniversary date of the issuance of the sec license
D. Regional Operating Headquarters (ROHQ), Regional Headquarters (RHQ) to be submitted: i.) within thirty (30) days after the issuance of the sec certificate of registration and license and ii.) within thirty (30) days from the anniversary date of the issuance of the sec certificate of registration.

The GIS should also be submitted to the SEC any time there have been changes in shareholders, board of directors/officers, resident agent and contact address of a company,  whether it is a corporation 100% Foreign owned, 60% Filipino owned – 40 % Foreign owned, Branch Office, Representative office.

How to open a business in the Philippines.

 

 

Tax Identification Number for Foreign Investors

Tax Identification Number for Foreign InvestorsForeign corporations and individuals whether resident or non-resident, who have opened/invested in a domestic corporation, branch office, representative office or any other legal entity licensed to transact business in the Philippines are now required to obtain a Tax Identification Number (TIN) from the Bureau of Internal Revenue (BIR).

SEC Filings

All documents to be filed with the SEC by corporations and partnerships after their incorporation (i.e. General Information Sheets, application for amendments) will not be accepted by the SEC unless the TIN of all its foreign investors natural or judicial, resident or non resident are indicated therein no matter their percentage of foreign ownership.

Foreigners are not required to obtain a TIN for incorporation but must instead indicate their nationality, passport number and date of issue in the registration documents (i.e Articles of Incorporation, etc…).

These new rules are to be found in Memorandum Circular No. 1, Series of 2013, issued by the Securities and Exchange Commission (SEC) which requires the mandatory inclusion of the Tax Identification Number (TIN) of foreign investors in all forms, papers and documents filed with the SEC.

The above memo was issued to comply with Revenue Regulation 7-2012 dated April 2, 2012, known as the “Amended Consolidated Revenue Regulations on Primary Registration, Updates and Cancellation”, which provides –

“Section 4(I)(V)– Non-resident Aliens Not engaged in Trade or Business (NRANETB) or Non-Resident Foreign Corporations (NRFC) shall be issued TIN’s for purposes of whithholding Taxes on their income from sources in the Philippines. The withholding Agent shall apply for the TIN in behalf of the NRANETB or NRFC prior to or at the time of the filing of thier monthly withholding tax return”

and in relation to E.O. 98, Series of 1998 signed by President Joseph Ejercito Estrada directing all persons whether natural or juridical having dealings with any government agencies and instrumentalities, including Government owned and/or Controlled Corporations (GOCCS), and all Local Government Units (LGUs) to include their TIN in all forms, permits, licenses, clearances, official papers and documents which they secure from these government agencies, instrumentalities, including GOCCs and LGUs by corporations/partnerships with foreign investors.

This is part of the government campaign to enforce tax compliance of foreign investors in the Philippines.

Philippines Government Agencies

The Philippines has numerous government agencies making it one of the most bureaucratic countries in South East Asia. It takes time to know exactly what process each agency handles. To make it easier here is our Philippine Government Agency guide.

For those who want to streamline the processing of their documents with the government, Dayanan Philippines Business Consultants is here to assist you with Philippines business registration, tax incentive application and alien employment visa.

Philippines Government Agencies

Philippines Securities and Exchange Commission SEC

Philippines SEC
Philippines SEC

The SEC was set up on 26 Oct 1936 by virtue of the Commonwealth Act No. 83 or the Securities Act. Its establishment was prompted by the need to safeguard public interest in view of local stock market boom at that time. The SEC was abolished during the Japanese occupation and was replaced with the Philippine Executive Commission. It was reactivated in 1947 with the restoration of the Commonwealth Government. Due to the changes in the business environment under Pres. Ferdinand Marcos, the agency was reorganized on 29 Sept 1975 as a collegial body with 3 commissioners and was given quasi-judicial powers under PD902-A.

The SEC has jurisdiction and supervision over all corporations, partnerships or associations who are the grantees of primary franchises and/or a license or permit issued by the Government. It also supervises the registration of branch offices, representative offices and regional headquarters.

Philippines Department of Trade and Industry DTI

Philippines DTI
Philippines DTI

The DTI serves as the principal coordinative, sponsorship, and facilitative arm for trade, industry and investment activities, and a means to increase private sector activity to accelerate and sustain economic growth through the following strategies:

  • A comprehensive industrial growth strategy
  • A progressive and socially responsible liberalization and deregulation program
  • Policies designed for the expansion and diversification of both domestic and foreign trade

Under the DTI are seven major functional groups composed of bureaus that provide support to DTI’s line agencies and are involved in line operations, which deliver business and consumer services directly to the stakeholders and the public.

DTI agencies of special interest to foreign investors are:

– PEZA (Philippines Economic Zone Authority)

– BOI (Board of Investments)

– IPO (Intellectual Property Office)

– SEC (Securities and Exchange Commission)

It also supervises the registration of company names and sole proprietorship.

Philippines National Telecommunications Commission (NTC)

Philippines NTC
Philippines NTC

The NTC is the government agency established under Executive Order No. 546 promulgated on July 23, 1979, and conferred with regulatory and quasi-judicial functions taken over from the Board of Communications and the Telecommunications Control Bureau which were abolished in the same Order.

First and foremost, the NTC is the sole body that exercises jurisdiction over the supervision, adjudication and control over all telecommunications services throughout the country. For the effective enforcement of this responsibility, it adopts and promulgates such guidelines, rules, and regulations relative to the establishment operation and maintenance of various telecommunications facilities and services nationwide.

Although independent, in so far as its regulatory and quasi-judicial functions are concerned, the NTC remains under the administrative supervision of the Department of Transportation and Communication as an attached agency.

Philippine Social Security System SSS

Philippines SSS
Philippines SSS

The SSS is funded by salary deductions and employer contributions. Its role is to provide employee with health, disability, retirement, maternity, death and funeral benefits and salary, housing and business loans.

Home Development Mutual Fund HDMF

The birth of the Home Development Mutual Fund (HDMF), more popularly known as the Pag-IBIG Fund, was an answer to the need for a national savings program and an affordable home financing for the Filipino worker. The Fund was established on 11 June 1978 by virtue of Presidential Decree No. 1530 primarily to address these two basic yet equally important needs. Under the said law, there were two agencies that administered the Fund. The Social Security System handled the funds of private employees, while the Government Service Insurance System handled the savings of government workers.

Pag-IBIG membership mandatory for all SSS and GSIS member-employees.

Philippine Health Insurance Corporation PhilHealth

PhilhealthPhilhealth
Philhealth

PhilHealth’s role is to ensure sufficient financial access of every Filipino to quality health care services through the effective and efficient administration of the National Health Insurance Program. It is a Government owned and Operated Health Care Corporation. Its main mission is to provide basic health insurance and health care financing to all Filipinos. Funding is provided by the central and local governments and employee

Department of Labor and Employment DOLE

Philippines DOLE
Philippines DOLE

DOLE started as a small bureau in 1908. It became a department on December 8, 1933 with the passage of Act 4121. The DOLE is the national government agency mandated to formulate and implement policies and programs, and serve as the policy-advisory arm of the Executive Branch in the field of labor and employment. It consists of the Office of the Secretary, 7 bureaus, 6 services, 16 regional offices, 12 attached agencies and 38 overseas offices with a full manpower complement of 9,806.

The Alien Employment Visa (AEP) is issued by DOLE.

 

Technical Education and Skills Development Authority TESDA

The Technical Education and Skills Development Authority (TESDA) was established through the enactment of Republic Act No. 7796 otherwise known as the “Technical Education and Skills Development Act of 1994”, which was signed into law by President Fidel V. Ramos on August 25, 1994. This Act aims to encourage the full participation of and mobilize the industry, labor, local government units and technical-vocational institutions in the skills development of the country’s human resources.

tesda
TESDA

TESDA is mandated to:

Integrate, coordinate and monitor skills development programs;
Restructure efforts to promote and develop middle-level manpower;
Approve skills standards and tests;
Develop an accreditation system for institutions involved in middle-level manpower development;
Fund programs and projects for technical education and skills development; and
Assist trainers training programs.

 

Contact Dayanan Philippines Business Consultants now for assistance with Philippine government agencies.

 

9th Regular Foreign Investment Negative List A

9th Regular Foreign Investment Negative List A

LIST A: FOREIGN OWNERSHIP IS LIMITED BY MANDATE OF THE CONSTITUTION AND SPECIFIC LAWS

No Foreign Equity

1. Mass Media except recording (Art. XVI, Sec.11 of the Constitution; Presidential Memorandum dated 04 May 1994)

2. Practice of all professions *1 (Art. XII, Sec.14 of the Constitution, Sec. 1 of R.A. 5181)

a) Engineering
i. Aeronautical engineering (P.D. 1570)
ii. Agricultural engineering (R.A. 8559)
iii. Chemical engineering (R.A. 9297)
iv. Civil engineering (R.A. 1582)
v. Electrical engineering (R.A. 7920)
vi. Electronics and Communication engineering (R.A. 9292)
vii. Geodetic engineering (R.A. 8560)
viii. Mechanical engineering (R.A. 8495)
ix. Metallurgical engineering (P.D. 1536)
x. Mining engineering (R.A. 4274)
xi. Naval Architecture and Marine engineering (R.A. 4565)
xii. Sanitary engineering (R.A. 1364)
b) Medicine and Allied Professions
i. Medicine (R.A. 2382 as amended by R.A. 4224)
ii. Medical Technology (R.A. 5527 as amended by R.A. 6318, P.D. 6138, P.D. 498 and P.D. 1534)
iii. Dentistry (R.A. 9484)
iv. Midwifery (R.A. 7392)
v. Nursing (R.A. 9173)
vi. Nutrition and Dietetics (P.D. 1286)
vii. Optometry (R.A. 8050)
viii. Pharmacy (R.A. 5921)
ix. Physical and Occupational Therapy (R.A. 5680)
x. Radiologic and X-ray Technology (R.A. 7431)
xi. Veterinary Medicine (R.A. 9268)
c) Accountancy (R.A. 9298)
d) Architecture (R.A. 9266)
e) Criminology (R.A. 6506)
f) Chemistry (R.A. 754)
g) Customs Brokerage (R.A. 9280)
h) Environmental Planning (P.D. 1308)
i) Forestry (R.A. 6239)
j) Geology (R.A. 4209)
k) Interior Design (R.A. 8534)
l) Landscape Architecture (R.A. 9053)
m) Law (Art. VIII, Sec. 5 of the Constitution; Rule 138, Sec. 2 of the Rules of Court of the Philippines)
n) Librarianship (R.A. 9246)
o) Marine Deck Officers (R.A. 8544)
p) Marine Engine Officers (R.A. 8544)
q) Master Plumbing (R.A. 1378)
r) Sugar Technology (R.A. 5197)
s) Social Work (R.A. 4373)
t) Teaching (R.A. 7836)
u) Agriculture (R.A. 8435)
v) Fisheries (R.A. 8550)
w) Guidance counseling (R.A. 9258)
x) Real estate service (R.A. 9646)
y) Respiratory therapy (R.A. 10024)
z) Psychology (R.A. 10029)

3. Retail trade enterprises with paid-up capital of less than US$2,500,000
(Sec. 5 of R.A. 8762) *2
4. Cooperatives (Ch. III, Art. 26 of R.A. 6938)
5. Private Security Agencies (Sec. 4 of R.A. 5487)
6. Small-scale Mining (Sec. 3 of R.A. 7076)
7. Utilization of Marine Resources in archipelagic waters, territorial sea, and exclusive economic zone as well as small scale utilization of natural resources in rivers, lakes, bays, and lagoons (Art. XII, Sec. 2 of the Constitution)
8. Ownership, operation and management of cockpits (Sec. 5 of P.D. 449)
9. Manufacture, repair, stockpiling and/or distribution of nuclear weapons (Art. II, Sec. 8 of the Constitution) *3
10. Manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons and anti-personnel mines (Various treaties to which the Philippines is a signatory and conventions supported by the Philippines) *3
11. Manufacture of firecrackers and other pyrotechnic devices (Sec. 5 of R.A. 7183)

Up to Twenty Percent (20%) Foreign Equity

12. Private radio communications network (R.A. 3846)

Up to Twenty-Five Percent (25%) Foreign Equity

13. Private recruitment, whether for local or overseas employment (Art. 27 of P.D. 442)
14. Contracts for the construction and repair of locally-funded public works (Sec. 1 of CA 541, LOI 630) except:

a) Infrastructure/development projects covered in R.A. 7718; and
b) Projects which are foreign funded or assisted and required to undergo international competitive bidding (Sec. 2a of R.A. 7718)

15. Contracts for the construction of defense related structures (Sec. 1 of CA 541)

Up to Thirty Percent (30%) Foreign Equity

16. Advertising (Art. XVI, Sec. 11 of the Constitution)


Up to Forty Percent (40%) Foreign Equity

17. Exploration, development and utilization of natural resources (Art. XII, Sec. 2 of the Constitution) *4
18. Ownership of private lands (Art. XII, Sec. 7 of the Constitution; Ch. 5, Sec. 22 of CA 141; Sec. 4 of RA 9182)
19. Operation and management of public utilities (Art. XII, Sec. 11 of the Constitution; Sec. 16 of CA 146)
20. Ownership/establishment and administration of educational institutions (Art. XIV, Sec. 4 of the Constitution)
21. Culture, production, milling, processing, trading excepting retailing, of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof (Sec. 5 of P.D. 194) *5
22. Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or municipal corporation (Sec. 1 of R.A. 5183)
23. Project Proponent and Facility Operator of a BOT project requiring a public utilities franchise (Art. XII, Sec. 11 of theConstitution; Sec. 2a of R.A. 7718)
24. Operation of deep sea commercial fishing vessels (Sec. 27 of R.A. 8550)
25. Adjustment Companies (Sec. 323 of PD 612 as amended by P.D. 1814)
26. Ownership of condominium units where the common areas in the condominium project are co-owned by the owners of the separate units or owned by a corporation (Sec. 5 of R.A. 4726)

Up to Forty-Nine Percent (49%) Foreign Equity

27. Lending Companies (SEC.6 of R.A. 9474) *6

Up to Sixty Percent (60%) Foreign Equity

28. Financing companies regulated by the Securities and Exchange Commission (SEC) (Sec. 6 of R.A. 5980 as amended by R.A. 8556) *6
29. Investment houses regulated by the SEC (Sec. 5 of P.D. 129 as amended by R.A. 8366) *6 (Sec. 6 of R.A. 5980 as amended by R.A. 8556) *6

*1 This is limited to Filipino citizens save in cases prescribed by law

*2 Full foreign participation is allowed for retail trade enterprises: (a) with paid-up capital of US$2,500,000 or more provided that investments for establishing a store is not less than US$830,000; or (b) specializing in high end or luxury products, provided that the paidup capital per store is not less than US$250,000 (Sec. 5 of R.A. 8762)

*3 Domestic investments are also prohibited (Art. II, Sec. 8 of the Constitution; Conventions/Treaties to which the Philippines is a signatory)

*4 Full foreign participation is allowed through financial or technical assistance agreement with the President (Art. XII, Sec. 2 of the Constitution)

*5 Full foreign participation is allowed provided that within the 30-year period from start of operation, the foreign investor shall divest a minimum of 60 percent of their equity to Filipino citizens (Sec. 5 of P.D. 194; NFA Council Resolution No. 193 s. 1998)

*6 No foreign national may be allowed to own stock in lending companies, financing companies or investment houses unless the country of which he is a national accords the same reciprocal rights to Filipinos (Sec. 6 of RA 9474; Sec. 6 of R.A. 5980 as amended by R.A. 8556; P.D. 129 as amended by R.A. 8366)

Philippines Foreign Investment Negative List B

Philippines RHQ ROHQ Tax Incentives

Regional Headquarters (RHQ) and Regional Operating Headquarters (ROHQ) and their expatriate and Filipino employees are entitled to tax incentives.

Foreign employees and their families may apply for special non immigrant visas.

Let DBC register your RHQ or ROHQ rapidly.

Philippines RHQ ROHQ Tax Incentives
Philippines RHQ ROHQ Tax Incentives

RHQ

• It may not obtain income from sources within the Philippines nor participate in any manner in the management of any subsidiary or branch office it might have in the Philippines.

• Annul remittance of USD50,000.00 to cover operating expenses.

ROHQ

• Is allowed to derive income in the Philippines

• A one time remittance of USD200,000.00 is required.

Tax Incentives for Philippines RHQ

• Exemption from corporate income tax
• Exemption from value-added tax (0%VAT)

+ Sale or lease of goods and property, and services to the RHQ shall be subjected to zero VAT

• Exemption from all kinds of local taxes, fees or charges imposed by a local government unit, except real property tax on land improvement and equip-ment
• 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.

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

RHQ and ROHQ Incentives for Expatriates and Filipinos

•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 submis-sion 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

For Expats and Filipinos

Withholding tax of 15% on compensation applicable to both alien and Filipino executives holding managerial and technical positions. (Revenue Regulation 11-2010)*

* Filipino employees must have a gross annual taxable income of at least PHP975,000.

Once your RHQ / ROHQ has been registered with the SEC, DBC will assist in applying for tax incentives with the BOI.

Branch Office Registration

Philippines Branch Office

One of the ways for a foreign corporation to start business in the Philippines is to register a branch office. A Philippines branch office may start its operations as soon as the SEC has issued its license to transact business.

SEC Branch Office Registration Process

1 – Name Verification Slip (The SEC will conduct a name search to check if the corporate name has any similitude with a corporation already registered with the SEC).

2 – Authenticated copy of Board resolution authorizing the establishment of an office in the Philippines: designating the resident agent to whom summons and other legal processes may be served in behalf of the foreign corporation and stipulating that in the absence of such agent or upon cessation of its business in the Philippines, any summon of legal processes may be served to SEC as if the same is made upon the corporation at its home office.

3 – Financial statements

A. For those whose home country requires audited financial statements, the applicant shall submit the audited financial statements (AFS) as of date not exceeding one (1) year immediately prior to the filing of the application;

If the date of the AFS exceeds the one-year requirement, the following shall be submitted:
i. Audited financial statements that are available as of date of filing of the application; and
ii. Unaudited financial statements (UFS) as of date not exceeding one (1) year immediately prior to the filing of the application.

B. For those whose home country does not require audited financial statements, the applicant shall submit the unaudited financial statements (UFS) as of a date not exceeding one (1) year immediately prior to the filing of the application provided that the UFS shall be accompanied by a Certification signed under oath by an officer of a responsible regulatory institution or by the applicant’s legal counsel that the applicant is not required to prepare and submit audited financial statements, with a citation of the law or regulation on which it is based.

The aforementioned AFS and UFS must be signed under oath by the president or any other person authorized by the corporation. No authentication shall be necessary if the signatory to the said financial statements is the same as that in the corporation’s application.

Pursuant to Section 125 of the Corporation Code, the applicant’s financial statements must show that it is solvent and in sound financial condition.

4 – Certified copies of the Articles of Incorporation/By-laws/Partnership/Memorandum and Articles of Association with an English translation thereof if in a foreign language.

5 – Proof of Inward Remittance such as bank certificate of inward remittance or
credit advices. *

6 – Resident Agent’s acceptance of appointment (not necessary if agent is the signatory in the application form.

7 – Copy of passports, names and addresses of the present Corporate Directors and Officers with English translation.

Advise when setting up a branch office:

All documents must be in English and authenticated by the Philippines Embassy/Consulate of the home country.

* Minimum inward remittance of USD 200,000.00 as capital investment. Branches which use advanced technology or employ a minimum of 50 direct employees may be allowed a reduced paid-in capital of USD 100,000.00. Companies which export more than 60% of their products or services may apply for an exemption.

The SEC requires that within sixty days from the issuance of the license to transact business in the Philippines a foreign corporation (except foreign banking or Insurance Corporation) is obligated to deposit with the SEC satisfactory securities with an actual market value of P100,000 in order to secure present and future creditors of the licensee in the Philippines. That within six (6) months after each fiscal year of the licensee, the Securities and Exchange Commission shall require the licensee to deposit additional securities equivalent in actual market value to two (2%) percent of the amount by which the licensee’s gross income for that fiscal year exceeds five million (P5,000,000.00) pesos. (Corporation Code of the Philippines Section 126)

We recommend that the inward remittance be registered with the Central Bank of the Philippines, Bangko Sentral ng Pilipinas.

A foreign corporation transacting business in the Philippines without having been licensed by the SEC does not have the right to file any action, suit or proceedings in Philippine courts of law.

Eligible companies may apply for Philippine tax incentives by registering with the PEZA or BOI.

After the SEC has issued the License to Transact Dayanan Business Consultancy will assist you in obtaining local business permits.

The corporation code of the Philippines in Title XV gives the definition and rights of a foreign corporation in the Philippines to conduct business.