Business Registration and Structure in the Philippines

JCL consultants, equipped with adequate knowledge and training, will assess your business here in the Philippines using their professional judgement to identify which types of Company Registration is appropriate for your need. We will provide efficient and effective assistance throughout the process of Company Formation, Planning, and Registration in accordance with Philippine regulatory bodies (e.g SEC located in Metro- Manila, Davao, Laguna, Cebu, Clark, and Subic).

Conforming to the Republic Act No. 8762 or the Retail Trade Liberalization Act, Foreign equity are encouraged in the Philippines with an exception to Financial Institutions and other industry areas included in Foreign Investment Negative list.

Board of Investments Incentives

The Board of Investment offers incentives for foreign equity with subject to certain conditions.

  1. Income Tax Holiday – 100% exemption from Corporate Income Tax (CIT), Total entitlement period shall not exceed eight (8) years.
  2. Tax credit on semi-manufactured product, raw materials and supplies
  3. Deduction in Taxable Income for expenses in labor
  4. Deduction in Taxable Income for major infrastructure
  5. Additional Deductions cannot be simultaneous with the Income Tax Holiday incentives.

Philippine Economic Zone Authority (PEZA)

According to the Presidential Decree No. 66 (Executive Order 226), companies operating within the Economic Zones shall be granted tax incentives with additional exemption on importations of raw materials, capital equipment, and other commodities necessary to the company’s operations.

Subic Bay Freeport Zone (SBF) and Clark Special Economic Zone permits enterprises to pay 5% of gross income as long as their income from non-export sale shall not go beyond 30% of their income from all sources. Other incentives are also recognized through Zamboanga City Special Economic Zone, Cagayan Economic Zone Authority (CEZA), and Tourism Infrastructure and Enterprise Zone Authority (TIEZA)

 

Business Structure under Philippine Laws

  • Sole Proprietorship

Owned by an individual who has full authority and owns all assets, owes all of the liabilities, and suffers losses but solely enjoys the profits. A Sole Proprietorship should apply for a Business Name and be registered with the Department of Trade and Industry- National Capital Region (DTI-NCR). In rural areas, application may be filed with the extension offices of the DTI.

  • Partnership

Under the Civil Code of the Philippines, a partnership is a juridical person with a separate legal personality from its members. Partnerships can be a general partnerships, where partners share unlimited liability for the obligations of the partnership, or limited partnerships, where one or more general partners have unlimited liability and the limited partners have liability only up to their capital contributions. A partnership consists of two (2) or more partners, with more than three thousand pesos ( 3,000.00) capital and must be registered with Securities and Exchange Commission (SEC).

  • Corporation

These are juridical persons established under the Corporation Code, regulated by the Securities and Exchange Commission with a personality separate and distinct from its stockholders. The liability of the stockholders is limited to their share capital. A corporation must consist of at least five (5) to fifteen (15) incorporators each of whom must hold at least one share and must be registered with the Securities and Exchange Commission (SEC) with a minimum paid up capital of a corporation is five thousand pesos ( 5,000.00). It can either be Stock or Non-stock Corporation regardless of nationality.

 

Business Structure under Foreign Laws

  • Branch Office

A foreign Corporation organized and existing under foreign laws which carries out the business activities of the head office and derives income from the host country. The required minimum paid in capital of a Branch Office is US$200,000.00, but it can be reduced to US$100,000.00 if the activity involves advanced technology, or the company employs at least 50 direct employees. The registration with SEC is mandatory.
 

  • Representative Office

A foreign corporation organized and existing under foreign laws that does not derive income from the host country and is fully subsidized by the head office. A representative office deals directly with clients of the parent company as it undertakes its activities. It is required to have a minimum inward remittance of US$30,000.00 to cover its operating expenses and must be registered with SEC.
 

  • Regional Headquarters (RHQ)

A Regional Headquarter undertakes activities that limited to supervisory, communication and coordinating center for subsidiaries, affiliates and branches in the Asia-Pacific region. RHQ acts as an administrative branch of a multinational company engaged in international trade. It does not derive income from sources within the Philippines and does not participate in any manner in the management of any subsidiary or branch office it might have in the Philippines. The required inward remittance for RHQ is US$50,000.00 annually.

 

  • Regional Operating Headquarters (ROHQ)

It performs services to its affiliates, subsidiaries, and branches in the Philippines such as:

  • General administration and planning
  • Business planning and coordination
  • Sourcing/procurement of raw materials components
  • Corporate finance advisory services
  • Marketing Control and sales promotion
  • Training and personnel management
  • Logistic services
  • Research and development services and product development
  • Technical support and communications
  • Business development
  • Derives income in the Philippines
  • Required capital: US$200,000.00 one-time remittance