Philippine Company Registration
Service Description
| I. Advantages of Philippine Company Incorporation |
| The Philippines is an island nation located in the western Pacific Ocean of Southeast Asia, consisting of about 7,100 islands and islets. The capital is Manila, and Quezon City is the most populous city.
The Philippines is a major member of ASEAN, one of the 24 member countries of APEC, and one of the emerging industrial countries. Its economy is growing rapidly and has been steadily exceeding 6% annually. According to the data, the GDP of the Philippines in 2021 will be over US$394.1 billion. The government is pursuing legislative reforms to provide a more vibrant business services department to expand employment and optimize the entrepreneurial environment. The close economic ties between the Philippines and the country have attracted many business people to set up companies in the Philippines, and the main advantages of incorporating a company in the Philippines are as follows: 1. Emerging markets in Southeast Asia. As a popular country in Southeast Asia, many Chinese enterprises have gone to the Philippines to invest and develop the Southeast Asian market. 2. The local population is English-speaking, making it easy to communicate. The Philippines is the fourth most English-speaking country in the world, with over 92% of the population being proficient in English. The Philippines is also a bilingual country, which is a rarity in Southeast Asia. 3. Enjoy the same local treatment. Whether you register a Filipino sole proprietorship or a joint venture, you will enjoy the same preferential policies in the local area, which will be analyzed according to the different investment industries, the import and export of products and the company’s holding. 4. Low labor cost in the Philippines. With the low labor cost in Southeast Asia, many foreign companies use the Philippines as an OEM factory to reduce the production cost of their products. 5. The Philippines has a population of over 100 million and a large market potential. According to data released by the World Bank, the population of the Philippines continues to rise, with the total population exceeding 100 million in 2019. Private consumption accounts for nearly 70 percent of GDP. 6. Attracting foreign investment. The local government strongly supports investment attraction, and the sound economic system is conducive to foreign investment. 7. preferential tax policy. Companies registered in the Philippines are only required to file tax returns when they are actually operating, and there are fewer types of taxes and cheaper fees. If the company does not operate in the local area, no tax is required and labor costs are saved. 8. Financial companies do not need to apply for financial licenses. If the investor is registered as a financial company, the company can start the loan business after establishment without applying for a financial license, which saves the high application fee for the enterprise. 9. enjoy multi-national tariff preferences. In 2018, the U.S. GSP tariff preference for the Philippines was extended to December 31, 2020, covering 5,057 items. 2015, the EU granted the Philippines GSP+ treatment, allowing the Philippines to export more than 6,000 products to the EU at zero tariff. Japan has granted the Philippines tariff exemptions for some of its exports. |
| II. Types of registered Philippine companies |
| Before proceeding to register a company in the Philippines, foreign investors will see different types of companies in the Philippines. Based on your expected business activities and company structure and long-term business goals, we will advise you on the most optimal type of business entity.
1、Domestic corporation A domestic company is one of the most popular legal business entities in the country for registering foreign companies, similar to a limited liability company (LLC), and is considered a separate legal entity by the authorities. ● The owner of the business does not assume personal responsibility or liability for the debts and liabilities of the company, granting full foreign ownership under selected business sectors. ● Some of the requirements for the establishment of such companies are: -Local Agent -2 to 15 directors, most of whom are local residents. -At least four corporate officers (president, company secretary, treasurer and compliance officer) -Company Secretary, Filipino Management must be appointed within 15 days of the issuance of the certificate of incorporation. In addition, a notice must be filed with the Securities and Exchange Commission (SEC) within 5 days of the appointment. A minimum paid-in capital of US$200,000 is required for domestic companies with majority foreign ownership (at least 40% of foreign equity). However, if the company employs at least 50 Filipinos or uses advanced technology, the minimum paid-in capital may be reduced to US$100,000. For domestic companies with foreign ownership of less than 40%, the minimum paid-in capital is approximately US$100.
2、One Person Company (OPC) ● A one-person company is considered by the authorities to be a separate legal entity, which is a form of limited company, because the owner is not personally liable for the debts and liabilities of the company. Due to the limited liability, One Person Corporation (OPC) is usually the common choice for foreign investors to register a business entity in the Philippines, where the owner of the company is the sole shareholder, acting director and president. Please note that this is only applicable if your business is not in the banking or financial services sector. All foreign ownership rights granted to the company in selected industries such as manufacturing and export. There is no minimum authorized paid-in capital requirement, and no authorized capital contribution is required during the formation of a Philippine corporation. Some of the requirements for registering this type of company are: -Resident Company Secretary -Local Company Treasure The Articles of Incorporation (AOI) must include the appointment of 2 interim candidates, one of whom will take over the company in the event of a director’s failure. Management must be appointed within 15 days of the issuance of the Certificate of Incorporation and must file a notice with the Securities and Exchange Commission (SEC) within 5 days of the appointment. Mandatory filing of the company’s annual audited financial statements within 120 days of its fiscal year end.
3、Branch organization When a foreign company wishes to expand its business in the Philippines, a branch office is a viable option for international business owners to expand their parent company by registering a branch office in the Philippines. The purpose of the branch is to facilitate operations and generate revenue in the Philippines on behalf of the foreign parent entity. ● The parent company is fully responsible for the debts and liabilities of the subsidiaries. ● The requirements for partial establishment of a branch form of a Philippine corporation include: -Local Resident Agent -At least one director of any nationality -Minimum number of shareholders depends on the parent company -Audited financial statements of the parent company The Philippines branch is granted 100% foreign ownership. The branch must obtain a license to do business with the Securities and Exchange Commission (SEC) to enable it to conduct business activities. For most branches, the minimum paid-up capital is $200,000. However, this ultimately depends on factors such as your business activities, the number of local employees, and whether you use advanced technology.
4、Representative office Foreign investors interested in learning more about doing business in the Philippines and exploring investment opportunities may choose to register a representative office (RO) in the Philippines. The Representative Office helps foreign investors fully assess the feasibility of doing business in the Philippines before making a final decision to register a Philippine company. As a result, the representative office can only conduct limited non-commercial activities for its parent company, such as market research and marketing activities. Tega Business Consulting will encourage foreign investors interested in promoting the company in the Philippines to register for a Philippine Representative Office. The requirements for partial registration of a Philippine branch are: -A resident director -Parent Company Charter -Audited financial statements of the parent company -No minimum number of shareholders The Philippine Representative Office is not allowed to engage in business activities and therefore the corporate income tax does not apply to the Philippine Representative Office. Double Taxation Avoidance Agreements (DTAA) are not available.
5、Holding Company A holding company in the Philippines can provide an advantage to companies whose goal is to own and control the assets of other companies, which themselves do not produce any goods. The steps for registering a holding company will be carried out in accordance with the provisions of the Commercial Code. Some of the requirements for establishing such a business entity include: Multinational companies with operations in at least one Asia-Pacific region -Invest at least $200,000 -Remittance of at least US$50,000 per year from its foreign subsidiaries If no domestic business is conducted, such a company will be fully exempt from tax on all income received from abroad. If the company conducts business domestically, a 10% tax rate is imposed on the business.
6、Self-trade Zone Company ● The Philippine Free Trade Zone is specifically designed to stimulate and facilitate the development of onshore and offshore jurisdictions established in their respective regions, and the Department of Trade and Industry aims to use the Free Trade Zone to promote an influx of foreign direct ● investment that will benefit the value of trade and the volume of trade in the country. Fiscal and non-fiscal incentives are granted to promote export-oriented manufacturing and service operations. Companies in the Philippine Free Trade Zone are completely exempt from corporate income tax for up to six years. After the income tax holiday expires, business entities will be charged a special tax of 5% of their gross income and will be exempt from all state and local taxes, reducing the financial burden on business owners by granting tax exemptions. ● An application and business plan including a description of the proposed business activity must be submitted for review and approval by the Philippine Economic Zone Authority (PEZA). |
| 3、Registered Philadelphia company conditions & information & process |
| ◆Registration requirements for Philippine companies
(A) Conditions for registration of Philadelphia joint venture companies 1. Shareholders: At least 5 natural shareholders, of which at least 3 must be Filipino. 2. Directors: At least 5 natural person directors, including at least 1 Filipino director, each of whom must hold shares. 3. Secretary: at least 1 Filipino secretary. 4. Share allocation ratio: The foreign shareholding of the joint venture company shall be less than 40% and the Filipino shareholding shall be more than 60%. 5. Registered Address: A valid local registered address is required. 6. Registered capital: from 5,000 pesos. (2) Conditions for registration as a wholly foreign-owned company in Philadelphia 1. 1 natural person shareholder (OPC single person company), or more than 3 shareholders (at least 2 natural persons). 2. Share allocation ratio: foreign capital accounts for more than 40% of the shares, up to 100% of the shares. 3. Company members: Chairman (no Filipino nationality required), Company Secretary and Treasurer (Filipino nationality required, may be the same person). 4. Registered capital: minimum requirement of $200,000 (non-retail, non-restricted industries such as e-commerce do not need to pay). All applications and requirements must be approved and confirmed by the SEC before the company can be registered. Note: The company’s industry is not on the list of investment restrictions before the establishment of a wholly foreign-owned company is allowed. Information required for the registration of a Philippine company 1. Philippine Company Name: 3 names are recommended for registration. 2. Information on shareholders and directors of the Company (information on shareholders and directors, shareholding allocation ratio) 3. The identity and position of the shareholders of the company: PRESIDENT, TREASURER and CORPORATE SECRETARY; the treasurer and the secretary may be the same person. 4. The company’s scope of business: basically no restrictions (except for special industries). 5. Registered office of the company: must be in the Philippines. 6. relevant notarized documents Note: Philippine corporate law requires that only Filipino nationals holding a Philippine passport may serve as Secretary General of a corporation. Retired immigrants or other permanent residents are not eligible to serve as secretary.
◆The process of registering a Philippine company Step 1: Planning and Strategy We will first understand your business activities and needs, and then recommend the most suitable business entity for your business. Step 2: Pre-registration Requirements ● Once confirmed, we will advise you on the requirements for incorporation of a company in the Philippines, depending on the entity chosen for your business, and help you meet these requirements. Some of these requirements include the need for a local resident agent, a company secretary, preparation of financial statements for your business, etc. We will check the availability of your preferred company name and pass it through the Securities and Exchange Commission (SEC). Step 3: Register with the SEC After all requirements are met, we will proceed with the preparation of the required corporate documents, including the Articles of Incorporation and the Treasurer’s Affidavit, for the registration of Philabin Corporation through the SEC (Securities Commission). The process of incorporating a company in the Philippines can be done remotely with our assistance so that you do not need to travel. Once registration is complete, we will receive a certificate of incorporation, which contains the company registration number. We will then courier the file to your preferred office address. Step 4: Obtain customs clearance and business permit We will then file an application with the office where we do business, for which we will need a business registration certificate from the SEC, proof of address and two pieces of identification. After that, we will apply for a business license in the municipality where the business is located. To do this, we will need a business registration certificate, a customs clearance certificate, proof of address and two forms of identification. Step 5: Register at BIR We will then assist you in registering with the IRS to obtain a community tax certificate that includes a taxpayer identification number. Step 6: Register with other organizations If your business needs to employ individuals, we will continue to register your business with other organizations, such as the Social Security System, Philippine Health Insurance Corporation, etc. ● Depending on your business activities, we will help you obtain any additional licenses. Step 7: Open a Bank Account We will then assist you in opening a bank account using our extensive banking network. Step 8: Comply with local laws After your business is registered, we will ensure that you comply with local laws by filing annual tax returns, preparing your business’s financial statements, etc. The registration process can be done remotely, so you do not need to travel to the Philippines to register your company. For certain business entities, you can expect the company to be incorporated within 3 weeks and you will receive the new company’s documents, including the Certificate of Incorporation, Memorandum and Articles of Association and the Register of Directors and Shareholders.
◆The full set of documents obtained after the successful registration of a Philippine company are as follows: 1. Philippine Certificate of Incorporation 2. Philippine Articles of Incorporation and Share Capital 3. Philippine Company Secretary Card 4. a list of Philippine company files 5. Philippine company seal |
