Here’s a practical guide from Enterprise Singapore and our knowledge partner RSM on the nuts and bolts of setting up shop in Philippines. It covers:
To do business in the Philippines, one of the first things to consider is your business structure. Different regulations apply to different business structures and activities.
Here are the business entities to consider depending on the nature of your business:
You can set up a subsidiary corporation of your company in the Philippines as a separate legal entity from the parent company. This separates the liabilities of your subsidiary in the Philippines from your company in Singapore.
A branch office is considered an extension of the head office but with powers equal to a regular corporation. Its liabilities are part of the liabilities of the head office.
Setting up a representative or liaison office in the Philippines allows you to deal directly with your clients there. However, the Representative or Liaison Office is not allowed to earn income in the Philippines.
These are businesses owned and operated by foreigners. The purpose of setting up a headquarter in the Philippines is to service your affiliates, subsidiaries or branches in the Philippines, Asia-Pacific Region, and other foreign markets.
Set aside enough time as it takes two to three months to register your business with the Securities and Exchange Commission, and all other relevant government agencies.
For a subsidiary corporation, you need at least five, and up to 15 Directors.
For a branch office, you need to appoint a resident agent.
Yes. The majority of your directors must be residents of the Philippines.
Directors of your company must:
Yes, your entire board can consist of foreigners only. However, if you are doing business in nationalised or partially nationalised industries, there are restrictions on the proportion of foreign equity. You need to appoint the necessary number of Philippine nationals as directors under the rules.
Yes. A local company may be wholly-owned by foreigners, under certain conditions:
You need at least five shareholders.
In general, you must obtain a licence (or Certificate of Incorporation) from the Securities and Exchange Commission before starting your business operations.
After securing the licence, you need to register your company with the other government agencies such as the local government unit, the Bureau of Internal Revenue, Social Security System, Philhealth and Pag-IBIG.
To do business in the following industries, you need prior approval:
You are not allowed to invest in mass media (except recording), practice of professions, retail trade enterprises with paid-up capital less than US$2.5 million (S$3.4 million), private security agencies, small-scale mining and utilisation of marine resources.
You need a licence for these business activities:
Apply for licences after setting up your company.
Licences are valid for different periods and you can renew them when they expire.
Yes, you need to display your business licence.
Here’s the minimum paid-up capital you need, depending on your business structure:
Yes, you need approval from the local authorities. The process may take two to three months.
The minimum capital stock for a foreign holding and trading company is US$200,000 (S$268,000).
The common unit issue price per share (par value) of common shares is P1 (S$0.03).
You can only issue shares in Pesos.
In general, there are no restrictions.
However, if you use the foreign exchange from the local banking system to service or fund the repatriation of capital, profits and dividends, you have to register the foreign investment with the Bangko Sentral ng Pilipinas (Philippine Central Bank).
No, you don’t.
The account should be ready a day after you have submitted all the documents the bank needs.
No, you don’t need to keep a minimum sum in your bank account. You can use all of your capital for business purposes.
Yes, they can.
The tax rate depends on your business structure:
Depending on the nature of your business, you can make use of tax incentives from these avenues, as well as from other special economic zones:
Corporations need to file tax returns each quarter, but the corporate tax is paid annually.
Yes. If you are a branch office, pay 15% tax on the profits you remit to your head office. For subsidiaries, it is 30% tax on dividends, unless tax treaty provisions apply.
These are the withholding tax rates:
Yes. The current Value-Added Tax rate is 12%.
Yes, there is a tax treaty between the Philippines and Singapore to avoid double taxation of income and prevent fiscal income tax evasion.
You need to contribute to their Social Security fund, Pag-IBIG (Home Development Mutual Fund) and Philhealth (including hospitalisation) benefits.
Yes. You also need to withhold the income taxes and contributions of your employees.
Yes. Your employee needs an Alien Employment Permit to work in the Philippines. Apply for the permit with the following:
It takes about two to four weeks to get the permit.
Yes, you need a specific principal office address for your business in the Philippines.
Please note all information is provided in good faith for guidance and reference purposes only, and is correct as of 17 September 2018.