Doing Business in Iloilo City

DOING BUSINESS IN THE PHILIPPINES 

TYPES OF BUSINESS ORGANIZATIONS

                There are several types of business enterprises an investor can choose from in establishing operations in the Philippines.

A. ORAGANIZED UNDER PHILIPPINE LAWS

1. Sole Proprietorship

            Sole Proprietor is a business structure owned by an individual who has full  control/authority of its own and owns all the assets, personally owes and answers all liabilities or suffers all losses but enjoys all the profits to the exclusion of others.

            A sole proprietorship must apply for a Business Name and be registered with the Department of Trade and Industry (DTI).

2. Partnership

                Under the Civil Code of the Philippines, by the contract of partnership two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves. It is treated as juridical person, having a separate legal personality from that of its members. Partnerships  may either be general partnerships, where the partners have unlimited liability for the debts and 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    the amount of their capital contributions. A Partnership may be constituted in any form except when real property or real rights are contributed thereto, in which case a public  instrument is necessary. Further, a contract of partnership having a capital of three   thousand pesos (Php 3,000.00) or more, in money or property, must register with the Securities and Exchange Commission (SEC).

3. Corporation

            Corporation are artificial beings corporate by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. Corporation are juridical persons with personality separate and distinct from that its stockholders. The liability of the shareholders of a corporation is limited to the amount of their share capital. It consists of at least one share and must be  registered with the SEC. The minimum paid up capital required is not less than five thousand pesos (Php 5,000.00)

            A corporation can either be stock or non-stock company regardless of nationality. Such   company, if 60% Filipino and 40% foreign-owned, is considered a Filipino  corporation. If more than 40% foreign-owned, it is considered a domestic foreign-owned corporation.

 

 

 

 

 

  • Stock Corporation

            This is a corporation with a capital stock dividend into shares and authorized to    distribute to the holders of such shares dividends or allotments of the surplus profits on       the basis of the shares held.

  • Non-Stock Corporation

            It is a corporation organized principally for public purposes such as charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, like trade, industry agricultural and like chambers, or any combination  thereof. No part of its income is distributed as dividends to its members, trustees, or officers. Further, any profit which a non-stock corporation may obtain as an incident to its operations shall whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized.

                        A. ORGANIZED UNDER FOREIGN LAWS

1. Branch Office

            A Branch Office is a foreign corporation organized and existing under foreign laws that   carries out business activities of the head and derives income from the host country. It is required to put up a minimum paid up capital of US$200,000.00

2. Representative Office

            A Representative Office is foreign corporation organized and existing under foreign laws. It does not derive income from the host country and is fully subsidized by its head office.  It deals directly with clients of the parent company as it undertakes such activities as   information dissemination, acts as a communication center and promotes company products, as well a quality control of products for exports. It is required to have an initial   minimum inward remittance in the amount of US$30,000.00 to cover its operating expenses and must be registered with SEC.

            Under RA 8756, any multinational company may establish an RHQ or ROHQ as long as they are existing under laws other than foreign markets.

3. Regional Headquarters (RHQs) 

  • An RHQ undertakes activities that shall be limited to acting as supervisory, communication and coordinating center for its subsidiaries, affiliates and branches in the Asia-Pacific region.
  • It 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.
  • Required capital: US$ 50,000.00 annually to cover operating expenses.

4. Regional Operating Headquarters (ROHQs)

  • An ROHQ performs the following qualifying services to its affiliates, subsidiaries, and branches in the Philippines.
    • General administration and planning
    • Business planning and coordination
    • Sourcing/procurement of raw materials components
    • Corporate finance advisor services
    • Marketing control and sales promotion
    • Training and personnel management
    • Logistics Services
    • Research and development services and product development
    • Technical support communications
    • Business development
    • Derives income in the Philippines
    • Required capital: US$200,000.00 one time remittance.

 

 

 

9th FOREIGN INVESTMENT NEGATIVE LIST

          Republic Act (RA) no. 7042, also known as the “Foreign Investments Act of 1919”, as amended by RA 8179, provides for the formation of a Regular Foreign Investment Negative List, covering investment areas/activities which may be opened to foreign investors and/or reserved to Filipino nationals.

             Below is the Ninth (9th) Regular Foreign Investment Negative List issued on October 29, 2012

 

LIST A: FOREIGN OWNERSHIP IS LIMITED BY MANDATE OF THE

 CONTITUTION 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. Practices of all professions (Art. XII, Sec. 14 of the Constitution, Sec. 1 of RA 5181)

                     a. Engineering

                                i. Aeronautical engineering (PD 1570)

                                ii. Agriculture engineering (RA 8559)

                              iii. Chemical engineering (RA 9297)

                              iv. Civil engineering (RA 1852)

                              v. Electrical engineering (RA 7920)

                              vi. Electronics and communication engineering (RA 9292)

                              vii. Geodetic engineering (RA 8560)

                             viii. Mechanical engineering (RA 8495)

                               ix. Metallurgical engineering (PD 1536)

                               x. Mining engineering (RA 4274)

                               xi. Naval architecture and marine engineering (RA 4565)

                               xii. Sanitary engineering (RA 1364)

                      b. Medicine and allied professions

                                 i. Medicine (RA 2382 as amended by RA 4224)

                                ii. Medical technology (RA 5527 as amended by RA 6138, PD 498 and PD 1534)

                               iii. Dentistry (RA 9484)

                               iv. Midwifery (RA 7392)

                                v. Nursing (RA 9173)

                               vi. Nutrition and dietetics (PD 1286)

                              vii. Optometry (RA 8050)

                             viii. Pharmacy (RA 5921)

                               ix. Physical and occupational therapy (RA 5680)

                                x. Radiologic and x-ray technology (RA 7431)

                               xi. Veterinary medicine (RA 9262)

                       c. Accountancy (RA 9298)

                       d. Architecture (RA 9266)

                       e. Criminology (RA 6506)

                        f. Chemistry

                        g. Customs brokerage (RA 9280)

                        h. Environmental planning (PD 1308)

                                                                                                                                                                                                    

 

 

                i. Forestry (RA 6239)

                j. Geology (RA 4209)

                k. Interior design (RA 8534)

                l. landscape architecture (RA 9053)

                m. Law (Art. VII, Section 5 of the Constitution, Rule 138, Sec. 2 of the Rules of Court of the                                Philippines.)

                n. Librarianship (RA 9246)

                o. Marine deck officers (RA 8544)

                p. Master plumbing (RA 1378)

                q. Sugar technology (RA 5197)

                r. Social work (RA 4373)

                s. Social Work (RA 4373)

                t. Teaching (RA 7836)

                u. Agriculture (RA 8435)

                v. Fisheries (RA 8550)

                w. Guidance counselling (RA 9258)

                x. Real Estate Service (RA 9646)

                y. Respiratory therapy (RA 10024)

                z. Psychology

3. Retail trade enterprise with paid-up capital of less than US$ 2,500,000 (Sec. 5 of RA 8762)²

4. Cooperatives (Ch. III, Art. 26 of RA 6938)

5. Private security agencies (Sec. 4 of RA 5487)

6. Small-scale mining (Sec. 3 of RA 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 PD 449)

9. Manufacture, repair, stockpiling, and/or distribution of nuclear weapons (Art. II, Sec. 8 of the constitution) ²

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 RA 7183)

 

 

Up to Twenty Percent (20%) Foreign Equity

                1. Private radio communication network (RA 3846)

 

 

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

              2. Private recruitment, whether for local or overseas employment (Art. 27 of PD 442)

              3. Contracts for the construction and repair of locally-funded public works (Sec. 1 of                                          Commonwealth Act No. 541, Letter of Instruction No. 630) except:

                   a. Infrastructure/ development projects covered in RA 7718; and

                   b. Projects which are foreign funded or assisted and required to undergo international                                         competitive bidding (sec. 2 (a) of RA 7718)

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

 

 

Up to Thirty Percent (30%) Foreign Equity

              5. Advertising (Art. XVI, Sec. II of the Constitution)

 

 

 

 

 

        Up to Forty Percent (40%) Foreign Equity

        6. Exploration, development and utilization of natural resources (Art. XII, Sec. 2 of the

                Constitution)

        7. Ownership of private lands (Art. XII, Sec. 7 of the Constitution; Ch. 5, Sec. 22 of CA 141; Sec. 4

                Of RA 9182)

        8. Operation and Management of public utilities (Art. XII, Sec. II of the Constitution; Sec. 16 of

                CA 146)

        9. Ownership/establishment and administration of educational institution (Art. XIV, Sec. 4 of the

             Constitution)

       10. Culture, production, milling, processing, trading except retailing, of rice and corn and requiring,

             by barter, purchase or otherwise, rice and corn and the by-products thereof (Sec. 5 of PD 194)

       11. Contracts for supply of materials, goods and commodities to government-owned controlled

              Corporation, company agency, or municipal corporation (Sec. 1 of RA 5183)

       12. Project proponent and facility operator of a BOT Project requiring a public utilities franchise

              (Art. XII, Sec. 11 of the Constitution; Sec. 2 (a) of RA 7718)

       13. Operation of a deep sea commercial fishing vessels (Sec. 27 of RA 8550)

       14. Adjustment companies (Sec. 323 of PD 612 as amended by PD 1814)

       15. Ownership of condominium units where the common areas in the condominium projects are co-

              Owned by the owners of the owners of the separate units or owned by a corporation (Sec. 5 of

               RA 4726)

 

 

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

16. Lending companies (Sec. 6 of RA 9474)

 

 

Up to Sixty Percent (60%) Foreign Equity

17. Financing companies regulated by the SEC (Sec. 6 of RA 5980 as amended by RA 8556)

18. Investment houses regulated by the SEC (Sec. 5 of PD 129 as amended by RA 8366)

 

 

 

List B: FOREIGN OWNERSHIP IS LIMITED FOR REASONS OF SECURITY, DEFENSE, RISK TO HEALTH AND MORALS AND PROTECTION OF SMALL- AND MEDIUM SCALE

ENTERPRISES

           

            Up to Forty Percent (40%) Foreign Equity

               1. Manufacture, repair, storage, and/or ingredients requiring Philippines National Police (PNP)

                   Clearance:

                    a. Firearms (handguns to shotguns), parts of firearms and ammunition therefore,

                         instruments or implements used or intended to be in the manufacture of firearms

                    b. Gunpowder

                    c. Dynamite

                    d. Blasting Supplies

                    e. Ingredients used in making explosive:

                             i. Chlorates of potassium and sodium

                            ii. Nitrates of ammonium, potassium, sodium barium, copper (11), lead (11), calcium

                                 and cuprite

                           iii. Nitric Acid

                            iv. Nitrocellulose

                             v. Perchlorates of ammonium, potassium and sodium

                            vi. Dinitrocellulose

                           vii. Glycerol

                          viii. Amorphous phosphorus

                            ix. Hydrogen peroxide

                             x. Strontium nitrate powder

                            xi. Toluence

                   f. Telescopic sights, sniper scope and other similar devices

                       However, the manufacturer or repair of these items may be authorized by the Chief of the

                      PNP to non-Philippine nationals; Provided further that the extent of foreign equity   

                       Ownership allowed shall be specified in the said authority/clearance (RA 7042 as amended

                      by RA 8179)

              2. Manufacture, repair, storage and/or distribution of products requiring Department of

                   National Defense (DND) clearance:

                   a. Guns and ammunition for warfare

                   b. Military ordinance and parts thereof (e.g. torpedoes, depth charges, bombs, grenades,

                        missiles)

                   c. Gunnery, bombing, and fire control systems and components

                   d. Guided missiles/missile systems and components

                   e. Tactical aircraft (fixed as rotary-winged), parts and components thereof

                    f. Space vehicles and components system

                    g. Combat vessels (air, land and naval) and auxiliaries

                    h. Weapons repair and maintenance equipment

                     i. Military communications equipment

                     j. Night vision equipment

                     k. Stimulated coherent radiation devices, components and accessories

                     l. Armament training devices

                   m. Others as may be determined by the Secretary of the DND

                      However, the manufacturer or repair of these items may be authorized by the Secretary

                      of National Defense to non-Philippine nationals; Provided that a substantial percentage of

                      output, as determined by the said agency, is exported. Provided further that the extent

                      foreign equity ownership allowed shall be specified in the said authority/clearance (RA

                      7042 as amended by RA 8179)

            3. Manufacture ans distribution of dangerous drugs (RA 7042 as amended by RA 8179)

            4. Sauna and stream bathhouses, massage clinics and other like activities regulated by law

            

                                    

 

 

 

                    

                    of risks posted to public health and morals (RA 7042)

             5.   All forms of gambling, except those covered by investments agreements with PAGCOR pursuant to

                     RA 9487, or the PAGCOR Charter (RA 7042 as amended by RA 8179)

             6.    Domestic  market enterprises with paid-in equity capital of less than the equivalent of US$200,000

                      (RA 7042 as amended by RA 8179)

             7.     Domestic market enterprises which involve advanced technology or employ at least fifty (50) direct

                       Employees with paid-in equity capital of less than US$100,000 (RA 7042 as amended by RA 8179)

 

FOOTNOTES:

1. This is limited TO Filipino citizens save in case prescribe by the law.

2. Full foreign participation is allowed for retail trade enterprise; (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 and or luxury products, provided that the paid-up capital per store is not less than US$250,000 (Sec. 5 of RA 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 30year period from start of operation, the foreign investor shall divest a minimum of 60 percent of their equity to Filipino citizens (Sec. 5 of PD 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. of RA 5980 as amended by RA 8556; PD 129 as amended by RA 8366)

 

REGISTRATION OF CORPORATIONS AND PARTNERSHIP

            In order to validly transact business in the Philippines, entities should first be registered with the appropriate government agencies.

Entities required registering with SEC

            1. Stock corporations (including foreign corporations e.g. branch offices, representative offices, regional headquarters or regional operating headquarters)

            2. Non-stock corporations (Foundations, associations, non-government organizations, religious organizations, etc.)

            3. Partnerships (General and Limited partnerships)

 

General procedures in registration with SEC

           

            1. Verify/reserve proposed name;

            2. Draw up the Articles of Incorporation and By-Laws in accordance with Corporation                      Code;

            3. If applicable, get endorsements from other government agencies;

            4. Deposit paid-up capital / contribution (for foundations only) in the bank;

            5. Pay the filing fees

            6. Claim the certificate of Incorporation/License

            7. Buy and register Stocks and Transfer Book or Membership Book

 

CERTIFICATION ISSUED BY SEC UPON REGISTRATION

For incorporation of stock or non-stock corporation

 

Certificate of Incorporation

For formation of partnership

 

Certificate of Recording

For Establishment of foreign branch or representative office, regional headquarters or regional operating headquarters

License to Do Business in the Philippines

 

 

 

 

Schedule 1 – REQUIRED DOCUMENTS FOR APPLICANT CORPORATION &

PARTNERSHIP

  • STOCK CORPORATIONS

 

  • Name, Verification Slip
  • Articles of Incorporation and By- Laws
  • Treasurer’s Affidavit
  • Bank Certificate of Deposit
  • Clearance from the government agencies (if applicable)
  • Foreign Investment Application Form
  • Proof of Inward Remittance by Non-Resident Aliens/Subscribers

 

  •  NON-STOCK CORPORATIONS  

                    

  • Name, Verification Slip
  • Articles of Incorporation and By- Laws
  • Treasurer’s Affidavit
  • Bank Certificate of Deposit
  • List of members and amount contributed certified by the Secretary

and Treasurer

  • Copy of the Certificate of election on or letter of appointment of a

Bishop, rabbi, presiding priest etc. (only forCorporation Sole)

  • Master deed duly entered under the primary entry of the concerned

Register of Deeds and certification that there is no existing similar

Corporation within the condominium (only forCondominium Corporations)

  • Certification from the Housing and Land Use Regulatory Board

 (HLURB) that there is no other existing homeowners of similar associations in the Community where the association is to be

established (only forNeighborhood Associations)

 

  • PARTNERSHIPS (GENERAL/LIMITED)

 

  •  Name, Verification Slip
  • Articles of Partnership
  • Form F – 105 for Partnerships with foreign partners

 

 

 

 

 

 

Schedule 2 – REQUIRED DOCUMENTS FOR FOREIGN CORPORATIONS (In addition to those in Schedule 1

 

  • Foreign Investment Application Forms

Form F- 103     Branch Office

Form F- 104     Representative Office

F- 108 Branch/Representative Office of Non-Stock Foreign Corporation

 

 

Application Form for Regional Headquarters (RHQ)/Regional Operation Headquarters (ROHQ)

 

 

  • Proof of Inward Remittance by mother company (except for Branch/Representative

Office of Non-Stock Foreign Corporations)

 

 

  • Authenticating Board Resolution authorizing establishment of office in the Phil.;

designing Resident Agent; and stipulating that in the absence of Resident Agent or

upon cession of business in the Phil, any summons may be served to SEC as

if same is made upon corporation at its home office.

 

 

  • Authenticated Financial Statement of Applicant certified by independent CPA in home

Country.

 

 

  • Authenticated copies of articles of Incorporation and By-laws of applicant.

 

 

  • Resident Agent’s Acceptance of Appointment (if not signatory in application form)

 

 

  • Affidavit that mother company is solvent and of sound financial condition (only for Representative Office)

 

 

  • Authenticated Certification that is engaged in international trade with affiliate,

Subsidiaries, or branch office in the Asia-Pacific region and other areas (only for RHO

and ROHQ)

 

 

  • Authenticated Certification from principal office of foreign entity that it was authorized

By its Board of Directors or governing body to establish RHQ or ROHQ in the Philippines

(only for RHQ and ROHQ)

 

 

 

 

 

 

BUSINESS ACTIVITIES WITH ENDORSEMENTS

 

Air Transport

Civil Aeronautics Board

Banks, Pawnshops or other Financial Intermediaries with Quasi-Banking

Functions

 

Bangko Sentral ng Pilipinas

Charitable Institutions

Department of Social Welfare and

Development

Educational Institutions (for stock or non-stock)

  • Elementary to High School
  • College, Tertiary Course
  • Technical Vocational Course

 

Department of Education (DepEd)

Commission on Higher Educations

Technical Education Skills and

Development Authority (TESDA)

Electric Power Plants

Department of Energy

Hospitals

Health Maintenance Organizations

 

Department of Health

Insurance

Insurance Commission

Professional Associations

Professional Regulation Board

Radio, TV, Telephone

National Telecommunication Board

Recruitment for Overseas Employment

Philippine Overseas Employment

Administration

Security Agency

Philippine National Police

Water Transportation/Shipbuilding

Ship Repair

Maritime Industry Authority

Manufacture, repair, storage and/or

Distribution of products and/or ingredients

Of firearms, gun powder, and all those

Indicated in EO 389 series 2004 Foreign

Investments Negative List

 

 

Philippine National Police

Manufacture, repair, storage and/or

Distribution of products and/or ingredients

Of firearms, gun powder, and all those

Indicated in EO 389 series 2004 Foreign

Negative List

 

 

Department of National Defense (DND)

Volunteer Fire Brigades

Department of Interior and Local Government (Bureau of Fire Protection)

 

MINIMUM PAID-UP CAPITAL REQUIREMENTS

 

Break Bulk Agent

P 250,000.00

Cargo Consolidator

P 400,000.00

Financing Company

  • Metro Manila and other 1st class cities
  • Other classes of cities
  • Municipalities

 

P 10,000.000.00

P 5,000.000.00

P 2,500.000.00

Freight Forwarders

  • Domestic
  • International

 

P 250,000.00

P 2,000.000.00

Foundations

P 1,000,000.00

Health Maintenance Organizations

 

P 10,000,000.00

Insurance

  • Insurance Broker/Reinsurance Broker
  • Insurance Broker and Reinsurance Broker

 

 

P 20,000.000.00

P 50,000.000.00

Life/Non Life Insurance Company

P 1,000.000.000.00

Reinsurance Company

P  2,000,000,000.00

Investment Adviser/Manager

P 10,000,000.00

Investment Company

P 50,000,000.00

Investment House

P 300,000,000.00

Lending Investor

P 1,000,000.00

Mining

P 2,500,000.00

Non –vessel Operating Common Carrier ( NVOCC)

P 4,000,000.00

Pawnshop

P 100,000.00

Pre-Need Plan Issuer

P 100,000,000.00

Pre-Need Plan Agent

P 5,000,000.00

Recruitment for Local Employment

  • Corporation
  • Partnership

 

P 500,000.00

P 200,000.00

Recruitment for Overseas Employment

P 2,000,000.00

Retail Trade with Foreign Equity

US $ 2,500,000.00

School ( for  stock corporation)

  • Pre Elementary, Elementary Education
  • Elementary and Secondary Education
  • Elementary, Secondary,Tertiary,Post-Graduate

Education

 

P 1,000,000.00

P 2,500,000.00

5,000,000.00

Security Agency

P 500,000.00

Securities Broker/Dealer(New/SRO-Member)

P 100,000,000.00

Securities  Broker/Dealer (Existing/SRO-Member)

P 10,000,000.00

Securities Broker/Dealer in Proprietary Shares ( Non SRO-

Member)

 

P 5,000,000.00

Special Purpose Vehicle

P 31,250,000.00

Transfer Agent

P 1,000,000.00

 

 

(Based on Foreign Equity )

 

Corporation with more than 40% foreign equity

  • Domestic market enterprise

 

 

 

US$ 200,000.00

 

  • Export market enterprise

P 5000,000.00

Foreign Branch Office

  • Domestic market enterprise
  • Export market enterprise

 

US$200,000.00

P 5,000.00

Partnership with foreign partner

  • Domestic market enterprise
  • Export market enterprise

 

US$200,000.00

P3,000.00

Foreign Representative Office

US$ 30,000.00

Regional Area Headquarters (RHQ)

US$ 50,000.00

Regional Operating Headquarters (RQHQ)

US$ 200,000.00

 

 

FEES AND CHARGES

                In accordance with SEC Memorandum Circular (MC) no. 9 series of 2004, below is the consolidated schedule of fees and charges:

COMPANY REGISTRATION AND MONITORING (CRMD)

A. Registration of New Corporation/Partnerships

  1. Name Verification/Reservation

P 40.00per allowed name (30-day reservation)

  1. Article of Incorporation/Partnership

 

a. Stock Corporation with par value

1/5 of 1%of the authorized capital stock or the subscription price of the subscribed capital stock whichever is higher but not less than P 1,000.00 plus LRF*

b. Stock Corporation without par value

1/5 of  1% of the authorized capital stock computed

At P100.00 per share or the subscription  price of the subscribed capital stock whichever is higher but not  less than P1,000.00 plus LRF*

c. Non-stock corporation

P 500.00 plus LRF*

d. Partnerships

1/5 of 1% of the Partnership’s capital but not less than P 1000, 00. plus LRF*

3. By-laws of both stock and non-stock corporation

P 500, 00. plus LRF*

4. Application Under Foreign Investments  Act

(aside from the filing fee for the articles of incorporation)

P 2,000.00 plus LRF*

5. License to Operate-Foreign Corporations

 

a. Branch Office

 1%  of the actual inward remittance of the corporation converted into the Philippine currency but not less than P 2,000.00 plus LRF*

b. Representative Office

 1/10 of 1%  of  the actual inward remittance of the corporation converted into the Philippine currency but not less than P 2,000.00 plus LRF*

c. Application for Area of Regional Headquarters

P  5,000.00

  1. Application for Regional Operating Headquarters or Petition for Conversion of an Area or Regional Headquarters into Regional Operating Headquarters

 1%  of  the actual inward remittance but not less than 1% of the peso equivalent of US$200,000.00 at the time of remittance plus LRF*

e. Application for Area of Regional Headquarters

P 2,000.00.plus LRF*

B. Amendments (Domestic)

6. Amended Articles of Incorporation of both stock

And non-stock corporation

P 500.00 plus LRF*

7. Amended Articles of Incorporation where amendment consists of extending the term of corporate existence

1/5 of 1% of the authorized capital stock but not less than P2,000.0 plus LRF*

8. Amended Articles of Incorporation Re: Conversion/Reclassification of Shares

P 2,000.00 plus LRF*

9. Amended By Laws of both stock and non-stock corporation

P 500.00 plus LRF*

10. Amended Articles of Partnership

P 1,000.00 plus LRF*

11. Articles of Dissolution of Partnership

1/5 of 1% of the increase in capital but not less than

 

 

P 1,000.00 plus LRF*

12. Increase of Capital Stock

 

a. Corporation with par value

 

 

 

1/5 of 1% of the authorized capital stock or the subscription price of the subscribed capital stock whichever is higher but not less than P1,000.00 plus LRF*

 

b. Corporation without par value

 

 

1/5 of 1% of the authorized capital stock computed at P100.00 per share or the subscription price of the subscribed capital stock whichever is higher but not less than P1,000.00  plus LRF*

14. Decrease of Capital Stock

 

a. Return of Capital

P 3,000.00 plus LRF*

b. all others

P 2,000.00 plus LRF*

15. Merger or Consolidation of corporations

1/5 of 1% of the equity of the absorbed corporation/s but not less than P 3,000.00 plus LRF*

16. Equity Restructuring

a. To wipe out existing deficiency

P 3,000.00 plus LRF*

b. To create additional paid-in capital

1/5 of 1% of the amount infused but not less than   P 1,000.00 plus LRF*

C. Amendments of License (Foreign)

17. Petition for Amendment of License of a Foreign Corporation

P 2,000.00 plus LRF*

18. Cancellation of License of a Foreign Corporation

P 2,000.00 plus LRF*

19. Cancellation of License of Regional Headquarters of a Multinational Corporation

P 1,000.00 plus LRF*

20. Cancellation of License of Regional Operating Headquarters of Multinational Corporation

P 2,000.00 plus LRF*

21. Appointment of a Resident Agent or Substitute Resident Agent

P 1,000.00 plus LRF*

22. Revocation of Appointment of Resident Agent  or Substitute Resident Agent

P 1,000.00 plus LRF*

23. Amended Articles of Incorporation of Foreign Corporation

P 1,000.00 plus LRF*

24. Amended By-Laws of a Foreign Corporation

P 1,000.00 plus LRF*

D. Other Filings / Transactions

25. Deed of Assignment of Partnership Interest

P 500.00 plus LRF*

26. Affidavit of Withdrawal of Partner

P 500.00 plus LRF*

27. Certificate of incurring, creating, increasing bonded indebtedness

1/10 of 1% of the total indebtedness but not less than P 500.00 plus LRF*

28. Valuation of Consideration for shares of stock

 

1/5 of 1% of the total indebtedness but not less than P 500.00 plus LRF*

29. Stock/cash dividend up to P 50,000,000.00

P 500.00 plus LRF*

 

Declared by the corporation whose securities are not listed

 

30. Stock/cash dividend  over  P 50,000.000.00 declared by the corporation whose securities are not listed

P 1,000.00 plus LRF*

31. Property Dividend Declaration

1/5 of 1% of the amount declared but not less than P 1,000.00 plus LRF*

32. Petition to set aside order of Suspension/Revocation

P 1,000.00 plus LRF*

33. Petition for correction in Articles of Incorporation, By-Laws or amendments thereto

P 1,000.00

 

34.Certification on Corporate Information, recording of Deed of Assignment of Stock

P 300.00

35. Certification of Company Status

P 500.00

36. Certification of Paid-up Capital, Outstanding Capital, percentage of Filipino stockholdings etc.

P 400.00

37. Accreditation of Appraisal Companies

P 5,000.00 plus LRF*

38. Approval of Voting Trust Agreement

P 200.00 plus LRF*

39. Registration of Stock and Transfer Book

P 150.00

40. Registration of Membership Book

P 75.00

 

 

REPORTORIAL REQUIREMENTS OF CORPORATIONS

REGISTERED WITH SEC

 

                The SEC requires registered corporations to comply with the reportorial requirements to properly monitor existence and financial standing of the said corporations.

Entities required to file reports with SEC

            1. Registered stock corporations (including foreign corporations e.g. branch offices, representative offices, regional headquarters or regional operating headquarters);

            2. Registered non-stock corporations (foundations, associations, non-government organizations, religious organizations, corporation sole, etc.

            3. Corporations granted secondary licenses e.g. broker or dealer in securities,      government securities eligible dealer (GSED), investment adviser of an investment           company, close-end or open-end investment company, investment house, transfer            agent, commodity or financial futures exchange/broker merchant, financing company,    pre-need plan issuer, general agent in pre-need plans and time             shares/club/shares/membership certificates issuers or selling agents thereof;

            4. Other entities required by the SEC to submit reports on a regular or special basis.

 

REPORT FOR ALL SEC REGISTERED CORPORATIONS WITH PRIMARY LICENSE

Document

No. of Copies

Filer

Filing Period

 

 

 

 

 

General Information Sheet

 

 

 

 

 

 

 

4

Domestic Stock/Non-Stock Corporations

Within 30 days from date of the

annual stockholders’ or members

meeting

Branch Office and

Representative Office of

Foreign Corporations

Within 30 days from the

 anniversary date of the issuance

of the license

Regional Operating

Headquarters (ROHQs)

Regional Headquarters

(RHQs) of Multinational

Companies

 

Within 30 calendar days after the

Issuance of the certificate of

Registration and license, and then

Annually, within 30 calendar days

After the anniversary date of the

Issuance of the certificate of

Registration and license.

 

 

 

Audited Financial

Statements (AFS)

Stamped

“RECEIVED” by

The BIR

 

 

 

 

 

4

Domestic Stock/Non-

Stock Corporations

 

 

 

Within 120 calendar days after the

End of the fiscal year, as indicated

In the Financial Statements.

Branch Office and

Representative Office of

Foreign Corporations

Regional Operating

Headquarters (ROHQs)

Regional Headquarters

(RHQs) of  Multinational

Companies

 

LEGAL, ACCOUNTING AND AUDIT REQUIREMENTS

                The Philippines observes the application of the Philippine Accounting Standards/Philippine Financial Reporting Standards in the preparation of the accounting requirements, which are adoptions of the International Accounting Standards/International Financial Reporting Standards of the International Accounting Standards Boards.

The following are the reportorial and monitoring requirements for corporations:

1. General Information Sheet – The GIS should be certified and sworn to by the corporate secretary.

2. Financial Statements stamped received by the BIR.

 

TAXATION

                The country’s taxation system is governed by the Tax Reform Act 1997, passed into law on December 11, 1997 and became effective on January 01, 1998b. The law was aimed at the expanding the country’s tax base and maintaining the healthy fiscal standing of the government.

Corporate Income Tax Rates

 

 

Domestic/ Resident Foreign Corporation

Non-resident Foreign

Corporation

Taxable income not subject to special tax rates

30%

30%

Interest from deposits and yield from

Deposit substitutes/trust funds and

royalties

20%

30%

Interest on foreign loans

N/A

N/A

Interest income derived by a domestic

Corporation from a depository bank under

The expanded foreign currency deposit system

 

7.5%

 

N/A

Dividends from domestic corporations

0

15% */ 35%

Gains on sales of shares of stock not traded in the Stock Exchange

5% / 10%**

5% / 10%**

 

NOTES:

*The rate of 15% applies if the host country exempts the derived from tax or permits a 20% or greater credit or underlying corporation tax paid by the company paying the derived.

**The 15% rate applies applies to the first P 100,000 of gains annually, with the 10% rate applying to the excess.

 

Entity

Rates

Tax base

Proprietary educational institutions and non- profit hospitals

10%

Taxable income

Certain enterprises registered with the Philippine Economic Zone Authority

5%

Gross income

Non-resident owner or lessor of aircraft, machinery and other equipment

7.5%

Gross Philippine rentals, lease, charter fees

Non-resident owners of vessel chartered by Philippine nationals and approved by the Maritime Industry Authority

 

4.5%

Gross Philippine rentals, lease, charter fees

 

Non-resident cinematographic film owners, lessors or distributors

2.5%

Gross Philippine source billings

Foreign international carriers (air and sea)

2.5%

Gross Philippine billings

Offshore banking units (OBUs) and foreign

Currency deposit units (FCDUs) authorized

By the Bangko Sentral ng Pilipinas

10%

Income from foreign currency transactions with residents

Regional operating headquarters

10%

Taxable income

 

1.2 Income Tax Rates as Passive Income of Domestic/Resident Corporation

Dividends received from domestic corporations

Not subject to tax

Interest on any currency bank deposit and yield or other monetary benefit from deposit substitute and from trust fund and similar arrangements

20% of final tax

Interest from foreign currency deposits with foreign currency deposit units (FCDUs)

7 ½ of final tax

Gains from sale or exchange of shares of stock not listed and traded in the local stock exchange

5% capital gains tax (CGT) on net gains not exceeding   P 100,000 and 10% on the excees

Gains from sale or exchange of land or buildings not actually used in business and treated as capital issue

6% CGT on gross selling price of fair market value, whichever is higher

Royalties

20% final tax

 

1.3 New Taxes for Corporation under the Tax Reform Act of 1997

Minimum Corporate Income Tax (MCIT) – A 2% MCIT on gross income on annual basis is imposed on corporations whose regular corporate income tax liability is less than the MCIT beginning the fourth taxable year following the year they commenced business operation. Any excess of the MCIT over the Normal tax shall be carried forward and credited against the normal tax for the three (3) immediately succeeding taxable years.

 

 

Fringe Benefits Tax – Fringe benefits granted to supervisory and managerial employees are subject to 32% tax on the grossed-up monetary value of the fringe benefit. Fringe benefits given by OBUs regional operating headquarters of multinational companies, petroleum contractors and subcontractors to qualified alien employees and in certain cases, to Filipino employees, are taxed at 15% of the grossed-up monetary value of the fringe benefit.

Improperly Accumulated Earnings Tax – a 10% tax is imposed on the improperly accumulated earnings of a corporation, except in the case of publicly held corporations, banks, and other non-bank financial intermediaries and insurance companies. When a corporation allows its earnings or profits to accumulate beyond its reasonable needs. It shall be assumed that the purpose is to avoid tax on stockholders, unless proven to the contrary.

1.4 Individual Taxation

Non-resident lies not engaged in trade and

business flat income tax rate

Resident citizens/aliens (gainfully employed)

Graduated income tax rates

25%

 

0% - 35%

Who shall File:

1. An individual whose gross compensation income does not exceed his total personal and additional exemptions;

2. An individual whose compensation derived from one year employer does not exceed P60,000 and the income tax on which has been correctly withheld;

3. An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee occupying the same position as that of the alien employee of regional or area headquarters and regional operating headquarters of multinational companies, petroleum service contractors and sub-contractors, and offshore banking units, non-resident lien not engaged in trade or business), and

4. An individual who is exempt from income tax.

5. Married individual shall file single return for the taxable year to include the income of both spouses, separately computing their individual income tax based on their respective taxable income. When it is impracticable for the spouses to file one return, each spouse may file a separate return.

1.5 Value Added Tax (VAT)

Sale of goods, other properties, and services in the Philippines, as well as importation of goods to the Philippines, are subject to the 12% VAT. VAT is imposed on the gross selling price (in case of sale of goods) and gross receipts (in case of sale of services).

1.6 Stock Transaction Tax

½ of 1% of gross selling price is imposed on the sale, barter, exchange or other disposition of shares through the facilities of stock exchange.

 

Sources:

1. 1997 National Internal Revenue Code

2. Civil Code on Partnership

3. Corporation Code

4. Foreign Investment Act of 1991

5. SEC Citizen’s Manual

 

 

BOARD OF INVESTMENTS

Frequently

Asked

Questions

                                                                                    our Business, Our People.

INVEST Philippines

 

1. What are the various structural options that I could choose from in setting up

      a business?

 

 

    You may set up your business under several organizational structures known as a single

    proprietorship, partnership, corporation, branch office, representative office, regional

    headquarters, or regional operating headquarters.

 

2. Can a foreign investor be allowed to own a 100% of a business entity?

     

     Yes, one hundred percent (100%) foreign equity may be allowed in all areas of investments

     under the Foreign Investments Act (FIA) R>A> 7042 except those included in the Regular

     Foreign Investment Negative List (FINL).

 

3. What are the areas of investments covered by the Foreign Investment Act (FIA)?

 

      The FIA covers all investment areas, except banking and other financial institutions, which are governed and regulated by the Bangko Sentral ng Pilipinas (BSP).

The Foreign Investment Negative List covers areas of economic activity whose foreign ownership is limited to a maximum of forty percent (40%) of the outstanding capital stock in the case of a corporation or capital in the case of partnership.

       Below are further descriptions on the Negative Lists A & B:

              List A: refers to areas reserved to Filipinos by mandate of the Constitution and Special Laws such as but not limited to:

                          a. Mass Media, except recording, practice of licensed profession, retail trade, cooperative and small-scale mining, etc. where foreign ownershipis prohibited; and

                             b. Advertising, ownership of land operation, operation and management of public utilities, etc. where only minority foreign ownership is prohibited.

             List B: refers to areas that are defense-realted, those with adverse effects on public                               health and morals and domestic market enterprises with paid-up capital of                                     less than US$ 100,000 only to non-Philippine nationals.

4. When can foreigners do business or invest in a domestic enterprise up to                             100% of its capital?

         

     A. Full entry of non-Filipinos is feasible if the proposed activity is not among those listed in the  FINL;

     B. When the paid-up capital for domestic market enterprise is at least US$200,000 which may be lowered to US$ 100,000 and if the following conditions are met:

  • Introduction of advanced technology; or
  • Employment of at least 50 direct employees.

 

5. Where does one apply for registration of investments?

 

      A. For Single/Sole Proprietorship (Filipino or foreign national) –You may go online at http;//www.bnrs.dti.gov.ph to register your business name.

For Other inquiries on Business Name (BN) Registration, consider the following:

  • For concerns regarding Business Name politics, clarification on requirements, call (632) 751-3330;
  • For technical concerns such as page cannot be displayed, problem in viewing look-up table, etc., please call (632) 729-8681;
  • For inquiries and checking of application status, the contact points in Metro Manila are:

Atrium Building                                   :                       (632)864-08 47 or (632) 501-5135

Trafalgar Building                               :                       (632)811-83 67 or (632) 811-8231

Hi-Way 54                                           :                       (632) 706-1767

Park and Ride                                      :                       (632) 536-7153

(near Manila City Hall)

Caloocan City                                      :                       (632) 332-0829

  • Send emails to bnrshelpdesk@dti.gov.ph;
  • Visit the DTI-National Capital Region, Makati City if within Metro Manila, locayed at the  12th Trafalgar Plaza, 105 H.V. dela Costa St., Salcedo Village, Makati         City;
  • Approach any DTI Provincial office (if outside Metro Manila) with contact information     supplied at http://www.business.gov.ph.
  1. A.  A foreign national should secure first ACR-Icard with the Bureau of Immigration before

      securing DTI permit and/or opening an account in any commercial bank.

  1. For corporations/Partnership, Branch and Representative Offices – Submit application forms

      together with the required documents at the Securities and Exchange Commission (SEC).

      The SEC is located at the SEC Building, EDSA corner Ortigas Avenue, Greenhills,

       Mandaluyong City. Its contact number is (^#@) 584-0923; 5849225. For concerns outside

       Metro Manila, SEC has extension Offices. Online information could be generated from

       http://www.sec.gov.ph.

  1. C.   For Regional Headquarters and Regional Operating Headquarters – Submit application from

      together with required documents at the Board of Investments via the Project Evaluation

      and Registration Dept., Industry and Investments Building, 385 Sen. Sen. Gil Puyat Avenue,

      Makati City, Metro Manila. Said office could be reached through telephone number (632)

      895-3997 or through emails sent to perd@boi.gov.ph.

 

6. What requirements must be complied with before an enterprise can enjoy tax

     benefits?

        For a proposed activity of a domestic incorporated enterprise to qualify for incentives, the

        firms must be registered with the appropriate investment promotion agency/ies depending

        on the project’s location, to wit:

            A. Location outside of Economic or Freeport Zones

  • Board of Investments (BOI)
  • Regional BOI in ARMM
  1.  Located in Economic or Freeport Zones
  • Aurora Special Economic Zone Authority
  • Cagayan Economic Zone Authority (CEZA)
  • Clark Development Corporation (CDC)
  • Phividec Industrial Authority (PIA)
  • Philippine Economic Zone Authority (OEZA)
  • Subic Bay Metropolitan Authority (SBMA)
  • Zamboanga Economic Zone Authority (ZEZA)

7. What are other relevant information that should be noted about registering

      with the Board of Investments (BOI) and Philippine Economic Zone Authority

      (PEZA)?

            A. Board of Investments (BOI)

                  To qualify for registration with the BOI, a company should be organized under                              Philippine laws as domestic entity. An enterprise may register its activity if the same                          is listed in the current Investments Priorities Plan (IPP). If not listed, the enterprise                 may also be entitled to BOI incentives for as long as the following conditions are met:

  • At least 50% of the production is export (for enterprise with 60% Filipino/40%

foreign ownership); or

  • At least 70% of production is for export (for enterprises with more than 40% of

foreign-ownership).

Foreign-owned firms, whose ownership exceeds 40% of the outstanding capital stosk which proposes to engage in domestic-oriented activities, may be entitled to incentives if the proposed activity is listed in the current IPP and qualities under Pioneer status (refer to insuring description).

B. Philippine Economic Zone Authority (PEZA)

    The Special Economic Zone Act of 1995 as amended mandates the PEZA to operate,

     administer, manage and develop Special Economic Zones or Ecozones.

     Enterprises that may qualify for registration with PEZA are domestic company,

     subsidiary and branch office that will manufacture and export 100% of their

     production and/or services.

      Permission has to be sought if the enterprises located within the zone will export

      below 100% and in most cases PEZA has allowed up to 30% of production for the

      domestic market.

      So far, there are 98 proclaimed Special Economic Zones that are operating in the

      country. Details could be drown from http://www.peza.gov.ph.

  8. What is a Pioneer Status?    

A. A preferred area of investments may be declared Pioneer if the activity:

  • Involves the manufacturing or processing (not merely assembly or packaging of goods or raw materials that have not been produced in the Philippines on a commercial scale; or
  • Uses a design, formula, scheme, method, process or system of production or transformation of any element or raw material or finished goods which is new and untried; or
  • Engages in agricultural activities/services essential to the achievement of the country’s self-sufficiency program; or
  • Produces non-conventional fuels or manufactures equipment which utilize non-conventional sources of energy; or
  • Conforms to other specific criteria as provided for in the annually drawn Investments Priorities Plan.

 

9. What probable incentives are made available to registered enterprises?

      A. Board of Investments (BOI)

            An enterprise registered with the BOI, pursuant to the 1987 Omnibus Investment Code                (Executive Order No. 226) is entitled to, among others, the following incentives subject to                 certain terms and conditions:

  • Income Tax Holiday (ITH)

BOI-registered enterprise shall be except from the payment of income taxes reckoned from the scheduled start of commercial operations, as follows:

-          New projects with a pioneer status for six (6) tears;

-          New projects with a non-pioneer status for four (4) years;

-          Expansion projects for three (3) tears, the exception of which, as a general rule, is limited to incremental sales revenue/volume;

-          New or expansion projects in less developed areas (LDAs) for six (6) years, regardless of status;

-          Modernization projects for three years, the exemption of which, as a general rule, is limited to incremental sales revenue/volume.

  • Tax credit on raw materials, supplies and semi-manufactured products (for export producers only);
  • Additional deduction from taxable income for labor expense (cannot be simultaneous enjoyed with the ITH incentive);
  • Additional deduction from taxable income for necessary and major infrastructure works (cannot be simultaneously enjoyed with the ITH incentive);
  • Exemption from wharfage dues and export tax, duty, impost and fees.
  • Modified Duty Rate for Capital Equipment of E>O. No. 528

Since June 17, 2006, BOI registered enterprises of good standing with project registered as new or expanding under the Omnibus Investments Code of 1987 may import machinery, equipment, spare parts and accessories that are subject to zero percent (0%) duty for export-oriented enterprise and one percent (1%) duty for domestic-oriented enterprises. The products fall under Chapters 40,59,68,69,70,73,76,82,83,84,85,87,89,90, 91 and 96 of the tariff and customs Code of the Philippines.

The capital equipment incentive provided under E.O. No. 313 (Modifying the Nomenclature and the Rates of Import Duty on Certain Imported Articles under Section 104 of the Tariff and Customs Code f 1978, as amended) shall be availed of by a registered enterprise for a period of five (5) years from its effectivity, or until June 16, 2011.

Certain non-fiscal incentives are also available to the registered enterprise, among which are: (a) employment of foreign nationals; (b) guaranteed repatriation of foreign investments and earnings thereon; and, (c) importation of consigned equipment for an unlimited period subject to the posting of re-export bond.

B. Philippine Economic Zone Authority (PEZA)

     PEZA offers the following Investment Incentives for Ecozones Developers/Operators:

  • Income Tax Holiday

4 years for IT Parks/Building located outside of Metro Manila;

6 years for manufacturing located in less developed area;

 

  • Incentives under Build-Operate Transfer Law, which Includes government support for accessing Official Development Assistance and other sources of financing;
  • Provision of vital off-site infrastructure facilities;
  • Option to pay 5% tax on Gross Incopme earned, lieu of all national and local taxes;
  • Permanent resident status for foreign investor and immediate family members;
  • Employment of foreign nationals;
  • Assiatnce in the promotion of economic zones to local and foreign locator enreprises

 

For Ecozone and IT Locators,the following incentives could be extended:

  • Income Tax Holiday(ITH)

-          New registered pioneer firms

-          Six(6) years from commercial operation

-          New registered non-pioneer firms

-          Four (4) years from commercial operation;

-          Expanding firms

-          Three (3) years from commercial operation of the expansion;

-          After the ITH period, the option to pay a special 5% tax on Gross Income, in lieu of all national and local taxes;

  • Exemption from duties and taxes on imported capital equipment,spare parts,supplies,raw materials;
  • Tax Credit on Domestic Breeding Stock and Generic Materials-an ecozone export enterprise which purchases breeding stocks and genetic materials from a domestic producer shall be entitled to a tax credit equivalent to 100% of thevalue of the national internal revenue taxes and customs duties that would have been waived on the breeding stocks and genetic materials had these items been imported;
  • Domestic sales allowance equivalent to 30% of total sales
  • Exemption from wharfage dues and exports taxes,impost and fees;
  • Employment of foreign nationals
  • Simplified import and export procedures;
  • Other Incentives under Executive Order 226 (Omnibus Investments Code of 1987),as may be determined by the PEZA Board.

 

Enterprises allowed to operate within the Subic Bay Freeport (SBF) shall in lieu of paying all other taxes, pay a final tax of 5% of gross income provided their income from local (non-export) sales shall not exceed 30% of their income from all sources.

 

Enterprises locating within the clark Special Economic Zone (former American Base at Clark Field) and Popo Point Special Economic and Freeport Zone (formerly Wallace Air Station and its adjoining areas) are granted incentives similar to those given SBF enterprises.

 

Five other special economic zones were created under separate special laws. These are Cagayan Special Economic Zone Authority (CEZA) , Zamboanga Economic Zone Authority ( ZEZA), Bataan Economic Authority, and Tourism Infrastructure and Enterprise

  

Zone Authority (TIEZA) and Aurora Special Economic Zone. The incentives granted to those that will locate in these ecozones are similar to the incentives granted to PEZA ecozone.

10. What are the activities that an RHQ/ROHQ can engage in?

A. Regional Headquarters (RHQ)

      The activities of the RHQ are limited to acting as a supervisory, communications and

      coordinating center for its subsidiaries affiliates in the region.

       It is neither allowed to derive any income from sources in the Philippines and to participate

       in any manner in the management of any subsidiary or branch office it might have in the

       Philippines nor to solicit or market goods and services whether on behalf of its mother

       company or its branches, affiliates, subsidiaries or any other company.

        Incentives for RHQ

  • Exemption from corporate income tax;
  • Exemption from branch profits remittance tax;
  • Exemption from value-added tax;
  • Sale or lease of goods and property, and services to the RHQ are zero-rated;
  • 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;
  • Importation of brand new motor vehicle but subject to payment of taxes and duties.

B. the Regional Operating Headquarters (ROHQ) may engage in any of the

      Following qualifying services:

           

  • 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
  • Logistics services
  • Research and development services and product development
  • Technical support and maintenance
  • Dataprocessing and communications
  • Business development

 

Incentives for ROHQ

  • Subject to Preferential income tax rate of 10% o taxable income;
  • Exemption from all kinds of local taxes,fees or charges imposed by a local

government unit,real property tax on land improvements and equipment;

  • Tax and duty free impotation of equipment and materials for training and

conferences needed and solely used for the ROHQ functions,which are not

 

Locally available,subject to prior Board of Investments (BOI) approval;

  • Importation of brand new motor vehicle but subject to payment of taxes and duties.

ROHQ is allowed to offer qualifying services only to its affiliates, branches or subsidiaries as declared in its registration with the Securities nd Exchange Commission (SEC). It is not allowed to directly and indirectly solicit or market goods and services whether on behalf of their mother company,branches,affiliates,subsidiaries or any other company.

 

Incentives for Expatries

 

  • Multiple Ebtry Visa:

-         Expantriates,including spouse and  unmarried children below 21 years old will be issued this type of visa;

-         Non-immigrant visa will be processed within 72 hours from submission of documents to the Bureau of Immigration;

-         Validity period of 3years extendible for another 3 years;

-         Exemption from payment of fees except reasonable administrative costs;

-         Exemption from securing Alien Certificate of Registration;

  • Withholding tax of 15% on compensation of used household goods and personal effects;
  • Travel tax exemption

-         Personnel and their dependents.

 

    12. How does a company remits its profits and dividends and repatriate capital abroad?

Enterprises seeking to remit its profits and dividends or repatriate its capital abroad may register their inard remittance with Bangko  Sentral ng Pilipinas (BSP) after registration with the Sec or BTRCP. For this purpose, BSP rules and regulations covering procedures for registration of foreign investments are observed.

 

    13. What are the investment rights of a former natural born Filipino?

The Foreign Investments Act (FIA) recognizes the rights of former natural born Filipinos.

they are granted same investment rights as Filipino citizens in activites such as cooperatives, thrifts banks and private development banks, rural banks and financing companies. In addition, under Section 1 of the FIA as amended by RA 8179” Any  natural born citizen who has lost  his citizenship, and who has legal capacity to enter into a contract under Philippine laws may be a transferee of a private land to bu used by him for business or other purposes up to a maximum area of five thousand  ( 5,000) square meters in the case of urban land or three(3) hectares in the case of rural land.

 

    14. What are the basic rights and  guarantees given for the safety of foreign investor?

All Investors and enterprises are entitled to the basic rights and guarantess provided in the Philippine Constitution,such as:

 

A. Right to REPATRIATION OF INVESTMENTS

            In the case of foreign investments, the right to repatriate the entire proceeds of the liquidation of the investment in the currency in whicj the investmet was originally made at the exchange rate prevailing at the time of preparation.

7

B. Right to REMITTANCE OF EARNINGS

            In the case of foreign investments, the right to remit earnings from the investments in the currency in which the investment was originally made and the exchange rate prevailing at the time of remittance.

C. Right to FOREIGN LOANS AND CONTRACTS

            The right  to remit , at the exchange rate prevailing at the time of the remittance, such as may be necessary to meet the payment of interest and the principal on foreign loans and foreign obligations arising from the technological assistance contracts.

D.Right to FREEDOM FROM EXPROPRIATION

                        There shall be no expropriation by the government of the property represented by the investments or of the property of enterprises except for public use or in the interest of national. Welfare and defense and upon payment of just compensation.  In such cases, foreign investor of enterprises shall have the right to remit sums received as compensation for the expropriated property in the currency in which the investment was originally made and that exchange rate prevailing at the time of remittance.

E. Right to NON-REQUISITION OF INVESTMENT

There shall be no requisition of the property presented by the investment or of the property of enterprises, except in the event of war or national emergency and only for the duration of such.  Just compensation for the requisitioned property may be remitted in the currency in which the investment was originally made and at the exchange rate prevailing at the time of remittance.

    15. As  an Investor, what visa can be issued?

A.  The Special Investor Resident Visa (SIRV) entitles the holder to reside in the Philippines for an indefinite period as long as his investment subsists. Any alien, except restricted nationals under Foreign Service Code, may apply for an SIRV provided h meets the following requirements:

 

A. He has not been convicted of a crime involving moral turpitude.

B. He is not not afflicted with any loathsome, dangerous or contagious disease.

C. He has not been institutionalized for mental disorder or disability.

D. He is willing and able to invest the amount of at least US$75,000.00 in the Philippines.

B. SVEG-Special Visa for  Employment Generation (E.O.758)- The SVEG is a special visa issued to a qualified non-immigrant foreigner who shall actually employ and maintain at least ten (10) Filipinos in a lawful and sustainable enterprise, trade or industry. Qualified foreigners who are granted the SVEG shall be considered special

non-immigrants with multiply entry privileges and conditional extended stay, without  need of prior departure from the Philippines.

the Priviledges of this Executive Order may extend to the qualified foreigner’s spouse and dependent unmarried child/children below eighteen (18) years of age whether legitimate,illegitimate or adopted.

 

For the Purposes of securing an SIRV, only ownership of shares of stocks in the following shall be accepted as eligible forms of inevestment,to wit:

A.  In existing corporations:

  • Publicly-Listed companies
  • Companies engaged in Investment Priorities Plan (PPP) Projects, or
  • Companies engaged in the manufacturing and service sectors
  1. B.  In new corporations:

 

  • Companies engaged to be engaged in the manufacturing and service sectors,or
  • Companies engaged to be engaged in IPP Projects.

 

The government has liberalized visa requirements for foreign entrants to encourage foreign participation in the economic development of the Philippines.  Among the liberalized rules are the following provisions:

A. Foreign strockholders,investor,representatives of investment houses land developers  and tourism developers are among the categories entitled to the special visa incentive, which grants privileges to certain foreign nationals.

B. Aliens entitled to enter country under the provision of a treaty of amity, commerce and navigation may be admitted as non-immigrants.  They are given treaty –trader visas for the sole purpose of carrying on substantial trade between the Philippines and the state of which they are nationals.

C. Foreign technicians may be employers can prove that the skills they possesses are not available in the country.

 

Entry Visa

Foreign nationals may come to the Philippines for reasons of business, pleasure or health with a temporary visitor’s visa.  This visa allows stays for periods of 59 days extendable for a maximum of one year.  To extend their stay, visitor must register with the Bureau of Immigration or with the Office of the municipal or city treasurer in areas outside Manila. Executive Order No. 408 allows foreign nationals, except those of specifically restricted nationalities, to stay in the Philippines for up to 21 days without a visa.

 

Work Permits

 In general, a foreign national seeking employment in the Philippines, whether resident or non-resident, must secure an Alien Employment Permit (AEP) from the Department of Labor and Employment. (DOLE). An AEP is valid for one year from the date of issue and may be renewed subject to the approval of the DOLE. Executives of area or regional headquarters and OBUs’ as well as treaty trader visa tradervisa holders, are exempt from the requirement to obtain alien employment certificates.

 

A Local employer who wishes to employ a foreign national must apply on the foreign national’s behalf with the DOLE  for the permit. The positioning company must prove that foreign  National posesess the reqired skills for the position and that ni Filipino is available who is competent, able and willing to do the specific job for which the foreign national is desired.

 

To  ensure a proper transfer of technology, the DOLE requires the employers of foeign

 

nationals to provide an Understudy Training Programme (UTP) and designate at least two Filipino understudies. The functions of these employers must be deemed permanent, and they must require skills or expertise that are scarce in the Philippines.

 

Special Resident

 

The SSRV is managed by the Philippine Retirement Authority (PRA). Its primary role is to promote and grant the SSRVs to would-be retirees, and to offer a range of services, benefits, and comfort that would make their stay worthwhile.

 

Benefits

 

            Once you are SRRV Visa holder, it opens the door to vast oppurtunities and benefits.

These include:

 

  • Option to retire Permanently
  • You malive,work and study in the Philippines
  • Multiple entry Privileges
  • you may travel outside the Philippines and re-enter anytime
  • Exemptions from:
  • Income Tax over your pension and annuities;
  • Exit and re-entry permits of the Bureau of Immigration;
  • Annual registration requirement of the Bureau of Immigration;
  • Customs Duties and Taxes with regard to the importation of household goods and personal effects up to US$7,000.00;
  • Travel tax, if you stay in the Philippines is less than one year from the last entry date;
  • I-Card

For more details, you may log onto www.pra.gov.ph

 

Treaty Traders Visa( applicable only to Japanese, Germans and Americans)

 

This Visa is issued to foreigner who:

  1. Seeks to develop and direct the operations of the company in the Philippines
  2. is not applying for a non-immigrant visa in order to avoid the requirements or limitations applicable to an immigrant
  3. Intends to leave the country upon the completion of his contract
  4. is employed by an actual company and not by a bogus organization

if an applicant is from the United States of America(USA) he must prove that

A. He is engaged in a trade according to the completion or termination of his contract

C. His employer is a foreign national or the company he intends to work with is foreign-owned; and he must hold a supervisory or an executive position

D. he holds special qualifications as a supervisor or executive officer of a foreign company(if underage)

 

Note: The Treaty Trader’s Visa is valid for one year

 

At the Board of Investments,

We offer total investment management solutions

 

  • Supplying knowledge-based market information
  • Analyzing your business feasibility
  • handholding your concerns
  • Linking you to the service chain
  • Matching you with foreign and local businesses
  • Nurturing your expansion and diversification
  • Profiling Industires

    DOING BUSINESS IN THE PHILIPPINES 

    TYPES OF BUSINESS ORGANIZATIONS

                    There are several types of business enterprises an investor can choose from in establishing operations in the Philippines.

    A. ORAGANIZED UNDER PHILIPPINE LAWS

    1. Sole Proprietorship

                Sole Proprietor is a business structure owned by an individual who has full  control/authority of its own and owns all the assets, personally owes and answers all liabilities or suffers all losses but enjoys all the profits to the exclusion of others.

                A sole proprietorship must apply for a Business Name and be registered with the Department of Trade and Industry (DTI).

    2. Partnership

                    Under the Civil Code of the Philippines, by the contract of partnership two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves. It is treated as juridical person, having a separate legal personality from that of its members. Partnerships  may either be general partnerships, where the partners have unlimited liability for the debts and 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    the amount of their capital contributions. A Partnership may be constituted in any form except when real property or real rights are contributed thereto, in which case a public  instrument is necessary. Further, a contract of partnership having a capital of three   thousand pesos (Php 3,000.00) or more, in money or property, must register with the Securities and Exchange Commission (SEC).

    3. Corporation

                Corporation are artificial beings corporate by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. Corporation are juridical persons with personality separate and distinct from that its stockholders. The liability of the shareholders of a corporation is limited to the amount of their share capital. It consists of at least one share and must be  registered with the SEC. The minimum paid up capital required is not less than five thousand pesos (Php 5,000.00)

                A corporation can either be stock or non-stock company regardless of nationality. Such   company, if 60% Filipino and 40% foreign-owned, is considered a Filipino  corporation. If more than 40% foreign-owned, it is considered a domestic foreign-owned corporation.

     

     

     

     

     

    • Stock Corporation

                This is a corporation with a capital stock dividend into shares and authorized to    distribute to the holders of such shares dividends or allotments of the surplus profits on       the basis of the shares held.

    • Non-Stock Corporation

                It is a corporation organized principally for public purposes such as charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, like trade, industry agricultural and like chambers, or any combination  thereof. No part of its income is distributed as dividends to its members, trustees, or officers. Further, any profit which a non-stock corporation may obtain as an incident to its operations shall whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized.

                            A. ORGANIZED UNDER FOREIGN LAWS

    1. Branch Office

                A Branch Office is a foreign corporation organized and existing under foreign laws that   carries out business activities of the head and derives income from the host country. It is required to put up a minimum paid up capital of US$200,000.00

    2. Representative Office

                A Representative Office is foreign corporation organized and existing under foreign laws. It does not derive income from the host country and is fully subsidized by its head office.  It deals directly with clients of the parent company as it undertakes such activities as   information dissemination, acts as a communication center and promotes company products, as well a quality control of products for exports. It is required to have an initial   minimum inward remittance in the amount of US$30,000.00 to cover its operating expenses and must be registered with SEC.

                Under RA 8756, any multinational company may establish an RHQ or ROHQ as long as they are existing under laws other than foreign markets.

    3. Regional Headquarters (RHQs) 

    • An RHQ undertakes activities that shall be limited to acting as supervisory, communication and coordinating center for its subsidiaries, affiliates and branches in the Asia-Pacific region.
    • It 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.
    • Required capital: US$ 50,000.00 annually to cover operating expenses.

    4. Regional Operating Headquarters (ROHQs)

    • An ROHQ performs the following qualifying services to its affiliates, subsidiaries, and branches in the Philippines.
      • General administration and planning
      • Business planning and coordination
      • Sourcing/procurement of raw materials components
      • Corporate finance advisor services
      • Marketing control and sales promotion
      • Training and personnel management
      • Logistics Services
      • Research and development services and product development
      • Technical support communications
      • Business development
      • Derives income in the Philippines
      • Required capital: US$200,000.00 one time remittance.

     

     

     

    9th FOREIGN INVESTMENT NEGATIVE LIST

              Republic Act (RA) no. 7042, also known as the “Foreign Investments Act of 1919”, as amended by RA 8179, provides for the formation of a Regular Foreign Investment Negative List, covering investment areas/activities which may be opened to foreign investors and/or reserved to Filipino nationals.

                 Below is the Ninth (9th) Regular Foreign Investment Negative List issued on October 29, 2012

     

    LIST A: FOREIGN OWNERSHIP IS LIMITED BY MANDATE OF THE

     CONTITUTION 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. Practices of all professions (Art. XII, Sec. 14 of the Constitution, Sec. 1 of RA 5181)

                         a. Engineering

                                    i. Aeronautical engineering (PD 1570)

                                    ii. Agriculture engineering (RA 8559)

                                  iii. Chemical engineering (RA 9297)

                                  iv. Civil engineering (RA 1852)

                                  v. Electrical engineering (RA 7920)

                                  vi. Electronics and communication engineering (RA 9292)

                                  vii. Geodetic engineering (RA 8560)

                                 viii. Mechanical engineering (RA 8495)

                                   ix. Metallurgical engineering (PD 1536)

                                   x. Mining engineering (RA 4274)

                                   xi. Naval architecture and marine engineering (RA 4565)

                                   xii. Sanitary engineering (RA 1364)

                          b. Medicine and allied professions

                                     i. Medicine (RA 2382 as amended by RA 4224)

                                    ii. Medical technology (RA 5527 as amended by RA 6138, PD 498 and PD 1534)

                                   iii. Dentistry (RA 9484)

                                   iv. Midwifery (RA 7392)

                                    v. Nursing (RA 9173)

                                   vi. Nutrition and dietetics (PD 1286)

                                  vii. Optometry (RA 8050)

                                 viii. Pharmacy (RA 5921)

                                   ix. Physical and occupational therapy (RA 5680)

                                    x. Radiologic and x-ray technology (RA 7431)

                                   xi. Veterinary medicine (RA 9262)

                           c. Accountancy (RA 9298)

                           d. Architecture (RA 9266)

                           e. Criminology (RA 6506)

                            f. Chemistry

                            g. Customs brokerage (RA 9280)

                            h. Environmental planning (PD 1308)

                                                                                                                                                                                                        

     

     

                    i. Forestry (RA 6239)

                    j. Geology (RA 4209)

                    k. Interior design (RA 8534)

                    l. landscape architecture (RA 9053)

                    m. Law (Art. VII, Section 5 of the Constitution, Rule 138, Sec. 2 of the Rules of Court of the                                Philippines.)

                    n. Librarianship (RA 9246)

                    o. Marine deck officers (RA 8544)

                    p. Master plumbing (RA 1378)

                    q. Sugar technology (RA 5197)

                    r. Social work (RA 4373)

                    s. Social Work (RA 4373)

                    t. Teaching (RA 7836)

                    u. Agriculture (RA 8435)

                    v. Fisheries (RA 8550)

                    w. Guidance counselling (RA 9258)

                    x. Real Estate Service (RA 9646)

                    y. Respiratory therapy (RA 10024)

                    z. Psychology

    3. Retail trade enterprise with paid-up capital of less than US$ 2,500,000 (Sec. 5 of RA 8762)²

    4. Cooperatives (Ch. III, Art. 26 of RA 6938)

    5. Private security agencies (Sec. 4 of RA 5487)

    6. Small-scale mining (Sec. 3 of RA 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 PD 449)

    9. Manufacture, repair, stockpiling, and/or distribution of nuclear weapons (Art. II, Sec. 8 of the constitution) ²

    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 RA 7183)

     

     

    Up to Twenty Percent (20%) Foreign Equity

                    1. Private radio communication network (RA 3846)

     

     

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

                  2. Private recruitment, whether for local or overseas employment (Art. 27 of PD 442)

                  3. Contracts for the construction and repair of locally-funded public works (Sec. 1 of                                          Commonwealth Act No. 541, Letter of Instruction No. 630) except:

                       a. Infrastructure/ development projects covered in RA 7718; and

                       b. Projects which are foreign funded or assisted and required to undergo international                                         competitive bidding (sec. 2 (a) of RA 7718)

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

     

     

    Up to Thirty Percent (30%) Foreign Equity

                  5. Advertising (Art. XVI, Sec. II of the Constitution)

     

     

     

     

     

            Up to Forty Percent (40%) Foreign Equity

            6. Exploration, development and utilization of natural resources (Art. XII, Sec. 2 of the

                    Constitution)

            7. Ownership of private lands (Art. XII, Sec. 7 of the Constitution; Ch. 5, Sec. 22 of CA 141; Sec. 4

                    Of RA 9182)

            8. Operation and Management of public utilities (Art. XII, Sec. II of the Constitution; Sec. 16 of

                    CA 146)

            9. Ownership/establishment and administration of educational institution (Art. XIV, Sec. 4 of the

                 Constitution)

           10. Culture, production, milling, processing, trading except retailing, of rice and corn and requiring,

                 by barter, purchase or otherwise, rice and corn and the by-products thereof (Sec. 5 of PD 194)

           11. Contracts for supply of materials, goods and commodities to government-owned controlled

                  Corporation, company agency, or municipal corporation (Sec. 1 of RA 5183)

           12. Project proponent and facility operator of a BOT Project requiring a public utilities franchise

                  (Art. XII, Sec. 11 of the Constitution; Sec. 2 (a) of RA 7718)

           13. Operation of a deep sea commercial fishing vessels (Sec. 27 of RA 8550)

           14. Adjustment companies (Sec. 323 of PD 612 as amended by PD 1814)

           15. Ownership of condominium units where the common areas in the condominium projects are co-

                  Owned by the owners of the owners of the separate units or owned by a corporation (Sec. 5 of

                   RA 4726)

     

     

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

    16. Lending companies (Sec. 6 of RA 9474)

     

     

    Up to Sixty Percent (60%) Foreign Equity

    17. Financing companies regulated by the SEC (Sec. 6 of RA 5980 as amended by RA 8556)

    18. Investment houses regulated by the SEC (Sec. 5 of PD 129 as amended by RA 8366)

     

     

     

    List B: FOREIGN OWNERSHIP IS LIMITED FOR REASONS OF SECURITY, DEFENSE, RISK TO HEALTH AND MORALS AND PROTECTION OF SMALL- AND MEDIUM SCALE

    ENTERPRISES

               

                Up to Forty Percent (40%) Foreign Equity

                   1. Manufacture, repair, storage, and/or ingredients requiring Philippines National Police (PNP)

                       Clearance:

                        a. Firearms (handguns to shotguns), parts of firearms and ammunition therefore,

                             instruments or implements used or intended to be in the manufacture of firearms

                        b. Gunpowder

                        c. Dynamite

                        d. Blasting Supplies

                        e. Ingredients used in making explosive:

                                 i. Chlorates of potassium and sodium

                                ii. Nitrates of ammonium, potassium, sodium barium, copper (11), lead (11), calcium

                                     and cuprite

                               iii. Nitric Acid

                                iv. Nitrocellulose

                                 v. Perchlorates of ammonium, potassium and sodium

                                vi. Dinitrocellulose

                               vii. Glycerol

                              viii. Amorphous phosphorus

                                ix. Hydrogen peroxide

                                 x. Strontium nitrate powder

                                xi. Toluence

                       f. Telescopic sights, sniper scope and other similar devices

                           However, the manufacturer or repair of these items may be authorized by the Chief of the

                          PNP to non-Philippine nationals; Provided further that the extent of foreign equity   

                           Ownership allowed shall be specified in the said authority/clearance (RA 7042 as amended

                          by RA 8179)

                  2. Manufacture, repair, storage and/or distribution of products requiring Department of

                       National Defense (DND) clearance:

                       a. Guns and ammunition for warfare

                       b. Military ordinance and parts thereof (e.g. torpedoes, depth charges, bombs, grenades,

                            missiles)

                       c. Gunnery, bombing, and fire control systems and components

                       d. Guided missiles/missile systems and components

                       e. Tactical aircraft (fixed as rotary-winged), parts and components thereof

                        f. Space vehicles and components system

                        g. Combat vessels (air, land and naval) and auxiliaries

                        h. Weapons repair and maintenance equipment

                         i. Military communications equipment

                         j. Night vision equipment

                         k. Stimulated coherent radiation devices, components and accessories

                         l. Armament training devices

                       m. Others as may be determined by the Secretary of the DND

                          However, the manufacturer or repair of these items may be authorized by the Secretary

                          of National Defense to non-Philippine nationals; Provided that a substantial percentage of

                          output, as determined by the said agency, is exported. Provided further that the extent

                          foreign equity ownership allowed shall be specified in the said authority/clearance (RA

                          7042 as amended by RA 8179)

                3. Manufacture ans distribution of dangerous drugs (RA 7042 as amended by RA 8179)

                4. Sauna and stream bathhouses, massage clinics and other like activities regulated by law

                

                                        

     

     

     

                        

                        of risks posted to public health and morals (RA 7042)

                 5.   All forms of gambling, except those covered by investments agreements with PAGCOR pursuant to

                         RA 9487, or the PAGCOR Charter (RA 7042 as amended by RA 8179)

                 6.    Domestic  market enterprises with paid-in equity capital of less than the equivalent of US$200,000

                          (RA 7042 as amended by RA 8179)

                 7.     Domestic market enterprises which involve advanced technology or employ at least fifty (50) direct

                           Employees with paid-in equity capital of less than US$100,000 (RA 7042 as amended by RA 8179)

     

    FOOTNOTES:

    1. This is limited TO Filipino citizens save in case prescribe by the law.

    2. Full foreign participation is allowed for retail trade enterprise; (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 and or luxury products, provided that the paid-up capital per store is not less than US$250,000 (Sec. 5 of RA 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 30year period from start of operation, the foreign investor shall divest a minimum of 60 percent of their equity to Filipino citizens (Sec. 5 of PD 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. of RA 5980 as amended by RA 8556; PD 129 as amended by RA 8366)

     

    REGISTRATION OF CORPORATIONS AND PARTNERSHIP

                In order to validly transact business in the Philippines, entities should first be registered with the appropriate government agencies.

    Entities required registering with SEC

                1. Stock corporations (including foreign corporations e.g. branch offices, representative offices, regional headquarters or regional operating headquarters)

                2. Non-stock corporations (Foundations, associations, non-government organizations, religious organizations, etc.)

                3. Partnerships (General and Limited partnerships)

     

    General procedures in registration with SEC

               

                1. Verify/reserve proposed name;

                2. Draw up the Articles of Incorporation and By-Laws in accordance with Corporation                      Code;

                3. If applicable, get endorsements from other government agencies;

                4. Deposit paid-up capital / contribution (for foundations only) in the bank;

                5. Pay the filing fees

                6. Claim the certificate of Incorporation/License

                7. Buy and register Stocks and Transfer Book or Membership Book

     

    CERTIFICATION ISSUED BY SEC UPON REGISTRATION

    For incorporation of stock or non-stock corporation

     

    Certificate of Incorporation

    For formation of partnership

     

    Certificate of Recording

    For Establishment of foreign branch or representative office, regional headquarters or regional operating headquarters

    License to Do Business in the Philippines

     

     

     

     

    Schedule 1 – REQUIRED DOCUMENTS FOR APPLICANT CORPORATION &

    PARTNERSHIP

    • STOCK CORPORATIONS

     

    • Name, Verification Slip
    • Articles of Incorporation and By- Laws
    • Treasurer’s Affidavit
    • Bank Certificate of Deposit
    • Clearance from the government agencies (if applicable)
    • Foreign Investment Application Form
    • Proof of Inward Remittance by Non-Resident Aliens/Subscribers

     

    •  NON-STOCK CORPORATIONS  

                        

    • Name, Verification Slip
    • Articles of Incorporation and By- Laws
    • Treasurer’s Affidavit
    • Bank Certificate of Deposit
    • List of members and amount contributed certified by the Secretary

    and Treasurer

    • Copy of the Certificate of election on or letter of appointment of a

    Bishop, rabbi, presiding priest etc. (only forCorporation Sole)

    • Master deed duly entered under the primary entry of the concerned

    Register of Deeds and certification that there is no existing similar

    Corporation within the condominium (only forCondominium Corporations)

    • Certification from the Housing and Land Use Regulatory Board

     (HLURB) that there is no other existing homeowners of similar associations in the Community where the association is to be

    established (only forNeighborhood Associations)

     

    • PARTNERSHIPS (GENERAL/LIMITED)

     

    •  Name, Verification Slip
    • Articles of Partnership
    • Form F – 105 for Partnerships with foreign partners

     

     

     

     

     

     

    Schedule 2 – REQUIRED DOCUMENTS FOR FOREIGN CORPORATIONS (In addition to those in Schedule 1

     

    • Foreign Investment Application Forms

    Form F- 103     Branch Office

    Form F- 104     Representative Office

    F- 108 Branch/Representative Office of Non-Stock Foreign Corporation

     

     

    Application Form for Regional Headquarters (RHQ)/Regional Operation Headquarters (ROHQ)

     

     

    • Proof of Inward Remittance by mother company (except for Branch/Representative

    Office of Non-Stock Foreign Corporations)

     

     

    • Authenticating Board Resolution authorizing establishment of office in the Phil.;

    designing Resident Agent; and stipulating that in the absence of Resident Agent or

    upon cession of business in the Phil, any summons may be served to SEC as

    if same is made upon corporation at its home office.

     

     

    • Authenticated Financial Statement of Applicant certified by independent CPA in home

    Country.

     

     

    • Authenticated copies of articles of Incorporation and By-laws of applicant.

     

     

    • Resident Agent’s Acceptance of Appointment (if not signatory in application form)

     

     

    • Affidavit that mother company is solvent and of sound financial condition (only for Representative Office)

     

     

    • Authenticated Certification that is engaged in international trade with affiliate,

    Subsidiaries, or branch office in the Asia-Pacific region and other areas (only for RHO

    and ROHQ)

     

     

    • Authenticated Certification from principal office of foreign entity that it was authorized

    By its Board of Directors or governing body to establish RHQ or ROHQ in the Philippines

    (only for RHQ and ROHQ)

     

     

     

     

     

     

    BUSINESS ACTIVITIES WITH ENDORSEMENTS

     

    Air Transport

    Civil Aeronautics Board

    Banks, Pawnshops or other Financial Intermediaries with Quasi-Banking

    Functions

     

    Bangko Sentral ng Pilipinas

    Charitable Institutions

    Department of Social Welfare and

    Development

    Educational Institutions (for stock or non-stock)

    • Elementary to High School
    • College, Tertiary Course
    • Technical Vocational Course

     

    Department of Education (DepEd)

    Commission on Higher Educations

    Technical Education Skills and

    Development Authority (TESDA)

    Electric Power Plants

    Department of Energy

    Hospitals

    Health Maintenance Organizations

     

    Department of Health

    Insurance

    Insurance Commission

    Professional Associations

    Professional Regulation Board

    Radio, TV, Telephone

    National Telecommunication Board

    Recruitment for Overseas Employment

    Philippine Overseas Employment

    Administration

    Security Agency

    Philippine National Police

    Water Transportation/Shipbuilding

    Ship Repair

    Maritime Industry Authority

    Manufacture, repair, storage and/or

    Distribution of products and/or ingredients

    Of firearms, gun powder, and all those

    Indicated in EO 389 series 2004 Foreign

    Investments Negative List

     

     

    Philippine National Police

    Manufacture, repair, storage and/or

    Distribution of products and/or ingredients

    Of firearms, gun powder, and all those

    Indicated in EO 389 series 2004 Foreign

    Negative List

     

     

    Department of National Defense (DND)

    Volunteer Fire Brigades

    Department of Interior and Local Government (Bureau of Fire Protection)

     

    MINIMUM PAID-UP CAPITAL REQUIREMENTS

     

    Break Bulk Agent

    P 250,000.00

    Cargo Consolidator

    P 400,000.00

    Financing Company

    • Metro Manila and other 1st class cities
    • Other classes of cities
    • Municipalities

     

    P 10,000.000.00

    P 5,000.000.00

    P 2,500.000.00

    Freight Forwarders

    • Domestic
    • International

     

    P 250,000.00

    P 2,000.000.00

    Foundations

    P 1,000,000.00

    Health Maintenance Organizations

     

    P 10,000,000.00

    Insurance

    • Insurance Broker/Reinsurance Broker
    • Insurance Broker and Reinsurance Broker

     

     

    P 20,000.000.00

    P 50,000.000.00

    Life/Non Life Insurance Company

    P 1,000.000.000.00

    Reinsurance Company

    P  2,000,000,000.00

    Investment Adviser/Manager

    P 10,000,000.00

    Investment Company

    P 50,000,000.00

    Investment House

    P 300,000,000.00

    Lending Investor

    P 1,000,000.00

    Mining

    P 2,500,000.00

    Non –vessel Operating Common Carrier ( NVOCC)

    P 4,000,000.00

    Pawnshop

    P 100,000.00

    Pre-Need Plan Issuer

    P 100,000,000.00

    Pre-Need Plan Agent

    P 5,000,000.00

    Recruitment for Local Employment

    • Corporation
    • Partnership

     

    P 500,000.00

    P 200,000.00

    Recruitment for Overseas Employment

    P 2,000,000.00

    Retail Trade with Foreign Equity

    US $ 2,500,000.00

    School ( for  stock corporation)

    • Pre Elementary, Elementary Education
    • Elementary and Secondary Education
    • Elementary, Secondary,Tertiary,Post-Graduate

    Education

     

    P 1,000,000.00

    P 2,500,000.00

    5,000,000.00

    Security Agency

    P 500,000.00

    Securities Broker/Dealer(New/SRO-Member)

    P 100,000,000.00

    Securities  Broker/Dealer (Existing/SRO-Member)

    P 10,000,000.00

    Securities Broker/Dealer in Proprietary Shares ( Non SRO-

    Member)

     

    P 5,000,000.00

    Special Purpose Vehicle

    P 31,250,000.00

    Transfer Agent

    P 1,000,000.00

     

     

    (Based on Foreign Equity )

     

    Corporation with more than 40% foreign equity

    • Domestic market enterprise

     

     

     

    US$ 200,000.00

     

    • Export market enterprise

    P 5000,000.00

    Foreign Branch Office

    • Domestic market enterprise
    • Export market enterprise

     

    US$200,000.00

    P 5,000.00

    Partnership with foreign partner

    • Domestic market enterprise
    • Export market enterprise

     

    US$200,000.00

    P3,000.00

    Foreign Representative Office

    US$ 30,000.00

    Regional Area Headquarters (RHQ)

    US$ 50,000.00

    Regional Operating Headquarters (RQHQ)

    US$ 200,000.00

     

     

    FEES AND CHARGES

                    In accordance with SEC Memorandum Circular (MC) no. 9 series of 2004, below is the consolidated schedule of fees and charges:

    COMPANY REGISTRATION AND MONITORING (CRMD)

    A. Registration of New Corporation/Partnerships

    1. Name Verification/Reservation

    P 40.00per allowed name (30-day reservation)

    1. Article of Incorporation/Partnership

     

    a. Stock Corporation with par value

    1/5 of 1%of the authorized capital stock or the subscription price of the subscribed capital stock whichever is higher but not less than P 1,000.00 plus LRF*

    b. Stock Corporation without par value

    1/5 of  1% of the authorized capital stock computed

    At P100.00 per share or the subscription  price of the subscribed capital stock whichever is higher but not  less than P1,000.00 plus LRF*

    c. Non-stock corporation

    P 500.00 plus LRF*

    d. Partnerships

    1/5 of 1% of the Partnership’s capital but not less than P 1000, 00. plus LRF*

    3. By-laws of both stock and non-stock corporation

    P 500, 00. plus LRF*

    4. Application Under Foreign Investments  Act

    (aside from the filing fee for the articles of incorporation)

    P 2,000.00 plus LRF*

    5. License to Operate-Foreign Corporations

     

    a. Branch Office

     1%  of the actual inward remittance of the corporation converted into the Philippine currency but not less than P 2,000.00 plus LRF*

    b. Representative Office

     1/10 of 1%  of  the actual inward remittance of the corporation converted into the Philippine currency but not less than P 2,000.00 plus LRF*

    c. Application for Area of Regional Headquarters

    P  5,000.00

    1. Application for Regional Operating Headquarters or Petition for Conversion of an Area or Regional Headquarters into Regional Operating Headquarters

     1%  of  the actual inward remittance but not less than 1% of the peso equivalent of US$200,000.00 at the time of remittance plus LRF*

    e. Application for Area of Regional Headquarters

    P 2,000.00.plus LRF*

    B. Amendments (Domestic)

    6. Amended Articles of Incorporation of both stock

    And non-stock corporation

    P 500.00 plus LRF*

    7. Amended Articles of Incorporation where amendment consists of extending the term of corporate existence

    1/5 of 1% of the authorized capital stock but not less than P2,000.0 plus LRF*

    8. Amended Articles of Incorporation Re: Conversion/Reclassification of Shares

    P 2,000.00 plus LRF*

    9. Amended By Laws of both stock and non-stock corporation

    P 500.00 plus LRF*

    10. Amended Articles of Partnership

    P 1,000.00 plus LRF*

    11. Articles of Dissolution of Partnership

    1/5 of 1% of the increase in capital but not less than

     

     

    P 1,000.00 plus LRF*

    12. Increase of Capital Stock

     

    a. Corporation with par value

     

     

     

    1/5 of 1% of the authorized capital stock or the subscription price of the subscribed capital stock whichever is higher but not less than P1,000.00 plus LRF*

     

    b. Corporation without par value

     

     

    1/5 of 1% of the authorized capital stock computed at P100.00 per share or the subscription price of the subscribed capital stock whichever is higher but not less than P1,000.00  plus LRF*

    14. Decrease of Capital Stock

     

    a. Return of Capital

    P 3,000.00 plus LRF*

    b. all others

    P 2,000.00 plus LRF*

    15. Merger or Consolidation of corporations

    1/5 of 1% of the equity of the absorbed corporation/s but not less than P 3,000.00 plus LRF*

    16. Equity Restructuring

    a. To wipe out existing deficiency

    P 3,000.00 plus LRF*

    b. To create additional paid-in capital

    1/5 of 1% of the amount infused but not less than   P 1,000.00 plus LRF*

    C. Amendments of License (Foreign)

    17. Petition for Amendment of License of a Foreign Corporation

    P 2,000.00 plus LRF*

    18. Cancellation of License of a Foreign Corporation

    P 2,000.00 plus LRF*

    19. Cancellation of License of Regional Headquarters of a Multinational Corporation

    P 1,000.00 plus LRF*

    20. Cancellation of License of Regional Operating Headquarters of Multinational Corporation

    P 2,000.00 plus LRF*

    21. Appointment of a Resident Agent or Substitute Resident Agent

    P 1,000.00 plus LRF*

    22. Revocation of Appointment of Resident Agent  or Substitute Resident Agent

    P 1,000.00 plus LRF*

    23. Amended Articles of Incorporation of Foreign Corporation

    P 1,000.00 plus LRF*

    24. Amended By-Laws of a Foreign Corporation

    P 1,000.00 plus LRF*

    D. Other Filings / Transactions

    25. Deed of Assignment of Partnership Interest

    P 500.00 plus LRF*

    26. Affidavit of Withdrawal of Partner

    P 500.00 plus LRF*

    27. Certificate of incurring, creating, increasing bonded indebtedness

    1/10 of 1% of the total indebtedness but not less than P 500.00 plus LRF*

    28. Valuation of Consideration for shares of stock

     

    1/5 of 1% of the total indebtedness but not less than P 500.00 plus LRF*

    29. Stock/cash dividend up to P 50,000,000.00

    P 500.00 plus LRF*

     

    Declared by the corporation whose securities are not listed

     

    30. Stock/cash dividend  over  P 50,000.000.00 declared by the corporation whose securities are not listed

    P 1,000.00 plus LRF*

    31. Property Dividend Declaration

    1/5 of 1% of the amount declared but not less than P 1,000.00 plus LRF*

    32. Petition to set aside order of Suspension/Revocation

    P 1,000.00 plus LRF*

    33. Petition for correction in Articles of Incorporation, By-Laws or amendments thereto

    P 1,000.00

     

    34.Certification on Corporate Information, recording of Deed of Assignment of Stock

    P 300.00

    35. Certification of Company Status

    P 500.00

    36. Certification of Paid-up Capital, Outstanding Capital, percentage of Filipino stockholdings etc.

    P 400.00

    37. Accreditation of Appraisal Companies

    P 5,000.00 plus LRF*

    38. Approval of Voting Trust Agreement

    P 200.00 plus LRF*

    39. Registration of Stock and Transfer Book

    P 150.00

    40. Registration of Membership Book

    P 75.00

     

     

    REPORTORIAL REQUIREMENTS OF CORPORATIONS

    REGISTERED WITH SEC

     

                    The SEC requires registered corporations to comply with the reportorial requirements to properly monitor existence and financial standing of the said corporations.

    Entities required to file reports with SEC

                1. Registered stock corporations (including foreign corporations e.g. branch offices, representative offices, regional headquarters or regional operating headquarters);

                2. Registered non-stock corporations (foundations, associations, non-government organizations, religious organizations, corporation sole, etc.

                3. Corporations granted secondary licenses e.g. broker or dealer in securities,      government securities eligible dealer (GSED), investment adviser of an investment           company, close-end or open-end investment company, investment house, transfer            agent, commodity or financial futures exchange/broker merchant, financing company,    pre-need plan issuer, general agent in pre-need plans and time             shares/club/shares/membership certificates issuers or selling agents thereof;

                4. Other entities required by the SEC to submit reports on a regular or special basis.

     

    REPORT FOR ALL SEC REGISTERED CORPORATIONS WITH PRIMARY LICENSE

    Document

    No. of Copies

    Filer

    Filing Period

     

     

     

     

     

    General Information Sheet

     

     

     

     

     

     

     

    4

    Domestic Stock/Non-Stock Corporations

    Within 30 days from date of the

    annual stockholders’ or members

    meeting

    Branch Office and

    Representative Office of

    Foreign Corporations

    Within 30 days from the

     anniversary date of the issuance

    of the license

    Regional Operating

    Headquarters (ROHQs)

    Regional Headquarters

    (RHQs) of Multinational

    Companies

     

    Within 30 calendar days after the

    Issuance of the certificate of

    Registration and license, and then

    Annually, within 30 calendar days

    After the anniversary date of the

    Issuance of the certificate of

    Registration and license.

     

     

     

    Audited Financial

    Statements (AFS)

    Stamped

    “RECEIVED” by

    The BIR

     

     

     

     

     

    4

    Domestic Stock/Non-

    Stock Corporations

     

     

     

    Within 120 calendar days after the

    End of the fiscal year, as indicated

    In the Financial Statements.

    Branch Office and

    Representative Office of

    Foreign Corporations

    Regional Operating

    Headquarters (ROHQs)

    Regional Headquarters

    (RHQs) of  Multinational

    Companies

     

    LEGAL, ACCOUNTING AND AUDIT REQUIREMENTS

                    The Philippines observes the application of the Philippine Accounting Standards/Philippine Financial Reporting Standards in the preparation of the accounting requirements, which are adoptions of the International Accounting Standards/International Financial Reporting Standards of the International Accounting Standards Boards.

    The following are the reportorial and monitoring requirements for corporations:

    1. General Information Sheet – The GIS should be certified and sworn to by the corporate secretary.

    2. Financial Statements stamped received by the BIR.

     

    TAXATION

                    The country’s taxation system is governed by the Tax Reform Act 1997, passed into law on December 11, 1997 and became effective on January 01, 1998b. The law was aimed at the expanding the country’s tax base and maintaining the healthy fiscal standing of the government.

    Corporate Income Tax Rates

     

     

    Domestic/ Resident Foreign Corporation

    Non-resident Foreign

    Corporation

    Taxable income not subject to special tax rates

    30%

    30%

    Interest from deposits and yield from

    Deposit substitutes/trust funds and

    royalties

    20%

    30%

    Interest on foreign loans

    N/A

    N/A

    Interest income derived by a domestic

    Corporation from a depository bank under

    The expanded foreign currency deposit system

     

    7.5%

     

    N/A

    Dividends from domestic corporations

    0

    15% */ 35%

    Gains on sales of shares of stock not traded in the Stock Exchange

    5% / 10%**

    5% / 10%**

     

    NOTES:

    *The rate of 15% applies if the host country exempts the derived from tax or permits a 20% or greater credit or underlying corporation tax paid by the company paying the derived.

    **The 15% rate applies applies to the first P 100,000 of gains annually, with the 10% rate applying to the excess.

     

    Entity

    Rates

    Tax base

    Proprietary educational institutions and non- profit hospitals

    10%

    Taxable income

    Certain enterprises registered with the Philippine Economic Zone Authority

    5%

    Gross income

    Non-resident owner or lessor of aircraft, machinery and other equipment

    7.5%

    Gross Philippine rentals, lease, charter fees

    Non-resident owners of vessel chartered by Philippine nationals and approved by the Maritime Industry Authority

     

    4.5%

    Gross Philippine rentals, lease, charter fees

     

    Non-resident cinematographic film owners, lessors or distributors

    2.5%

    Gross Philippine source billings

    Foreign international carriers (air and sea)

    2.5%

    Gross Philippine billings

    Offshore banking units (OBUs) and foreign

    Currency deposit units (FCDUs) authorized

    By the Bangko Sentral ng Pilipinas

    10%

    Income from foreign currency transactions with residents

    Regional operating headquarters

    10%

    Taxable income

     

    1.2 Income Tax Rates as Passive Income of Domestic/Resident Corporation

    Dividends received from domestic corporations

    Not subject to tax

    Interest on any currency bank deposit and yield or other monetary benefit from deposit substitute and from trust fund and similar arrangements

    20% of final tax

    Interest from foreign currency deposits with foreign currency deposit units (FCDUs)

    7 ½ of final tax

    Gains from sale or exchange of shares of stock not listed and traded in the local stock exchange

    5% capital gains tax (CGT) on net gains not exceeding   P 100,000 and 10% on the excees

    Gains from sale or exchange of land or buildings not actually used in business and treated as capital issue

    6% CGT on gross selling price of fair market value, whichever is higher

    Royalties

    20% final tax

     

    1.3 New Taxes for Corporation under the Tax Reform Act of 1997

    Minimum Corporate Income Tax (MCIT) – A 2% MCIT on gross income on annual basis is imposed on corporations whose regular corporate income tax liability is less than the MCIT beginning the fourth taxable year following the year they commenced business operation. Any excess of the MCIT over the Normal tax shall be carried forward and credited against the normal tax for the three (3) immediately succeeding taxable years.

     

     

    Fringe Benefits Tax – Fringe benefits granted to supervisory and managerial employees are subject to 32% tax on the grossed-up monetary value of the fringe benefit. Fringe benefits given by OBUs regional operating headquarters of multinational companies, petroleum contractors and subcontractors to qualified alien employees and in certain cases, to Filipino employees, are taxed at 15% of the grossed-up monetary value of the fringe benefit.

    Improperly Accumulated Earnings Tax – a 10% tax is imposed on the improperly accumulated earnings of a corporation, except in the case of publicly held corporations, banks, and other non-bank financial intermediaries and insurance companies. When a corporation allows its earnings or profits to accumulate beyond its reasonable needs. It shall be assumed that the purpose is to avoid tax on stockholders, unless proven to the contrary.

    1.4 Individual Taxation

    Non-resident lies not engaged in trade and

    business flat income tax rate

    Resident citizens/aliens (gainfully employed)

    Graduated income tax rates

    25%

     

    0% - 35%

    Who shall File:

    1. An individual whose gross compensation income does not exceed his total personal and additional exemptions;

    2. An individual whose compensation derived from one year employer does not exceed P60,000 and the income tax on which has been correctly withheld;

    3. An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee occupying the same position as that of the alien employee of regional or area headquarters and regional operating headquarters of multinational companies, petroleum service contractors and sub-contractors, and offshore banking units, non-resident lien not engaged in trade or business), and

    4. An individual who is exempt from income tax.

    5. Married individual shall file single return for the taxable year to include the income of both spouses, separately computing their individual income tax based on their respective taxable income. When it is impracticable for the spouses to file one return, each spouse may file a separate return.

    1.5 Value Added Tax (VAT)

    Sale of goods, other properties, and services in the Philippines, as well as importation of goods to the Philippines, are subject to the 12% VAT. VAT is imposed on the gross selling price (in case of sale of goods) and gross receipts (in case of sale of services).

    1.6 Stock Transaction Tax

    ½ of 1% of gross selling price is imposed on the sale, barter, exchange or other disposition of shares through the facilities of stock exchange.

     

    Sources:

    1. 1997 National Internal Revenue Code

    2. Civil Code on Partnership

    3. Corporation Code

    4. Foreign Investment Act of 1991

    5. SEC Citizen’s Manual

     

     

    BOARD OF INVESTMENTS

    Frequently

    Asked

    Questions

                                                                                        our Business, Our People.

    INVEST Philippines

     

    1. What are the various structural options that I could choose from in setting up

          a business?

     

     

        You may set up your business under several organizational structures known as a single

        proprietorship, partnership, corporation, branch office, representative office, regional

        headquarters, or regional operating headquarters.

     

    2. Can a foreign investor be allowed to own a 100% of a business entity?

         

         Yes, one hundred percent (100%) foreign equity may be allowed in all areas of investments

         under the Foreign Investments Act (FIA) R>A> 7042 except those included in the Regular

         Foreign Investment Negative List (FINL).

     

    3. What are the areas of investments covered by the Foreign Investment Act (FIA)?

     

          The FIA covers all investment areas, except banking and other financial institutions, which are governed and regulated by the Bangko Sentral ng Pilipinas (BSP).

    The Foreign Investment Negative List covers areas of economic activity whose foreign ownership is limited to a maximum of forty percent (40%) of the outstanding capital stock in the case of a corporation or capital in the case of partnership.

           Below are further descriptions on the Negative Lists A & B:

                  List A: refers to areas reserved to Filipinos by mandate of the Constitution and Special Laws such as but not limited to:

                              a. Mass Media, except recording, practice of licensed profession, retail trade, cooperative and small-scale mining, etc. where foreign ownershipis prohibited; and

                                 b. Advertising, ownership of land operation, operation and management of public utilities, etc. where only minority foreign ownership is prohibited.

                 List B: refers to areas that are defense-realted, those with adverse effects on public                               health and morals and domestic market enterprises with paid-up capital of                                     less than US$ 100,000 only to non-Philippine nationals.

    4. When can foreigners do business or invest in a domestic enterprise up to                             100% of its capital?

             

         A. Full entry of non-Filipinos is feasible if the proposed activity is not among those listed in the  FINL;

         B. When the paid-up capital for domestic market enterprise is at least US$200,000 which may be lowered to US$ 100,000 and if the following conditions are met:

    • Introduction of advanced technology; or
    • Employment of at least 50 direct employees.

     

    5. Where does one apply for registration of investments?

     

          A. For Single/Sole Proprietorship (Filipino or foreign national) –You may go online at http;//www.bnrs.dti.gov.ph to register your business name.

    For Other inquiries on Business Name (BN) Registration, consider the following:

    • For concerns regarding Business Name politics, clarification on requirements, call (632) 751-3330;
    • For technical concerns such as page cannot be displayed, problem in viewing look-up table, etc., please call (632) 729-8681;
    • For inquiries and checking of application status, the contact points in Metro Manila are:

    Atrium Building                                   :                       (632)864-08 47 or (632) 501-5135

    Trafalgar Building                               :                       (632)811-83 67 or (632) 811-8231

    Hi-Way 54                                           :                       (632) 706-1767

    Park and Ride                                      :                       (632) 536-7153

    (near Manila City Hall)

    Caloocan City                                      :                       (632) 332-0829

    • Send emails to bnrshelpdesk@dti.gov.ph;
    • Visit the DTI-National Capital Region, Makati City if within Metro Manila, locayed at the  12th Trafalgar Plaza, 105 H.V. dela Costa St., Salcedo Village, Makati         City;
    • Approach any DTI Provincial office (if outside Metro Manila) with contact information     supplied at http://www.business.gov.ph.
    1. A.  A foreign national should secure first ACR-Icard with the Bureau of Immigration before

          securing DTI permit and/or opening an account in any commercial bank.

    1. For corporations/Partnership, Branch and Representative Offices – Submit application forms

          together with the required documents at the Securities and Exchange Commission (SEC).

          The SEC is located at the SEC Building, EDSA corner Ortigas Avenue, Greenhills,

           Mandaluyong City. Its contact number is (^#@) 584-0923; 5849225. For concerns outside

           Metro Manila, SEC has extension Offices. Online information could be generated from

           http://www.sec.gov.ph.

    1. C.   For Regional Headquarters and Regional Operating Headquarters – Submit application from

          together with required documents at the Board of Investments via the Project Evaluation

          and Registration Dept., Industry and Investments Building, 385 Sen. Sen. Gil Puyat Avenue,

          Makati City, Metro Manila. Said office could be reached through telephone number (632)

          895-3997 or through emails sent to perd@boi.gov.ph.

     

    6. What requirements must be complied with before an enterprise can enjoy tax

         benefits?

            For a proposed activity of a domestic incorporated enterprise to qualify for incentives, the

            firms must be registered with the appropriate investment promotion agency/ies depending

            on the project’s location, to wit:

                A. Location outside of Economic or Freeport Zones

    • Board of Investments (BOI)
    • Regional BOI in ARMM
    1.  Located in Economic or Freeport Zones
    • Aurora Special Economic Zone Authority
    • Cagayan Economic Zone Authority (CEZA)
    • Clark Development Corporation (CDC)
    • Phividec Industrial Authority (PIA)
    • Philippine Economic Zone Authority (OEZA)
    • Subic Bay Metropolitan Authority (SBMA)
    • Zamboanga Economic Zone Authority (ZEZA)

    7. What are other relevant information that should be noted about registering

          with the Board of Investments (BOI) and Philippine Economic Zone Authority

          (PEZA)?

                A. Board of Investments (BOI)

                      To qualify for registration with the BOI, a company should be organized under                              Philippine laws as domestic entity. An enterprise may register its activity if the same                          is listed in the current Investments Priorities Plan (IPP). If not listed, the enterprise                 may also be entitled to BOI incentives for as long as the following conditions are met:

    • At least 50% of the production is export (for enterprise with 60% Filipino/40%

    foreign ownership); or

    • At least 70% of production is for export (for enterprises with more than 40% of

    foreign-ownership).

    Foreign-owned firms, whose ownership exceeds 40% of the outstanding capital stosk which proposes to engage in domestic-oriented activities, may be entitled to incentives if the proposed activity is listed in the current IPP and qualities under Pioneer status (refer to insuring description).

    B. Philippine Economic Zone Authority (PEZA)

        The Special Economic Zone Act of 1995 as amended mandates the PEZA to operate,

         administer, manage and develop Special Economic Zones or Ecozones.

         Enterprises that may qualify for registration with PEZA are domestic company,

         subsidiary and branch office that will manufacture and export 100% of their

         production and/or services.

          Permission has to be sought if the enterprises located within the zone will export

          below 100% and in most cases PEZA has allowed up to 30% of production for the

          domestic market.

          So far, there are 98 proclaimed Special Economic Zones that are operating in the

          country. Details could be drown from http://www.peza.gov.ph.

      8. What is a Pioneer Status?    

    A. A preferred area of investments may be declared Pioneer if the activity:

    • Involves the manufacturing or processing (not merely assembly or packaging of goods or raw materials that have not been produced in the Philippines on a commercial scale; or
    • Uses a design, formula, scheme, method, process or system of production or transformation of any element or raw material or finished goods which is new and untried; or
    • Engages in agricultural activities/services essential to the achievement of the country’s self-sufficiency program; or
    • Produces non-conventional fuels or manufactures equipment which utilize non-conventional sources of energy; or
    • Conforms to other specific criteria as provided for in the annually drawn Investments Priorities Plan.

     

    9. What probable incentives are made available to registered enterprises?

          A. Board of Investments (BOI)

                An enterprise registered with the BOI, pursuant to the 1987 Omnibus Investment Code                (Executive Order No. 226) is entitled to, among others, the following incentives subject to                 certain terms and conditions:

    • Income Tax Holiday (ITH)

    BOI-registered enterprise shall be except from the payment of income taxes reckoned from the scheduled start of commercial operations, as follows:

    -          New projects with a pioneer status for six (6) tears;

    -          New projects with a non-pioneer status for four (4) years;

    -          Expansion projects for three (3) tears, the exception of which, as a general rule, is limited to incremental sales revenue/volume;

    -          New or expansion projects in less developed areas (LDAs) for six (6) years, regardless of status;

    -          Modernization projects for three years, the exemption of which, as a general rule, is limited to incremental sales revenue/volume.

    • Tax credit on raw materials, supplies and semi-manufactured products (for export producers only);
    • Additional deduction from taxable income for labor expense (cannot be simultaneous enjoyed with the ITH incentive);
    • Additional deduction from taxable income for necessary and major infrastructure works (cannot be simultaneously enjoyed with the ITH incentive);
    • Exemption from wharfage dues and export tax, duty, impost and fees.
    • Modified Duty Rate for Capital Equipment of E>O. No. 528

    Since June 17, 2006, BOI registered enterprises of good standing with project registered as new or expanding under the Omnibus Investments Code of 1987 may import machinery, equipment, spare parts and accessories that are subject to zero percent (0%) duty for export-oriented enterprise and one percent (1%) duty for domestic-oriented enterprises. The products fall under Chapters 40,59,68,69,70,73,76,82,83,84,85,87,89,90, 91 and 96 of the tariff and customs Code of the Philippines.

    The capital equipment incentive provided under E.O. No. 313 (Modifying the Nomenclature and the Rates of Import Duty on Certain Imported Articles under Section 104 of the Tariff and Customs Code f 1978, as amended) shall be availed of by a registered enterprise for a period of five (5) years from its effectivity, or until June 16, 2011.

    Certain non-fiscal incentives are also available to the registered enterprise, among which are: (a) employment of foreign nationals; (b) guaranteed repatriation of foreign investments and earnings thereon; and, (c) importation of consigned equipment for an unlimited period subject to the posting of re-export bond.

    B. Philippine Economic Zone Authority (PEZA)

         PEZA offers the following Investment Incentives for Ecozones Developers/Operators:

    • Income Tax Holiday

    4 years for IT Parks/Building located outside of Metro Manila;

    6 years for manufacturing located in less developed area;

     

    • Incentives under Build-Operate Transfer Law, which Includes government support for accessing Official Development Assistance and other sources of financing;
    • Provision of vital off-site infrastructure facilities;
    • Option to pay 5% tax on Gross Incopme earned, lieu of all national and local taxes;
    • Permanent resident status for foreign investor and immediate family members;
    • Employment of foreign nationals;
    • Assiatnce in the promotion of economic zones to local and foreign locator enreprises

     

    For Ecozone and IT Locators,the following incentives could be extended:

    • Income Tax Holiday(ITH)

    -          New registered pioneer firms

    -          Six(6) years from commercial operation

    -          New registered non-pioneer firms

    -          Four (4) years from commercial operation;

    -          Expanding firms

    -          Three (3) years from commercial operation of the expansion;

    -          After the ITH period, the option to pay a special 5% tax on Gross Income, in lieu of all national and local taxes;

    • Exemption from duties and taxes on imported capital equipment,spare parts,supplies,raw materials;
    • Tax Credit on Domestic Breeding Stock and Generic Materials-an ecozone export enterprise which purchases breeding stocks and genetic materials from a domestic producer shall be entitled to a tax credit equivalent to 100% of thevalue of the national internal revenue taxes and customs duties that would have been waived on the breeding stocks and genetic materials had these items been imported;
    • Domestic sales allowance equivalent to 30% of total sales
    • Exemption from wharfage dues and exports taxes,impost and fees;
    • Employment of foreign nationals
    • Simplified import and export procedures;
    • Other Incentives under Executive Order 226 (Omnibus Investments Code of 1987),as may be determined by the PEZA Board.

     

    Enterprises allowed to operate within the Subic Bay Freeport (SBF) shall in lieu of paying all other taxes, pay a final tax of 5% of gross income provided their income from local (non-export) sales shall not exceed 30% of their income from all sources.

     

    Enterprises locating within the clark Special Economic Zone (former American Base at Clark Field) and Popo Point Special Economic and Freeport Zone (formerly Wallace Air Station and its adjoining areas) are granted incentives similar to those given SBF enterprises.

     

    Five other special economic zones were created under separate special laws. These are Cagayan Special Economic Zone Authority (CEZA) , Zamboanga Economic Zone Authority ( ZEZA), Bataan Economic Authority, and Tourism Infrastructure and Enterprise

      

    Zone Authority (TIEZA) and Aurora Special Economic Zone. The incentives granted to those that will locate in these ecozones are similar to the incentives granted to PEZA ecozone.

    10. What are the activities that an RHQ/ROHQ can engage in?

    A. Regional Headquarters (RHQ)

          The activities of the RHQ are limited to acting as a supervisory, communications and

          coordinating center for its subsidiaries affiliates in the region.

           It is neither allowed to derive any income from sources in the Philippines and to participate

           in any manner in the management of any subsidiary or branch office it might have in the

           Philippines nor to solicit or market goods and services whether on behalf of its mother

           company or its branches, affiliates, subsidiaries or any other company.

            Incentives for RHQ

    • Exemption from corporate income tax;
    • Exemption from branch profits remittance tax;
    • Exemption from value-added tax;
    • Sale or lease of goods and property, and services to the RHQ are zero-rated;
    • 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;
    • Importation of brand new motor vehicle but subject to payment of taxes and duties.

    B. the Regional Operating Headquarters (ROHQ) may engage in any of the

          Following qualifying services:

               

    • 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
    • Logistics services
    • Research and development services and product development
    • Technical support and maintenance
    • Dataprocessing and communications
    • Business development

     

    Incentives for ROHQ

    • Subject to Preferential income tax rate of 10% o taxable income;
    • Exemption from all kinds of local taxes,fees or charges imposed by a local

    government unit,real property tax on land improvements and equipment;

    • Tax and duty free impotation of equipment and materials for training and

    conferences needed and solely used for the ROHQ functions,which are not

     

    Locally available,subject to prior Board of Investments (BOI) approval;

    • Importation of brand new motor vehicle but subject to payment of taxes and duties.

    ROHQ is allowed to offer qualifying services only to its affiliates, branches or subsidiaries as declared in its registration with the Securities nd Exchange Commission (SEC). It is not allowed to directly and indirectly solicit or market goods and services whether on behalf of their mother company,branches,affiliates,subsidiaries or any other company.

     

    Incentives for Expatries

     

    • Multiple Ebtry Visa:

    -         Expantriates,including spouse and  unmarried children below 21 years old will be issued this type of visa;

    -         Non-immigrant visa will be processed within 72 hours from submission of documents to the Bureau of Immigration;

    -         Validity period of 3years extendible for another 3 years;

    -         Exemption from payment of fees except reasonable administrative costs;

    -         Exemption from securing Alien Certificate of Registration;

    • Withholding tax of 15% on compensation of used household goods and personal effects;
    • Travel tax exemption

    -         Personnel and their dependents.

     

        12. How does a company remits its profits and dividends and repatriate capital abroad?

    Enterprises seeking to remit its profits and dividends or repatriate its capital abroad may register their inard remittance with Bangko  Sentral ng Pilipinas (BSP) after registration with the Sec or BTRCP. For this purpose, BSP rules and regulations covering procedures for registration of foreign investments are observed.

     

        13. What are the investment rights of a former natural born Filipino?

    The Foreign Investments Act (FIA) recognizes the rights of former natural born Filipinos.

    they are granted same investment rights as Filipino citizens in activites such as cooperatives, thrifts banks and private development banks, rural banks and financing companies. In addition, under Section 1 of the FIA as amended by RA 8179” Any  natural born citizen who has lost  his citizenship, and who has legal capacity to enter into a contract under Philippine laws may be a transferee of a private land to bu used by him for business or other purposes up to a maximum area of five thousand  ( 5,000) square meters in the case of urban land or three(3) hectares in the case of rural land.

     

        14. What are the basic rights and  guarantees given for the safety of foreign investor?

    All Investors and enterprises are entitled to the basic rights and guarantess provided in the Philippine Constitution,such as:

     

    A. Right to REPATRIATION OF INVESTMENTS

                In the case of foreign investments, the right to repatriate the entire proceeds of the liquidation of the investment in the currency in whicj the investmet was originally made at the exchange rate prevailing at the time of preparation.

    7

    B. Right to REMITTANCE OF EARNINGS

                In the case of foreign investments, the right to remit earnings from the investments in the currency in which the investment was originally made and the exchange rate prevailing at the time of remittance.

    C. Right to FOREIGN LOANS AND CONTRACTS

                The right  to remit , at the exchange rate prevailing at the time of the remittance, such as may be necessary to meet the payment of interest and the principal on foreign loans and foreign obligations arising from the technological assistance contracts.

    D.Right to FREEDOM FROM EXPROPRIATION

                            There shall be no expropriation by the government of the property represented by the investments or of the property of enterprises except for public use or in the interest of national. Welfare and defense and upon payment of just compensation.  In such cases, foreign investor of enterprises shall have the right to remit sums received as compensation for the expropriated property in the currency in which the investment was originally made and that exchange rate prevailing at the time of remittance.

    E. Right to NON-REQUISITION OF INVESTMENT

    There shall be no requisition of the property presented by the investment or of the property of enterprises, except in the event of war or national emergency and only for the duration of such.  Just compensation for the requisitioned property may be remitted in the currency in which the investment was originally made and at the exchange rate prevailing at the time of remittance.

        15. As  an Investor, what visa can be issued?

    A.  The Special Investor Resident Visa (SIRV) entitles the holder to reside in the Philippines for an indefinite period as long as his investment subsists. Any alien, except restricted nationals under Foreign Service Code, may apply for an SIRV provided h meets the following requirements:

     

    A. He has not been convicted of a crime involving moral turpitude.

    B. He is not not afflicted with any loathsome, dangerous or contagious disease.

    C. He has not been institutionalized for mental disorder or disability.

    D. He is willing and able to invest the amount of at least US$75,000.00 in the Philippines.

    B. SVEG-Special Visa for  Employment Generation (E.O.758)- The SVEG is a special visa issued to a qualified non-immigrant foreigner who shall actually employ and maintain at least ten (10) Filipinos in a lawful and sustainable enterprise, trade or industry. Qualified foreigners who are granted the SVEG shall be considered special

    non-immigrants with multiply entry privileges and conditional extended stay, without  need of prior departure from the Philippines.

    the Priviledges of this Executive Order may extend to the qualified foreigner’s spouse and dependent unmarried child/children below eighteen (18) years of age whether legitimate,illegitimate or adopted.

     

    For the Purposes of securing an SIRV, only ownership of shares of stocks in the following shall be accepted as eligible forms of inevestment,to wit:

    A.  In existing corporations:

    • Publicly-Listed companies
    • Companies engaged in Investment Priorities Plan (PPP) Projects, or
    • Companies engaged in the manufacturing and service sectors
    1. B.  In new corporations:

     

    • Companies engaged to be engaged in the manufacturing and service sectors,or
    • Companies engaged to be engaged in IPP Projects.

     

    The government has liberalized visa requirements for foreign entrants to encourage foreign participation in the economic development of the Philippines.  Among the liberalized rules are the following provisions:

    A. Foreign strockholders,investor,representatives of investment houses land developers  and tourism developers are among the categories entitled to the special visa incentive, which grants privileges to certain foreign nationals.

    B. Aliens entitled to enter country under the provision of a treaty of amity, commerce and navigation may be admitted as non-immigrants.  They are given treaty –trader visas for the sole purpose of carrying on substantial trade between the Philippines and the state of which they are nationals.

    C. Foreign technicians may be employers can prove that the skills they possesses are not available in the country.

     

    Entry Visa

    Foreign nationals may come to the Philippines for reasons of business, pleasure or health with a temporary visitor’s visa.  This visa allows stays for periods of 59 days extendable for a maximum of one year.  To extend their stay, visitor must register with the Bureau of Immigration or with the Office of the municipal or city treasurer in areas outside Manila. Executive Order No. 408 allows foreign nationals, except those of specifically restricted nationalities, to stay in the Philippines for up to 21 days without a visa.

     

    Work Permits

     In general, a foreign national seeking employment in the Philippines, whether resident or non-resident, must secure an Alien Employment Permit (AEP) from the Department of Labor and Employment. (DOLE). An AEP is valid for one year from the date of issue and may be renewed subject to the approval of the DOLE. Executives of area or regional headquarters and OBUs’ as well as treaty trader visa tradervisa holders, are exempt from the requirement to obtain alien employment certificates.

     

    A Local employer who wishes to employ a foreign national must apply on the foreign national’s behalf with the DOLE  for the permit. The positioning company must prove that foreign  National posesess the reqired skills for the position and that ni Filipino is available who is competent, able and willing to do the specific job for which the foreign national is desired.

     

    To  ensure a proper transfer of technology, the DOLE requires the employers of foeign

     

    nationals to provide an Understudy Training Programme (UTP) and designate at least two Filipino understudies. The functions of these employers must be deemed permanent, and they must require skills or expertise that are scarce in the Philippines.

     

    Special Resident

     

    The SSRV is managed by the Philippine Retirement Authority (PRA). Its primary role is to promote and grant the SSRVs to would-be retirees, and to offer a range of services, benefits, and comfort that would make their stay worthwhile.

     

    Benefits

     

                Once you are SRRV Visa holder, it opens the door to vast oppurtunities and benefits.

    These include:

     

    • Option to retire Permanently
    • You malive,work and study in the Philippines
    • Multiple entry Privileges
    • you may travel outside the Philippines and re-enter anytime
    • Exemptions from:
    • Income Tax over your pension and annuities;
    • Exit and re-entry permits of the Bureau of Immigration;
    • Annual registration requirement of the Bureau of Immigration;
    • Customs Duties and Taxes with regard to the importation of household goods and personal effects up to US$7,000.00;
    • Travel tax, if you stay in the Philippines is less than one year from the last entry date;
    • I-Card

    For more details, you may log onto www.pra.gov.ph

     

    Treaty Traders Visa( applicable only to Japanese, Germans and Americans)

     

    This Visa is issued to foreigner who:

    1. Seeks to develop and direct the operations of the company in the Philippines
    2. is not applying for a non-immigrant visa in order to avoid the requirements or limitations applicable to an immigrant
    3. Intends to leave the country upon the completion of his contract
    4. is employed by an actual company and not by a bogus organization

    if an applicant is from the United States of America(USA) he must prove that

    A. He is engaged in a trade according to the completion or termination of his contract

    C. His employer is a foreign national or the company he intends to work with is foreign-owned; and he must hold a supervisory or an executive position

    D. he holds special qualifications as a supervisor or executive officer of a foreign company(if underage)

     

    Note: The Treaty Trader’s Visa is valid for one year

     

    At the Board of Investments,

    We offer total investment management solutions

     

    • Supplying knowledge-based market information
    • Analyzing your business feasibility
    • handholding your concerns
    • Linking you to the service chain
    • Matching you with foreign and local businesses
    • Nurturing your expansion and diversification
    • Profiling Industires

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