Take advantage of the rich natural resources, scenic spots, and rich culture. Its strategic location in the heart of Asia makes it a perfect place for trade. Filipinos also speak English, as it is the medium of instruction in school. Above all, the Filipino government welcomes investors, so there are many business opportunities. To help you get started, check out this quick primer for foreigners.
When doing trade in another country, the primary concern is the legality of stay. Most nationalities can stay in the Philippines with a quick visa on arrival. However, if you intend to stay for 3 months or longer for work, you will need a business visa. This permits you to make negotiations, attend conferences, join meetings, and the like.
To facilitate this long-term stay visa, go to the Philippine consulate that holds jurisdiction over your place of residence. You need to comply with the following requirements:
- Own a valid passport with at least 6 months validity period
- Properly accomplished visa application forms
- 2 pcs passport pictures
- Proof of status as foreign investor or businessman
- Confirmed airplane tickets with return OR onward journey to next destination
- Paid visa fees
For more information, check the complete guideline at the Department of Foreign Affairs website.
Pertinent Laws and Regulations
You will find that most foreign investments are supported by fiscal and non-fiscal incentives. The Foreign Investment Act of 1991 shows how you can avail of these benefits. However, restrictions abound for some industries with regard to capital investment. Check the Philippine Foreign Investment Negative List to see if you fall under, which stipulates:
- Domestic market enterprises that derive 40% revenue from within the Philippines must limit foreign equity to 40%, and you cannot be the company president. But if your company has a minimum paid capital of 200,000 USD or more, the cap is lifted, and you can fully own the business.
- Export enterprises that derive 60% of their revenue outside the Philippines can forego the capital requirement and work beyond the 40% cap on equity for foreigners.
- Do not violate the said restriction as the country has an Anti-Dummy Law. It is strict on foreign equity restrictions, as well as those who do not comply with nationalization laws. Refrain from using your Filipino partner’s name, too, from preventing complications.
Steps for Business Creation
Step 1: Identify the Niche
Make inquiries from Philippine government agencies before registering your business. Some businesses are not open to foreign ownership.
Step 2: Coin and Register Company Name
Proposed names need to be approved by different departments in the country. Specific requirements depend on the business type you register. Take note of the following:
- Sole Proprietorship – Visit the Department of Trade and Industry (DTI)
- Partnership or Corporation – Check with the Securities and Exchange Commission (SEC)
- Cooperative – Seek guidance from the Cooperative Development Authority
Step 3: Compliance with Requirements
Take note that most offices require the SEC or DTI certificate before you can begin applying for other papers and permits. You also need the following legal documents to run your business:
- DTI registration – for your business trade name
- SEC registration – for partnerships or corporations
- Business Permit – secure this mayor’s certificate to operate from the local government unit (LGU)
- BIR Registration – Secure your TIN or tax identification number from the Bureau of Internal Revenue. From the same office, secure official receipts and invoices, a book of accounts, and pay national tax dues (Income tax, VAT or percentage tax, withholding taxes, and other applicable taxes)
- Registration for employee contributions – Employers are mandated by law to shoulder their share for employee contributions under the SSS, Philhealth, and the Pag-ibig Fund government programs.
Keep in mind that you need to register in the offices near your business address, so you must decide on your location ahead.
Step 4: Open a Bank Account
A bank account with a minimum deposit of P5,000 is required for registering new businesses. To open, you need to present identification documents and articles of incorporation (if applicable).
Step 5: Check for Additional Clearances
Apart from the permits mentioned above, specific industries require additional clearances. For example, gas stations need to secure sanitation permits, compliance certificates with the Department of Energy, or building code permits.
To make sure that you comply with all your requirements, seek the help of a professional. Most accounting firms in the Philippines provide services to help you prepare documents and file the right papers. If you need assistance, call us for a FREE 30-minute consultation.