Foreign companies are very much welcome to engage in business in the Philippines. This developing country welcomes new economic opportunities, the creation of jobs, and technology transfer. Though there may be some exemptions like full ownership of mass media companies, almost all industries welcome the influx of foreign investors. To ascertain where your company stands, take a look at the list of the country’s “foreign investment negative list” which stipulates the limitation.
Remember, for a corporate entity to legally do business in the Philippines, companies must accomplish and submit the necessary requirements and certificates to the duly accredited government offices. Most often, the process of registration begins with the Philippine Securities and Exchange Commission. Thankfully, the country has made it easy for foreigners to do so with the “Ease of Doing Business Act” and the “Anti Red Tape Policy.” To find out the full list of processes and requirements that foreign corporations need to comply with before doing business in the Philippines, read on.
1. Register the Corporate Entity and Its Name to the Philippine SEC
To be able to register with the Securities and Exchange Commission, the company in question must first be authorized to operate in the Philippines by the investors or company’s country of origin. Then, the proposed company will be double-checked to see if it qualifies for incentives, and the foreign investor may prepare the application to claim such with the befitting government agency.
Do note that foreign investors who aim to do business in the Philippines have two options. They may either secure a license to do business as a foreign corporation, or they may register as a “foreign-owned company” in the Philippines.
2. Obtain the Business Permit or License to Operate
After registering with the SEC, a foreign-owned corporation must then meet local government ordinances of the city and province where it is stationed. A mayor’s permit or business permit must then be secured. The Local Government Unit refers to the governing unit of municipal bodies. Each municipality has its own set of rules and requirements for business registration. These processes, documents, and forms are often found on the municipality’s website.
Often, requirements include:
- Department of Trade and Industry (DTI) or Securities and Exchange Commission (SEC) forms
- Barangay Clearances
- Zoning Clearance
- Location Sketch or Picture
- Proposed Construction Plans
- Land Title or Lease Contracts
- Community Tax Certifications
- Sanitary Permit
- Occupancy permit
- Public Liability Insurance
- Environmental permit
- Fire Permit
Other additional requirements may be requested. Note that corporations that are already established outside of the Philippines and just wish to expand by foraying into the country may be required to submit financial reports, tax reports from previous years, and any other documents.
3. Accreditation with the Philippine Bureau of Internal Revenue (BIR)
The Bureau of Internal Revenue is the Philippine government’s tax-collecting arm. After obtaining previously mentioned requirements, the corporation must then register with the BIR. Owners and investors, foreign or not, are required to secure Tax Identification Numbers with the Revenue District Office. For corporations, Form 1903 must be accomplished.
4. Registering with the Philippine Social Security System (SSS), Philippine Health Insurance System (PhilHealth), and Pag-IBIG Fund
Corporations that hire employees must register with the SSS, PhilHealth, and Pag-IBIG funds. These government agencies provide benefits to employees, the SSS providing retirement benefits, PhilHealth providing health insurance, and Pag-IBIG providing home loan assistance.
5. Fulfillment of Other Ancillary Requirements
Other special requirements may need to be filled out and accomplished by certain types of corporations. Food and Drug companies must meet the standards of the Sanitation Code as well as the Philippine Bureau of Food and Drug Administration. In the same way, certain manufacturing and construction companies may be required to provide additional documentation.
If you are a foreign company looking to invest in the Philippines, you are on the right track. Many other ex-pats have established their headquarters in the country. The favorable foreign exchange rates, lower operating costs, and easy communication make it a breeze to set up a company in the Pearl of the Orient.
Should you need help processing requirements, our team can help you. Apart from bookkeeping and accounting services, we provide help with business registration services. We can help you collate documents, fill up forms, complete the crucial paperwork, and deal with the legwork. Give us a call for a free 30-minute consultation so we can get you started on the right track. Soon, you will be able to call the Philippines your business address and enjoy the nearby beaches as you work in this tropical island paradise.