Doing Business in Philippines

The C9 Guide to Starting & Registering a Business in the Philippines

by Phillip Lew

It is worth investing in the Philippines. For two years in a row, the economy of the country has been growing at a steady pace. In 2016, the country was ranked 9th according to the United Nations Conference on Trade and Development (UNCTAD) survey. Besides, business leaders of multinational corporations identify the Philippines as their top investment destination. The country has the 12th largest population and is also ranked as the 43rd largest economy in the globe. In fact, the Philippines appeared in Goldman Sach’s list of 11 future economic giants in 2019.

It is clear that there are numerous effective ways for investors to tap into the potential of the country’s market. CNN identified some of the potential businesses to start in the Philippines which includes stocks, mutual funds, and real estate, not forgetting tech startups that are currently booming in the country.

In this article, we makeyour business registration process manageable by reviewing the entire process and considerations involved when setting up a business in the country. As highly experienced business consultants, we are well-positioned here at C9 Digital to advise you on the business

opportunities that have a high probability of yielding financial returns for investors. We work with our clients on strategy, problem-solving, planning and help clients with new ideas while developing their business acumen and knowledge in the domestic market. Read through to identify various types of business you can start in the Philippines as a local or a foreigner.

Types of Businesses

There are various forms of business entities that foreign investors and Filipinos can choose from when establishing business operations in the Philippines. The forms of businesses organized under Philippine laws include;

Sole Proprietorship

This is a business structure owned by a single person who has full control of the business.

Pros

  • Easy to set up
  • Flexibility in management
  • Tax advantages since it is not a separate entity
  • Less government control
  • Easy to dissolve

Cons

  • Unlimited personal liabilityp
  • Uncertain business future
  • Difficulties in raising startup capital
  • Limited access to management expertise

Partnership

A partnership is a business structure owned by two or more individuals. A partnership is considered as a juridical person based on the civil code of the Philippines

Pros

  • Reduced financial burden
  • Less paperwork
  • Few tax forms
  • Extra hands

Cons

  • Unlimited liability for partners
  • Risk of conflict
  • Shared profits

Corporation

In the Philippines, corporations arejuridical persons formed under the corporation code and regulated by the Securities and Exchange Commission (SEC) and treated separately from the stockholders. It is formed by 5-15 incorporators with at least one share and must also be registered by SEC. The minimum amount required to start a corporation is P5, 000.00.

  • Stock and Non-stock Corporation

A stock corporationis a business structure whereby share dividends can be distributed to shareholders orallotments of the excess profits based on the number of shares held. On the other hand, a non-stock corporation is an organization started for the purposes of charity, education and other similar public purposes and hence does not issue shares to its members.

Pros

  • Owners enjoy limited liability
  • Shareholder protection/li>
  • Stock options for employees

Cons

  • Tax liabilities
  • Strict government regulations

The Registration Process
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Step 1. Register the Business Name

Securing a trading name is the first step of the registration process. One should register a business name with the Department of Trade and Industry (DTI) which is the Philippine government agency governing the registration of business names in the country. This enables a sole proprietor to be able to register their business with the Mayor’s Office and Bureau of Internal Revenue (BIR).

Corporations and partnerships established in the Philippines are required to register with the SEC but can secure their name at DTI as well. The SEC office is located in Mandaluyong City where you can get your business name verified. However, you can easily register a business name online on the DTI Business Name Registration System (BNRS) website and you will need be of the legal age of 18 years to qualify.

The Cooperative Development Authority (CDA) helps individuals seeking to register their cooperatives’ business names.

 

Check out this video for more information on how to register a business name in the Philippines

 

Step 2. Prepare Required Documents for Corporations

When registering a corporation business name,one is required to sign and notarize;

  • Articles of incorporation

These are a set of formal documents also referred to as a corporate charter or certificate of incorporation. The documents establish the existence and creation of a corporation. They must contain information on the street address of the firm, type of stock issued, and the name of the firm among others.

  • Treasurer’s affidavit

This is a document sworn and subscribed by the Treasurer of a corporation to establish that the amounts paid by the subscribers.

Submit the notarized documents of the corporation to the SEC office located in Mandaluyong City. Processing of the documents takes a maximum of seven days.

Required documents for a sole proprietorship

  • DTI registration form
  • Barangay clearance
  • Proof of address
  • Valid Ids, where applicable

Required documents for a partnership

  • Name Verification Slip
  • Articles of Partnership
  • Registration of data-sheet
  • Certificate of Bank Deposit
  • Name of the partnership
  • Principal office address
  • The contact number of the partner
  • Name, citizenship, address, birthday and Taxpayer Identification Number (TIN) of the partners
  • Capital contribution of the partners
  • Purpose of the partnership
  • Endorsement from other government agencies
  • FIA Form 10 for partnership with a foreign national partner

Step 3. Acquire a Business Permits & Certifications

Depending on the nature of the business, you will be required to acquire business permits and certifications from both local and national government agencies. Here is a list of the most popular permits and certifications required when registering a business in the Philippines.

  • BIR Permit
  • Mayor’s permit
  • DTI Permit
  • SEC Registration Certificate
  • Building Permit
  • Occupancy Permit
  • SSS, Philhealth, & Pag-ibig, BIR (HDMF) Registration
  • Barangay Clearance
  • And others!

Bureau of Internal Revenue (BIR) Permit

This is the required legal certificate for businesses wishing to do business in the Philippines. It provides you with a TIN (Tax Identification Numbers) and the ability to offer receipts.

Mayor’s Permit

This is required business permit for clearance to do business in the Philippines.

DTI Permit

This is required for Filipino or Foreign individuals wishing to operate a Sole Proprietorship or Partnership in the Philippines.

SEC Registration Certificate

The SEC registration certificate is required for Filipino or Foreign individuals wishing to operate a Corporation in the Philippines.

Building Permit

A building permit is required document issued by the Department of Building that serves as your official consent to commence any construction, demolition, addition, or renovation of your property.

Occupancy Permit

The document is issued by the Department of Building that serves as proof that the structure built is suitable for business occupation.

SSS, Philhealth, & Pag-ibig, BIR (HDMF) Registration

This is required for government agencies all employers must register their employees with who are legally working in the Philippines.

Barangay Clearance

This is a document certifying that an applicant is in good standing as a resident in their local town or barangay.

Step 4. Employee Enrollment

If the business structure has employees, the registration process is not complete until the employees are enrolled in agencies such as PhilHealth, Pag-IBIG, SSS, GSIS, DOLE, and HDMF based on the Philippines Department of Labor and Employment. The agencies ensure that your business complies with proper remittance of employee contributions. Document processing can take a maximum of 14 days.
Business Registration for Foreign Multinational Entities

In the Philippines, foreigners are allowed to register their businesses in the form of a Branch office, representative office,Regional Headquarters, Regional Operating Headquarters or as a Free Zone Company.

1. Branch Office

Philippine laws allow foreign companies to open branch offices in the country. This is the best strategy for foreigners who want to avoid the involvement of resident directors and shareholders. However, the appointment of one country representative is a must.

The foreigners should ensure the branch office is registered with the Philippines SEC and invest from $100,000 to $200,000 in the Archipelago. The amount is $100,000 if the branch office creates at least 50 jobs and a minimum of US$ 3,000,000if the goal of the branch office is to trade with retail customers. This is according to the Retail Trade Liberation Act of 2000. Read more from the Philippines Board of Investments.
2. Representative Office

This is a foreign corporation that is organized under foreign laws. The corporation does not generate income from the host country and is fully subsidized by its head office. It contracts directly with clients of the parent company. The representative office requires a minimum initial inward remittance amount of US$30,000 and SEC registration.

3. Regional Headquarters (RHQs)

An RHQ carries out activities such as supervisory, communication and coordination services for its parent company. It acts as an administrative branch for a multinational corporation. However, it does not, derive income for sources in the country or manage any subsidiary or branch office it may have in the Philippines. An annual capital of US$50,000 is required to cover operating costs.

4. Regional Operating Headquarters (ROHQs)

The minimum required capital for an ROHQ is US$200,000. It derives income in the Philippines.An ROHQ is set up by affiliates, branches, and subsidiaries in the Philippines to perform duties such as;

  • Logistic services
  • General administration and planning
  • Business planning and coordination
  • Sourcing of raw materials
  • Marketing control
  • Sales promotion
  • Training and personnel management
  • Research and development (R&D) services
  • Technical support and communications
  • Business development

5. Free Zone Company

This is for foreigners willing to start an export-oriented business. They can register a subsidiary in a Special Economic Zone (SEZ). The Philippines Economic Zone Authority (PEZA) vets the investment projects based on the nature of the business, export orientation, technology transfers, and the project size. The key industries eligible for the category include export manufacturing, tourism, logistics, and warehousing services among others.
Wrap Up

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After completing the business registration process you are ready to run and grow your business in the Philippines. If you are still unsure or too busy to complete the entire process, you can outsource to reputable business consultants in the Philippines at an affordable price. For more advice and insight, visit our business registration services page and fill out an inquiry form to learn more aboutour variousbusiness consulting and registration services.

Resources

Best investment options in the

PH.https://cnnphilippines.com/business/2019/5/28/Best-investment-options-in-the-PH.html
DOLE: Enforce SSS, Philhealth, Pag-Ibig Benefits. (2017). Retrieved from

Department of Labor and Employment:

https://www.dole.gov.ph/news/dole-enforce-sss-philhealth-pag-ibig-benefits/

Entrepreneur’s Guide to Business Registration in the Philippines.

(2017). ABC-CBN News.https://news.abs-cbn.com/business/12/29/17/entrepreneurs-guide-to-business-registration-in-the-philippines

Kuepper, J. (2019, June 25). A Guide to Investing in the Philippines.

Retrieved from The Balance: https://www.thebalance.com/a-guide-to-investing-in-the-philippines-1979034

Philippines Board of Investments.http://boi.gov.ph/

Tipsph. (2011). How to Register Your Business in the Philippines. Retrieved from https://businesstips.ph/how-to-register-your-business-in-the-philippines/

World Investment Prospects Survey 2014–2016

Phillip Lew

Phillip Lew

Phillip Lew helps investors, business owners, executives and government agencies all around the world on helping them leverage the power of outsourcing and using exponential technologies to create massive success within their organization. To contact Phillip for consulting, speaking opportunities or to hire C9 Digital, please fill out the online inquiry form at the bottom of this page.