Philippines employment visas in 2024

Healy Consultants will be pleased to assist our Clients willing to relocate to the Philippines to manage their business and/or to hire foreign workers with their local company. The first step to do so is to secure an employment permit with the Philippines Immigration Bureau. Our services include the preparation and filing of a quality immigration application, which will optimize the probability of timely approval of the work permit.

• Traveling to the Philippines

  1. The Philippines Government grants a visa waiver for most nationalities willing to travel to the Philippines for tourism or non-remunerated business. Provided they have a i) return ticket and a ii) passport valid for a period of at least six (6) months beyond the stay in the Philippines. Nationals of the countries listed on the Philippines’ consulate page can enter the Philippines and obtain a visa waiver for a duration of up to 30 days, renewable for additional 29 days;
  2. Other nationals are required to secure a tourist or business visa before traveling to the Philippines. This can be done by submitting an application at the nearest Philippines Embassy. The visas are usually processed within two weeks.

• Working in the Philippines

  1. Employment visas are available for foreigners who are seeking to engage in lawful occupations in the Philippines. Foreigners may enter the Philippines under temporary visitor visas and file for a Pre-Arranged Employee Visa;
     • The applicant and the sponsoring employer will have to submit multiple documents including i) an employment contract ii) a description of the position on offer iii) evidence that the employer searched unsuccessfully for local candidates and iv) degrees and licenses held by the foreigner. The future employee may also be required to attend a hearing (interview) before the visa can be issued;
     • The visa is valid for a period of 3 years and it can be renewed.
  2. Branches of offshore banks that wish to employ foreign workers must submit a i) passport of the employee ii) document certifying that the employee is an employee of the bank and will work exclusively at the Bank’s branch iii) corporate documents. More information on this type of visa can be found in the Bureau of Immigration website;
  3. Clients from America, Japan and Germany that hold supervisory or executive positions can apply for a Treaty Trader’s visa. The applying company most prove that i) the majority of its shareholders have the same nationality as the applicant (USA, Germany or Japan), that ii) it will carry out substantial trade between the Philippines and its country of origin and iii) that it will invest at least US$120,000;
  4. Residence permits are granted to foreigners that invest at least US$78,000 into the Philippines. A 6-month probation period is granted to allow the applicant to make the investment, and once the documents that prove that the investment has been made are submitted, then the visa is granted;
  5. Foreigners creating at least ten jobs in the Philippines are eligible for a residence permit. A list of the documents required to submit an investor visa application in the Philippines available on the BI FORM V-NI-026 checklist page;
  6. Only 50 applicants are approved annually for other categories of aliens whose countries accept Filipinos as immigrants on a reciprocal basis. The Philippine Consulate General receives the completed immigrant visa application with enclosures indicated below and, in turn, is forwarded through the Department of Foreign Affairs(DFA) for appropriate action by the concerned agencies in the Philippines. When authority from the DFA for the issuance of the visa allotting quota number is received, a personal interview with a consular officer will follow prior to the actual issuance of the immigrant visa.

Doing business in the Philippines through an agent

Registration of a subsidiary or branch in the Philippines i) takes a minimum of 4 months and ii) requires a capital injection of at least US$200,000. Consequently, many of our Clients prefer to trade with their local customers through a local agent or distributor.

Within 2 months, Healy Consultants Group will assist our Clients to action this low cost, simple, practical solution including i) searching and supplying our Client with a panel of professional agents ii) conducting KYC on each of them iii) drafting and negotiating a service agreement and iv) other business support services (click link).

• How we proceed?

  1. As a first step, Healy Consultants Group will assist our Client to i) secure confirmation of interest from multiple professional agents, ii) negotiate the best preliminary terms and conditions with the agents and iii) prepare a comparison table of interested agents, for our Client’s review;
  2. Once our Client has chosen the preferred agent or distributor, Healy Consultants Group will obtain detailed due diligence on our Client’s preferred agent and skillfully negotiate optimum terms and conditions;
  3. Thereafter, Healy Consultants Group will draft on behalf of our Client a quality agent contract. The following clauses are usually included in the document: i) the agent will not interfere with the business’s management or activities, ii) the agent will be paid a lump sum and/or a percentage of profits or turnover, iii) the agency agreement is for a fixed term and expires on a future agreed date, unless both parties agree renewal and iv) select binding arbitration as the method of dispute resolution with arbitration centers in neutral reputable jurisdictions like the USA, Singapore, UK, Germany or Australia;
  4. If needed, we engage a local lawyer or accountant to critically review legal agency agreements. We also recommend our Clients to visit the country for a face to face meeting with the agent before signing the agreement and commencing business operations;
  5. Click here to view the fees and timelines for a Philippines Commercial Agency engagement.

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• Agency rules for Philippines

  1. The Filipino local agent or distributor must be resident in the Philippines and be registered with the Securities and Exchange Commission (SEC). A failure to do so could result in fines and other penalties;
  2. To engage a local agent in Philippines, our Client must file a written power of attorney or board of resolution in the name of its foreign corporation and file it with the Securities and Exchange Commission (SEC);
  3. Most agents focus on the Metro Manila area. However, Healy Consultants Group has connections with local agents who provide services in the areas of Bacolod, Cebu, Cagayan de Oro, Davao, Iloilo, and Baguio, either directly or through a chain of dealers, retailers, sub-agents, and/or re-sellers.

• Important considerations when engaging agents or distributors or sponsors

  1. The appointed commercial agent is responsible for all Philippines accounting and tax obligations (if any) and receiving service of summons and other legal processes. Therefore, agents’ contracts in Philippines often include a commission of 5% to 10% on all local sales made by the distributor but may vary by industry;
  2. The Distribution Contracts require a 30 days’ notice period to terminate the contract, or as mutually agreed upon by both the parties;
  3. Most agents or distributors either act as i) stocking distributors, in which case they are required to keep an inventory of the products to be sold in the Philippines or ii) as indenters, in which case they only act as a broker between our Client and the end-customer, without a need to keep an inventory. In both cases, distributors are however required to seek registration with the Philippines Securities and Exchange Commission (SEC);
  4. Filipino agents engaging with foreign suppliers often employ:
     • Forward sales: The distributor places an order with the foreign supplier and sells the product to the Filipino customers;
     • Indent arrangements: The Filipino customers directly place an order with the Foreign supplier.

Setting up a Business Process Outsourcing (BPO) Company in the Philippines

Business Process Outsourcing (BPO) involves global Firms contracting some parts of their operations mostly to offshore third-party service providers to save costs. The BPO industry is mainly categorized into i) front office outsourcing involving various customer services such as call center services and ii) back office outsourcing, involving activities such as accounting and finance or human resources. The advancement of IT industry in recent decades has boosted growth in this industry and allowed companies to move some of their call center operations to remote locations like Philippines and India.

In Philippines, BPO is a major industry that has seen double-digit annual growth over the last decade. The industry is divided into various sub sectors including i) engineering and game development; ii) software development and animation; iii) back office services and contact centers; and iv) data transcription. Currently, several renown global companies maintain their BPO operations in the Philippines including i) JPMorgan Chase Bank ii) Accenture iii) IBM and iv) HSBC.

• Advantages of business process outsourcing in the Philippines

  1. Philippines is a leading preferred jurisdiction in the world for offering BPO services because:
     • In Philippines, the BPO industry derives at least US$25 billion in revenue and provides 1.3 million jobs. By 2020, the industry is projected by World Bank to be worth over US$50 billion and employ 2.6 million people;
     • Philippines is the third largest English speaking nation globally and this proficiency translates to smooth communication with minimum barriers;
     • The Philippines has a strong customer service oriented workforce and the country also has a high cultural affinity to the United States, the principal BPO market;
     • The Philippines Government permits BPO companies to employ foreign nationals or supervisory, technical and managerial positions and grant resident visas for their families without restriction.
  2. Our Clients outsourcing to the Philippines will enjoy Government incentives to support their operations including:
     • The Government grants income tax holidays of up to 8 years to both non-pioneer and pioneer projects from the start of operations;
     • Exemption from Value Added tax (VAT) for BPOs offering services to offshore companies not doing business in the Philippines;
     • Exemption from import duties and taxes on importation of machinery and equipment for BPOs registered with the Philippines BOI for up to 5 years;
     • A 10 year Local Business Tax (LBT) exemption for BOI registered pioneer or non-pioneer BPO projects from the date of registration;
     • Registered entities may receive a tax deduction equivalent to 50% of wages paid to unskilled and skilled workers for the first 5 years of operations.
  3. Other advantages our Clients stand to enjoy setting up they outsourcing operations in Philippines include:
     • Companies registered under the Board of Investments enjoy simplified customs procedures when importing equipment;
     • Companies will also enjoy up to 10-year exemption from export tax, wharfage dues and imposts from the day of registration;
     • BPO entities registered in the Philippines Economic Zones (PEZA) are exempted from branch profit remittance tax or profits intended for repatriation to the parent company. Also, a PEZA company is exempt from all local Government imposts, licenses, fees and taxes except real property tax.
  4. The Philippines is a more preferred jurisdiction for setting up BPO services company than India because:
     • The Government recognizes and supports the industry as one of the main generators of revenue to the country and has even setup special economic zones that has attracted even Indian BPO service providers;
     • The country offers lucrative tax cuts and tax holidays that presents an advantage especially to newly registered BPOs;
     • Foreign entities prefer Filipino workers in voice-based BPOs due to their stronger proficiency in American English accent compared to their Indian counterparts;
     • The Philippines enjoys a higher literacy rate (97%) to India (74%) and also has a higher proportion of population in the 25 to 35 age group with at least tertiary education.

• Problems with setting up outsourcing operations in the Philippines

  1. Our Clients setting up in the Philippines can expect a number of difficulties running their operations including:
     • Subpar telecommunications facilities and relatively slow internet connectivity in the Philippines is an impediment to BPO business efficiency;
     • Widespread corruption in both private and public sector and an inefficient bureaucracy in the Philippines has lead to redundant regulatory processes that result in additional business costs;
     • The restrictive labour laws in the Philippines make it difficult to fire incompetent employees, while permitting employees to freely leave the company even after the company may have spent resources on training.
     • Poor quality transportation infrastructure in the Philippines can be a drawback to productivity as employee waste a considerable amount of time on traffic due to inefficient transport system.
  2. Our clients also stand to experience government related difficulties and experience higher operations because:
     • The current Philippines President has in recent past announced severing of ties with the US, a stance that may scare investors from the US, the main BPO market;
     • The cost of human resource in the country is the highest component to BPO companies in the Philippines. The average BPO worker salary in the Philippines is almost double that of a similar worker in India;
     • Frequent power outages in the Philippines has led over time to a hike in the power tariffs and contributes to high business operations costs.

• Healy Consultants’ services

  Healy Consultants has over a decade’s worth of experience in the Philippines market and will be pleased to assist our Clients setup their BPO companies and call centers. We will offer the following services: i) setting up a new company ii) securing required office spaces and equipment iii) hiring of qualified local and foreign personnel and iv) obtaining the required government permits and licenses. For a complete breakdown of our costs, please refer to our Philippines company registration fees and timelines webpage.