Philippines company registration

DOING BUSINESS IN PHILIPPINES IN 2020

Since 2003, Healy Consultants Group PLC has assisted our Clients with business registration in the Philippines. Our services include i) Philippines company formation services ii) government license registration iii) corporate bank account opening services in the Philippines and abroad iv) employee recruitment v) visa strategies and vi) office rental solutions.

Summary table of Philippines company registration

SummaryJSCNominee Fast SolutionFree Zone LLCRegional or Area HQRegional Operating HQBranchRepresentative Office
Also known asJSCJSCFZRHQROHQBranchRO
Best use of company?All products and servicesClose a customer deal nowManufacturing and export tradingSupervision & CoordinationOperating CompanySpecific projectsMarketing & research
How soon can you invoice Clients / sign sales contracts?3 months2 months3 monthsCannot3 months3 monthsCannot
How soon can you hire staff?3 months2 months3 months3 months3 months3 months3 months
How soon can you sign a lease agreement?immediateimmediateimmediateimmediateimmediateimmediateimmediate
How long to supply corporate bank account numbers?1 month2 weeks1 month1 month1 month1 month1 month
How long to supply company registration / tax numbers?3 months2 months3 months3 months3 months3 months3 months
Corporate tax rate on annual net profits?30%30%0%0%10%15%0%
Limited liability entity?YesYesYesYesYesNoNo
Government grants available?YesYesYesYesYesYesNo
Resident director/partner/manager/ legal representative required?YesYesYesYesYesYesYes
Minimum paid up share capital?US$200,000US$200,000US$200,000US$50,000US$200,000US$200,000US$30,000
Can bid for Government contracts?YesYesYesYesYesYesNo
Corporate bank account location?CitibankCitibankHSBCSCBANZPNBBDO
Can secure trade finance?YesYesYesYesYesYesNo
VAT payable on sales to local customers?12%12%12%0%12%12%12%
Average total business set up engagement costs?US$21,960US$26,310US$17,750US$15,150US$20,510US$23,460US$18,850
Average total engagement period?4 months3 months4 months4 months4 months4 months4 months

See full table

Accounting and tax considerationsJSCNominee Fast SolutionFree Zone LLCRegional or Area HQRegional Operating HQBranchRepresentative Office
Statutory corporate tax payable?30%30%0%0%10%30%0%
Legally tax exempt if properly structured?NoNoNoYesNoNoYes
Group HQ tax incentives?YesNoYesNoYesNoNo
Must file an annual tax return?YesYesYesYesYesYesNo
Must file annual financial statements?YesYesYesYesYesYesNo
Must appoint an auditor?NoNoNoNoNoNoNo
Access to double taxation treaties?YesYesYesYesYesYesNo
Withholding tax on payments to foreign shareholders?15%15%15%15%15%15%15%
Company RegistrationJSCNominee Fast SolutionFree Zone LLCRegional or Area HQRegional Operating HQBranchRepresentative Office
Resident director/partner/manager/ legal representative required?YesYesYesYesYesYesYes
Minimum number of shareholders/partners?55511Parent CompanyParent Company
Maximum shareholding for foreigners?99%99%99%100%100%100%100%
Minimum statutory paid up share capital?US$200,000US$200,000US$250,00US$50,000US$200,00US$200,000US$30,000
Security deposit to be kept with Government?NoNoNoYesYesNoNo
Shelf companies available?YesYesNoNoNoNoNo
Time to incorporate a new entity?8 weeks8 weeks8 weeks6 weeks6 weeks6 weeks6 weeks
Can easily convert to a PLC?YesYesNoNoNoNoNo
Public register of shareholders and directors?YesYesYesYesYesYesYes
Can have preference shareholders?YesYesYesYesYesNoNo
Business ConsiderationsJSCNominee Fast SolutionFree Zone LLCRegional or Area HQRegional Operating HQBranchRepresentative Office
Good entity for trademark registration?YesYesYesYesYesYesNo
Can secure an import and export license?YesYesYesNoYesYesNo
Minimum number of directors/managers?55511Parent CompanyParent Company
Can be wholly foreign owned?YesNoYesYesYesYesYes

Sponsorship by a local citizen required?No
Our Client needs to travel to Philippines for business set up?No
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?No
The entity will likely be regulated by?SEC
Monthly VAT reporting to the Government?Yes
Must sign an office lease agreement during incorporation?Yes
Shareholders & directors documents to be attested/translated?Yes
Each foreign director needs a personal income tax number?Yes
Foreign director needs a residence visa?No
Maximum number of staff allowed?Unlimited
Expatriate to local staff ratio?Yes
Can secure residence visa for business owner?Yes
Other useful information
What will be included in my customer sales invoice?Click link
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Average custom duties suffered?6.70%
Government foreign investment approval required?Yes
Average monthly office rental? (US$ per sq m)US$15-35
Minimum statutory monthly salary?US$9.79
Average monthly US$ salary for local skilled employees?US$905
US$ deposit interest rate? (1 year average)1.75%
Overseas remittance currency controls?None
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?No
Quality of e-banking platform?Good
Crowd funding available in this country?Yes

Philippines business setup summary

  1. Philippines is the 5th largest ASEAN economy by GDP. Incorporating a Philippines company is recommended for Clients looking to extend their market footprint in the country and wider ASEAN region;
  2. A joint stock corporation is a common option for company formation in Philippines for foreign investors. To set up a joint stock corporation, a foreign company must appoint a Board of Directors with at least five members, three of which must be Philippines citizens. To fulfil this statutory requirement, Healy Consultants provides passive nominal resident director/shareholder services for our Clients;
  3. Since 2019, it has been possible to register a Philippines One Person Corporation (OPC) with only one shareholder, who can be foreign;
  4. Other business entities are available in the Philippines;
  5. The minimum paid up capital for a foreign company in the Philippines is US$200,000, though it can increase up to US$2.5 million for certain industries and activities. It is therefore necessary to open a Philippines corporate bank account before registering a joint stock company;
  6. English is the language of business in the Philippines, so recruiting English-speaking staff is straightforward. The average salary in the Philippines is US$3,294, one of the lowest in ASEAN. Our team can assist our Client with local staff recruitment in Philippines.

Click the subheading links below to read other information on Philippines company formation.

  • Benefits and problems

    Benefits of Philippines company registration

    Philippines business registration services

    1. Foreigners can register a company in the Philippines without travelling to the country;
    2. Philippines is a promising frontier market for worldwide entrepreneurs because:
      • The country is experiencing healthy economic growth, which reached 5.9% in 2019 (7.9% for the services sector). GDP growth is predicted to reach 6.0% in 2020, one of the fastest-growing in ASEAN. This can translate into numerous potential investment opportunities for entrepreneurs setting up Philippines companies;
      • Ratings agencies including Moody’s Investor Service, Fitch and Standard & Poors currently view the Philippines favourably for investment, with a number of ratings upgrades since 2015;
      • The Philippines has a vibrant start-up culture, supported by legislation such as the Philippines Innovation Act and the Innovative Startup Act, which was signed into law in 2019;
      • The Philippine Economic Zone Authority (PEZA) offers a range of e-services for entrepreneurs investing in the Philippines.
    3. The Philippines is a great place to form an export-orientated service company because:
      • Office space and utilities and infrastructure costs are low. Furthermore, Philippines average salaries are some of the lowest in ASEAN. Foreign companies can typically recruit qualified, English-speaking Filipino employees for less than US$5,000 per year;
      • A local company can attract foreign talent, since the country has a thriving expat community, ranks well on quality of life indices, and presents few obstacles to recruitment;
    4. The Philippines government offers tax incentives and other support for foreign investment projects including i) corporate tax holidays and ii) reduced/waived custom duties on imported equipment and raw materials. Eligible projects include i) medical tourism centers ii) hospitality projects for the retirement tourism industry and iii) IT businesses;
    5. The Philippines Information and Communications Technology (ICT) service sector is evolving rapidly. The country is an established global Business Process Outsourcing (BPO) hub, as well as an attractive base for IT and Global in-house Center (GIC) services sectors. Note also the following:
      • The Philippines is ranked eighth globally as a BPO destination, its competitive edge sharpened with a wide talent pool of tertiary graduates, especially in areas such as finance, accounting and business IT;
      • The Philippines Cyber services Corridor (PCC) accommodates numerous call centres and BPO companies served by a high-bandwidth fibre backbone and digital network;
    6. The Philippines is a signatory to the ASEAN Trade in Goods Agreement (ATIGA), offering a range of market-access advantages when registering a business in the Philippines. These include:
      • Closer economic ties between the Philippines and other ASEAN states, so a Philippines company can benefit from economies of scale;
      • A larger market for companies in the Philippines to access;
      • Removal of some trade barriers and tariffs.

    Problems with Philippines company registration

    1. A Philippines joint stock company requires a minimum of five shareholders (corporate or individuals);
    2. A Philippines joint stock company requires at least five directors (individuals) who must be resident in the Philippines;
    3. A Philippines foreign-invested company requires a paid-up capital of US$200,000, unless the company recruits more than 50 employees, in which case the paid-up capital requirement is US$100,000. However, industries subject to foreign investment restrictions including i) retail ii) agriculture and iii) advertising have a paid-up capital requirement of up to US$2.5 million;
    4. Philippines law makes no provision for a limited liability company. Foreigners willing to set up a business in the Philippines must either i) register a Philippines branch, whereby the overseas business has unlimited liability against operations in the Philippines ii) a Philippines One Person Corporation or iii) a joint stock corporation;
    5. Our Clients are required to open a temporary bank account before a joint stock company can be registered. Some local banks requires a foreign bank signatory to secure a visa and provide the Alien Certificate of Incorporation to open an account;
    6. Philippines company formation is time consuming, with licence approval via several different government departments as well as the municipality of the place where the company will operate;
    7. The Philippines publishes a list of business areas which require a 100% Filipino shareholding;
    8. Property registration is expensive, and can take more than a month to complete;
    9. The Philippines ranks poorly in terms of ease of obtaining credit and investor protection;
    10. Because of the above points, the Philippines is ranked only the world’s 95th easiest place to start a business by the World Bank.
    11. Doing business in the Philippines is also challenging because:
      • The Philippines has an annual per capita income of just over US$3,000. One quarter of the population lives below the poverty line;
      • Inter-island transport infrastructure needs to be modernised to facilitate domestic trade and movement of goods and people;
      • The southernmost island of Mindanao remains vulnerable to political violence and terrorism.
  • Best uses for a Philippines company

    1. The Philippines is popular for the formation of export-oriented service businesses, including call centres and BPOs. The availability of trained, English-speaking workers, along with a robust ICT infrastructure, supports this type of activity;
    2. The Philippines is also a good place for the formation of an agroforestry business, thanks to the country’s natural resources and the availability of a low-cost workforce.

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Frequently asked questions

Contact us

For additional information on our company registration services in Philippines, please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi