Philippines company registration

DOING BUSINESS IN PHILIPPINES IN 2018

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

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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 4th largest market in the ASEAN region and the 5th most competitive market within ASEAN in 2015. Incorporating a local company is recommended for Clients who are looking to increase their sales in ASEAN;
  2. A joint stock corporation is the most commonly used business entity in company formation in Philippines. For more information on the different business entities in Philippines click on this page;
  3. Foreign companies are obligated to appoint a Board of Directors for joint stock corporations, which must comprise of at least 5 members of which at least 3 of the members must be Filipino. As such, Healy Consultants do provide a passive nominal resident director/shareholder service to our Clients;
  4. The minimum paid up capital for a foreign company in Philippines is US$200,000 and may increase up to US$2.5 million in certain industries. Hence it is necessary to open a corporate bank account in Philippines before proceeding with registering a company;
  5. Philippines has quality English-speaking labour market, with a relatively low annual salary averaging at US$3,580 where US$2,800 is for production workers and US$5,500 for manufacturing staff. Our team can assist our Client with local staff recruitment in Philippines if needed.

Press the link headings below to read detailed, relevant, up to date information.

  • Benefits and problems

    Benefits of Philippines company registration

    Philippines business registration services

    1. Foreigners can register a company in the Philippines without travelling and with a minimum of i) five corporate or individual shareholders ii) five individual directors, half of whom must be resident in the Philippines and iii) a paid-up capital of US$200,000, which is reduced to US$100,000 if the company hires more than fifty employees;
    2. Philippines is a promising frontier market for worldwide entrepreneurs because:
      • The Filipino market is the third largest of Southeast Asia by its size of US$345 billion, after Indonesia (US$1,000 billion) and Thailand (US$430 billion). It also benefits from the second largest population of the region (104 million inhabitants), expected to increase by another 6 million by 2020 according to the International Monetary Fund;
      • Along with Vietnam, the Philippines’ economic growth should attain around 6.8% per year, the highest pace amongst major ASEAN economies. This will translate in numerous investment opportunities for businessmen setting up businesses in this country;
      • Over the past years, the economy of the Philippines has significantly strengthened and the economy is now much less vulnerable than it used to be, as demonstrated by the fact that the country’s sovereign debt benefits since 2015 from an investment grade rating by both Moody’s, Fitch and Standard and Poor’s;
      • Due to the growing number of start-ups, Philippines has the potential to become the next start up hub in Asia. According to the Department of Commerce, the Government of the Philippines is currently developing startup programs for local and foreign entrepreneurs.
    3. Philippines is also a great place to form an export-oriented service company because:
      • Salaries in the Philippines are low. Foreign companies are usually able to find quality employees by providing annual salaries below US$5,000 per year, according to the Japanese External Trade Organization;
      • Most Philippine workers who graduated from high school can converse in English, making the country a great place for the relocation of call and BPO centers;
      • Philippines is also a great place for expat workers: due to its former status as a United States colony and US base during the Vietnam war, the country has an important expat community, with restaurants, bars catering for a Western expatriate population;
      • The Philippine Government also offers tax incentives 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. See this page for further details on the list of eligible projects and incentives available;
      • Office space and utilities and infrastructure costs are low. Our readers can find more statistics on a range of costs on this page prepared by the Philippines Government.
    4. Philippines’ increasingly rising Information and Communications Technology (ICT) service sector makes it an attractive center for all the BPO, information technology (IT) and global in-house center (GIC) service related sectors.
      • Having a rank 7 among BPO destinations due to substantial amount of good-quality tertiary graduates with fast learning curves in areas of finance and accounting or business information technology, Philippines has a promising and reliable customer services industry;
      • Philippines has capitalized on its ICT services sector to further accelerate the growth of its economy. The government has developed the Philippines Cyber services Corridor (PCC) which accommodates numerous call centers and BPO companies that are served by a high-bandwidth fiber backbone and digital network;
      • The Philippine Economic Zone Authority (PEZA) serves as an attractive option to avail e-services for entrepreneurs who are willing to invest in Philippines;
      • The Philippines holds a rank of 91 out of 127 in the annual Forbes list of the Best Countries for Business. The nation has an excellent performance in its compliance along with a remarkable financial system.
    5. Being a fellow member of the Association of South East Asian Nations (ASEAN), Philippines signed the ASEAN Trade in Goods Agreement (ATIGA) in 2010. The ATIGA successfully merged the ASEAN economies into a single market and brings the following advantages for registering a business in Philippines:
      • ATIGA has successfully forged deeper economic linkages between Philippines and fellow ASEAN states which has led to i) lower business costs, that helps businesses to optimally manufacture their products and ii) a bigger market to expand into. Locally registered businesses in the Philippines have more opportunity to reap substantial profits with most of the tariff and non-tariff barriers being removed for trade;
      • Specifically, the Philippines has implemented a tariff reduction for both rice and sugar imports, thereby making it an attractive destination for fellow ASEAN exporters. This amendment has further led to an improvement in the real income levels of the nation and moved a big portion of the population out of poverty.

    Problems with Philippines company registration

    1. Starting business in the Philippines is challenging because:
      • The Philippines laws do not provide for a limited liability company. Foreigners willing to do business in the Philippines are consequently required to use one of the following strategies: i) register a branch, which subject their overseas business to unlimited liability against their operations in the Philippines or ii) register a joint stock corporation, which require the appointment of at least three resident directors;
      • Our Clients are required to open a temporary bank account before a 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;
      • Our Clients registering a subsidiary instead of a branch are also required to offer at least one share of the company to each of the three resident director. While this has no impact on the ownership of the company, this makes it impossible to wholly foreign-own a company in the Philippines;
      • Minimum paid-up capital for foreign invested companies is at least US$200,000. In industries subject to foreign investment restrictions including i) retail trade ii) agriculture and iii) advertising, such paid up capital requirement can increase to up to US$2.5 million and may go along an obligation to form a joint venture with a majority joint venture partner of Filipino nationality;
      • Philippines company formation follows lengthy procedures, requiring the approval of licenses by several Ministries and by the municipality of the place where the company will conduct operations;
      • For all the reasons listed above, Philippines is currently ranked as the 20th most difficult place in the world to start a business by the World Bank.
    2. Doing business in the Philippines is challenging also because:
      • Philippines is a developing country where the population lives with an income per capital below US$3,000 per year. One quarter of the population lives below the poverty level and less than one inhabitant out of two lives in a city;
      • Philippines is an archipelago of more than 7,300 islands. However, the maritime infrastructure of the country is generally poor and tends to be ridden with red tape, especially when the products are imported;
      • While educated workers in the cities tend to speak good English, most of the population is only able to speak the local language Tagalog;
      • Mindanao, the southernmost island of the Philippines, is still subject to an insurgency fomented by Islamist movements in favor of the formation of an independent State.
    3. Time consuming and complex procedures to navigate whilst incorporating a business.
      • The process of setting up a corporate entity is long and arduous in Philippines. The World Bank and IFC have ranked Philippines 161st in terms of complexity of setting up a corporate entity;
      • Many business areas in Philippines require a 100% Filipino shareholding, such as: i) mass media except recording, ii) pharmacy, iii) law, iv) small scale mining etc. Refer to the Foreign Investment Negative List in Philippines for more details;
      • Property registration can be a quite costly task in Philippines, taking more than a month to be completed;
      • The nation also has a poor ranking in terms of ease of getting credit as well as for investor’s protection.
  • Best uses for a Philippines company

    1. Philippines is mostly popular for the formation of export oriented services businesses, such as call centers and BPOs. The English fluency of the local workforce and its adequate level of training are strong assets for such type of businesses;
    2. Philippines is also a good place for the formation of an agroforestry business, thanks to the natural endowments of the Archipelago 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 email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi