Philippines

Company Formation in Philippines

Philippines are ideally located to cater to the fast growing market with a large population in Asia. YourGlobalPro can assist in Philippines for Company Formation, Secretarial Compliance, Tax Registration, VAT Reclaim, Document Retrieval and Trademark Registration.

About the Country

The Republic of Philippines (Philippines) is a sovereign island country in Southeast Asia situated in the western Pacific Ocean.  It is composed of 7,641 islands and is ranked as a 12th most populated country in the world. Due to the number of Philippine nationals living overseas, the Filipino people are considered as one of the largest Diasporas in the world. The country’s nearest neighbors are Taiwan, Vietnam, Malaysia, and Indonesia. The below content will explain you in detail about the requirements for the company formation in Philippines, know more about the process of trademark registration in Philippines and understand the Philippines Legal Compliance requirements.

Philippines

Doing Business Introduction

Philippine economy is ranked as the 34th largest in the world.  Primary exports ranged from semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, and fruits.  The emergence of Business Process Outsourcing (BPO) as a leading industry in the country provided additional investments and economic growth. The Philippine economy has been transitioning from that based on agriculture to that of service and manufacturing. As per Doing business report of The World Bank –Philippines ranks 99 for 2017 survey in terms of ease of doing business.

 

YourGlobalPro professionals can assist its client with any type of company formation in Philippines, trademark registration and other recurring services for your business in the Philippines.

Incorporation - Types of Business Entities

Before starting the business, the first decisions to make is to determine what form of business entity to establish. There are several types of entities that can be incorporated in Philippines are as mentioned below:

·       Sole Proprietorship

·       Partnership

·      

Fact Sheet

 
Stock Corporation  

·       Non-stock Corporation

·       Branch Office

·       Representative Office

·       Regional Headquarters (RHQS)

·       Regional Operating Headquarters (ROHQS)

 

Time Frame for Incorporation of Company in Philippines varies from depending on the type of entity selected and each business type has its own advantages and disadvantages. YourGlobalPro professionals estimate the time required for Philippines Company formation process to be completed is 21-25 working days.

Benefits of Registration of a Company

Below are the advantages of company formation in Philippines:

·       Philippine economy is regarded as one emerging and fastest growing economies in Asia

·       Existence of free-zones that provide tax and custom duties incentives

·       The Philippines provides a strong and capable workforce. The labor force is highly proficient in English providing ease for international businesses.

·       A consumer-driven population that offers business opportunities even in the domestic market.

·       The cost of operations is relatively low.

 

·       Favorable economic setting and regional locations are beneficial to entities who want to expand in the Asia-Pacific region.

Tax Registration and Filing

Domestic corporations are taxed on their worldwide net taxable income.  Domestic corporations are corporations incorporated under the laws of the Philippines.  Resident foreign corporations are taxed on net taxable income derived from the Philippines, and non-resident foreign corporations are taxed on gross income derived from the Philippines.

Corporate Income Tax Rate 30%
Capital gains tax Real Property - 6% Shares - 5%/10%
Branch Profits Tax Rate 30%
Branch Remittance Tax 15%
Withholding Taxes Dividends - 30% (for nonresident corporations only) Interest - 20% Royalties - 20%
Value Added Tax 12%
Fiscal Year 1 January to 31 December
Filing Tax Returns Quarterly Tax Returns - within 60 days from the close of each of the first three quarters Final Tax Return - before the 15th day of the fourth month following the close of the tax year.

Double Tax Treaty

Double Tax Agreements (DTA) regulates the tax treatment of income or capital gains in situations where the same taxpayer is taxed twice in two countries for the same subject.  The Philippines has double tax treaty agreements with over 40 countries.

Trademark registration

Trademark registration in the Philippines is done through the Intellectual Property Office. A certificate of registration shall remain in force for 10 years and can be renewed for another 10 years. It takes approximately 18-24 months from first filing to registration

 

YourGlobalPro professionals are fully equipped to assist you with the trademark registration process for your business in the Philippines. For assistance or advice in the matter of the trademark registration or intellectual property – please feel free to write or contact us.

Secretarial Compliance

Below are some of the important points in relation to Company Secretarial Compliance in the Philippines:

·       Every corporation shall keep and carefully preserve at its principal office a record of all business transactions and minutes of all meetings of stockholders or members, or of the board of directors or trustee.

·       Stock corporations must also keep a book to be known as the “stock and transfer book”, in which must be kept a record of all stocks in the names of the stockholders alphabetically arranged and all transactions involving the capital stock of the entity.

 

·       Regular meetings of stockholders or members shall be held annually on a date fixed in the by-laws, or if not so fixed, on any date in April of every year as determined by the board of directors or trustees.

Accounting Services

Accounting practices in the Philippines are set by the Philippine Financial Reporting Standards (PFRS). The PFRS is a set of accounting principle parallel to International Financial Reporting Standards (IFRS) and issued by the Accounting Standards Council (ASC) to guide the preparation of financial statements.

 

YourGlobalPro professionals can assist you with the entire bookkeeping and accounting services for your Philippines Business Set up as per your business needs including implementation of financial accounting software, accounting records preparation and time to time preparation of budgets, forecasts.

Auditing service

Statutory audit is required for all business entities. Audited financial statements are filed annually with the Securities and Exchange Commission and the Bureau of Internal Revenue upon filing of tax returns.

YourGlobalPro professionals provide you auditing services as required by your business in the Philippines.

Banking

Opening an account in a bank is quite easy in Philippines. The documentation requirement differs from Bank to Bank and needs to be compiled for the Bank account opening.

The major banks in Philippines are Bank of the Philippines Islands (BPI), Banco de Oro (BDO) and Metrobank.  All banks are stable, reliable and offer the same level of services.

 

YourGlobalPro professionals facilitate all the paper work in relation to banking need and can assist you in an opening bank account for your business plan in Philippines.

Legal and Compliance

In the Philippines, the responsibility of legal compliance is not a one-time affair, but a continuous process. Below is the various Philippines legal and compliance requirement to be followed by incorporated entities:

·       Foreigners willing to establish sole proprietorships are required to provide evidence of residency in the Philippines during the registration process.

·       Partnerships of more than Php 3,000 capital must register with the Securities and Exchange Commission.

·       Liabilities of shareholders in a corporation are limited to their capital contribution.

·       Corporations must have at least 5 incorporators and a minimum paid up capital of Php 5,000

·       At least 25% of the authorized stock capital of corporations must be subscribed and at least 25% of the total subscription must be paid.

·       Under the law, stock corporations must observe a 60%-40% rule on ownership such that 60% of the company must be owned by Filipino citizens. However, due to the amendments to the foreign investor law, this law can be flexible depending on the industry and nature of the business.

·       Branch offices must have a minimum paid up capital of $200,000. Branches are allowed to derive income from host countries.

·       Representative offices must have minimum inward remittance amount of $30,000 to cover its expenses. Representative offices are not allowed to derive income from the host country.

·       RHQS’s activities are limited supervisory, communication and coordinating center for its subsidiaries, affiliates, and branches in the Asia-Pacific region.

·       RHQS are required to have an inward remittance of $50,000 annually.

·       ROHQS are allowed more activities than RHQS. The required capital is $200,000.

 

YourGlobalPro professionals can assist you with Philippines Legal and Compliance requirements

HR and Employment Law and Immigration / VISA

Below are some of the important points in relation to HR & employment law in Philippines:

·       There is no limit on the term of labor contracts.

·       Employers must pay a premium of 25% of hourly pay for overtime work

·       Paid annual leaves regardless of tenure is a minimum of 5 days.

·       Companies with more than 10 employees are required to establish a retirement fund.

·       In general, a foreign national applying for any kind of visa to enter the Philippines is required to submit a report from a medical examination conducted by a duly authorized physician.

·       Foreign nationals who are not classified as restricted or high-risk may visit the Philippines without obtaining entry visas before departure from their point of origin if they have valid passports and onward tickets or confirmed travel tickets for a return journey.

 

·       Foreign nationals seeking employment in the Philippines, whether residents or nonresidents, must secure an Alien Employment Permit (AEP) from the Department of Labor and Employment (DOLE).

Country Statistics

Capital Manila
Largest city Quezon City
Total Area 300,000 Sq. Km.
Population 100,981,437
Density 336.60 / Sq. Km.
Currency Philippine Peso
Government Unitary Semi-Presidential Constitutional Republic
Official Language Filipino
Religion Christianity: 91.8%
Islam: 5.57%
Others: 2.63%
Government Office Hours Mon-Fri (0800-1700 Hrs)
Business Office Hours Mon-Fri (0830-1800 Hrs)
Banks and Exchange Houses Office Hours Mon-Sat (0900 to 1500 Hrs)

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