Business Registration Requirements for Foreign Companies in the Philippines (A Comprehensive Legal Guide as of 12 June 2025)
1. Constitutional & Statutory Framework
| Key Instrument | Core Rule for Foreign Equity | Notes |
|---|---|---|
| 1987 Constitution (Art. XII) | Limits full foreign ownership of land, natural resources, mass media, public utilities, educational institutions, and professions. | Some sectors require at least 60 % Filipino ownership (“60-40 Rule”). |
| Foreign Investments Act (FIA), R.A. 7042 as amended by R.A. 8179 & R.A. 11647 (2022) | Generally allows up to 100 % foreign ownership except where restricted in the Foreign Investment Negative List (FINL). | R.A. 11647 liberalized many areas (e.g., retail, renewable energy, domestic market enterprises ≥ US $200 000 paid-in capital). |
| Retail Trade Liberalization Act, R.A. 11595 (2021) | Minimum paid-in capital of PHP 25 million (≈ US $450 000) for 100 % foreign-owned retail enterprises; lower thresholds for retailers with Filipino partners. | |
| Public Service Act, R.A. 11659 (2022) | Redefined “public utility,” opening telecoms, airlines, and railways to up to 100 % foreign equity (subject to reciprocity and national security review). | |
| Revised Corporation Code (R.A. 11232, 2019) | Introduced the One-Person Corporation (OPC) and removed the minimum capital stock requirement for most corporations (unless special law or SEC rules apply). | |
| Special Economic Zone Act (R.A. 7916), CREATE Act (R.A. 11534, 2021) | Provide fiscal & non-fiscal incentives for export-oriented or strategic projects registered with PEZA, BOI, AFAB, etc. |
2. Choosing a Legal Vehicle
| Form | Who Registers | Typical Use Case | Key Foreign-Ownership Rules |
|---|---|---|---|
| Domestic Corporation | Securities and Exchange Commission (SEC) | Local subsidiary, domestic market or export-oriented | Equity ceiling per FINL; min. 5 incorporators (can be 1 for OPC); min. 2 foreign directors if >40 % foreign equity. |
| Branch Office | SEC (SEC Form F-104) | Continuation of parent’s business in PH | Capital remittance ≥ US $200 000 (domestic-market) or US $100 000 if employing ≥ 50 Filipinos or using advanced tech. |
| Representative/ Liaison Office | SEC | Non-commercial activities (e.g., marketing, quality control, R&D) | Initial inward remittance ≥ US $30 000; cannot derive income locally. |
| Regional Headquarters (RHQ) | SEC | Supervisory, communication, not earning income | Initial inward remittance ≥ US $200 000; tax-exempt on income, but employees enjoy special tax rate. |
| Regional Operating Headquarters (ROHQ) | SEC | Performs qualifying services to affiliates (e.g., IT, logistics, accounting) | Initial remittance ≥ US $200 000; 10 % corporate income tax (CIT) rate under CREATE Act; may earn in PHP or FX. |
| Partnership | SEC | Professional services, joint ventures | At least 60 % Filipino equity if in a partly-nationalized profession; otherwise FINL applies. |
| Sole Proprietorship | Department of Trade & Industry (DTI) | Small retail, consultancy | Only for Filipino citizens, except under special laws (e.g., R.A. 8799 for foreign retail with required capital). |
3. Core Registration Workflow
Name Reservation SEC’s Company Registration System (CRS); recommended to reserve for 30–90 days.
Corporate Documents Preparation
- Articles of Incorporation & By-laws (domestic corp. / OPC).
- Application Form (F-104) and Board Resolutions (branch/RHQ/ROHQ).
- Financial Statements authenticated by PH Embassy/Consulate if executed abroad.
Proof of Inward Capitalization
- Certificate of Bank Deposit (for domestic corp.) or
- Bangko Sentral ng Pilipinas (BSP)–registered inward remittance via banking channels (branch/RHQ/ROHQ).
SEC Filing & Payment of Fees
- Filing fee: 0.2 % of authorized capital stock + legal research fee (1 %).
- Documentary stamp tax (DST) on original share issuance (PHP 1 per PHP 200 of par value).
Issuance of SEC Certificate
- Certificate of Incorporation (domestic) or License to Do Business (branch).
Post-SEC Registrations
Agency Purpose Deadline Bureau of Internal Revenue (BIR) TIN, Authority to Print (ATP) official receipts/invoices, registration of books Within 30 days from SEC issuance or start of operations Social Security System (SSS), PhilHealth, Pag-IBIG Mandatory employer registration Before first employee is hired Local Government Unit (LGU) – Mayor’s/Business Permit & Barangay Clearance Zoning, fire safety, sanitation Before commencing operations; renewed every January Bangko Sentral ng Pilipinas (BSP) Registration of foreign investments (optional but often required for repatriation of capital/ dividends) As soon as FX is remitted PEZA / BOI / AFAB / SBMA (if applicable) Investment incentives registration Within prescribed period after SEC registration or before start of project
4. Capitalization Rules
| Enterprise Type | Minimum Paid-In Capital |
|---|---|
| Domestic Market Enterprise (DME) with >40 % foreign equity | US $200 000 (PHP equivalent), unless employing ≥ 50 Filipinos or using advanced tech (then US $100 000). |
| Export-Oriented Enterprise (≥ 60 % export) | No minimum under FIA. |
| Retail Enterprise (100 % foreign-owned) | PHP 25 million aggregate (≈ US $450 000) + PHP 10 million per store after the first. |
| Financing/ Lending Company (foreign) | PHP 1 billion paid-up, per BSP/ SEC rules. |
| Branch/ ROHQ | US $200 000 initial remittance. |
| Representative Office | US $30 000 running costs per year. |
5. Tax & Incentives Landscape
- Regular Corporate Income Tax (CIT) – 25 % of net taxable income (effective 1 July 2020 under CREATE). OPCs, branches, and domestic corporations are all subject, unless enjoying special rates.
- Optional 1 % Gross Income Tax (GIT) for PEZA-registered export enterprises (transitory; to be replaced by CREATE’s 5 % GIE in 2026).
- 10 % CIT for ROHQs; tax-exempt for RHQs (non-income generating).
- Withholding Taxes – 15 % preferential rate on dividends to non-resident foreign corporations, subject to tax-treaty relief.
- Value-Added Tax (VAT) – Standard 12 %, but zero-rated for exports and PEZA ecozone sales.
- Locational Incentives – Income tax holiday (ITH) up to 7 years, duty-free importation, enhanced deductions.
6. Sector-Specific Licenses & Approvals
| Sector | Primary Regulator | Typical Extra Steps |
|---|---|---|
| Banking & Fintech | Bangko Sentral ng Pilipinas (BSP) | Approval of a banking license or EMI (e-money issuer) certificate, fit-and-proper tests. |
| Insurance | Insurance Commission (IC) | Minimum net worth PHP 1.3 billion; license to transact insurance business. |
| Mining & Renewable Energy | Department of Environment & Natural Resources (DENR) & DOE | MPSA/FTAAs, RE Service Contracts, indigenous people’s free & prior informed consent (FPIC). |
| Construction | Philippine Contractors Accreditation Board (PCAB) | Foreign contractors must secure a Special License per project or a Regular License if in joint-venture with 60 % Filipino partner. |
| Education | CHED / DepEd / TESDA | Not open to full foreign ownership; limited to 40 % foreign equity. |
| Mass Media & Advertising | NTC / PANA | Mass media is 100 % Filipino-owned; advertising up to 30 % foreign equity. |
7. Labor & Immigration Compliance
- Alien Employment Permit (AEP) – Issued by DOLE for each foreign hire (unless exempt).
- 9(g) Working Visa – Processed through Bureau of Immigration (BI) & DOLE endorsement.
- Special Investor’s Resident Visa (SIRV) – For foreigners investing ≥ US $75 000 in acceptable enterprises.
- PEZA 47(a)(2) Visa – Multiple-entry visa for foreign personnel in ecozones.
The Labor Code sets rules on probationary periods, mandatory benefits, and termination grounds. Foreign employers must observe the percentage ratio rule (must hire at least 4 Filipino workers for every 1 foreign professional, unless exempt).
8. Anti-Money Laundering & Reporting
All corporations and branches must maintain records of true beneficial ownership (BO) and submit a General Information Sheet (GIS) annually to the SEC. Certain entities (banks, insurance companies, financing companies, remittance agents) are Covered Persons under the Anti-Money Laundering Act (AMLA) and must register with the AMLC, conduct KYC, and report covered & suspicious transactions.
9. Foreign Exchange & Repatriation
Under BSP’s FX Manual (2023):
- Foreign investments registered with BSP may be repatriated (capital, dividends) in FX at prevailing rates.
- Loans obtained abroad must be reported and, in many cases, approved by BSP.
- Royalty, management, and service-fee payments to non-residents require prior BSP/SEC evaluation if exceeding arm’s-length thresholds.
10. Ongoing Compliance Calendar
| Compliance Item | Frequency |
|---|---|
| SEC Audited Financial Statements (AFS) | Annually, within 120 days of fiscal year-end (for domestic corps.); within 30 days of parent’s submission (branches). |
| SEC GIS | Within 30 days of annual stockholders’ meeting or anniversary of SEC registration (OPC & branches). |
| BIR Income Tax Return (ITR, BIR Form 1702-RT/IC) & Audited FS | On or before the 15th day of the 4th month after fiscal year-end. |
| Quarterly VAT & Percentage Tax Returns | 25 days after each taxable quarter. |
| Local Business Permit Renewal | 1–20 January every year. |
| SSS, PhilHealth, Pag-IBIG Contributions & Alphalists | Monthly remittances; annual alphalists due every January. |
| Beneficial Ownership Declaration | Update within 30 days of any change; confirm annually via GIS. |
11. Penalties for Non-Compliance
| Offense | Regulator | Typical Sanction |
|---|---|---|
| Late SEC filings | SEC | PHP 1 000/day; suspension/revocation of license. |
| Failure to register books & invoices | BIR | PHP 1 000 per unregistered book + compromise penalties. |
| Operating a branch office without SEC license | SEC | Cease & desist order; fines; disqualification of officers. |
| Alien employment without AEP/9(g) visa | DOLE/BI | Fines up to PHP 10 000 & deportation. |
| Non-registration of foreign investment with BSP (optional but recommended) | BSP | Difficulties in future repatriation; no FX guarantee. |
12. Practical Tips & Recent Trends (2023-2025)
- Digitalization – SEC’s Electronic Filing & Submission System (eFAST) now mandatory for AFS/GIS; CRS fully online for new corporations.
- Ease of Doing Business – The Anti-Red Tape Authority (ARTA) enforces 3-7-20 processing-day rules; silence-is-consent doctrine applies in some cases.
- FINL Shift – Expect shorter Negative Lists as the government continues liberalization (e.g., potential removal of advertising cap).
- CREATE 2 – Pending proposals aim to further reduce CIT to 20 % and harmonize incentive tiers.
- ESG & Sustainability Disclosures – Public and large companies must file Sustainability Reports with SEC starting FY 2023.
13. Checklist Summary (Quick Reference)
- Choose entity type → verify FINL & capital thresholds.
- Reserve name & draft constitutional documents.
- Secure inward remittance proof and apostilled parent docs (for branch / ROHQ).
- File with SEC, pay fees, receive registration/license.
- Register with BIR, LGU, SSS/PhilHealth/Pag-IBIG.
- Obtain sector-specific permits (if any).
- Hire staff → secure AEP & visas for expatriates.
- Apply for incentives with BOI/PEZA if eligible.
- Maintain books, file tax & SEC reports on time.
- Plan FX registration for smooth dividend repatriation.
14. Final Thoughts
The Philippines offers a progressively liberalized landscape for foreign investors, but compliance remains highly formalistic. The interplay between constitutional restrictions, the FINL, sector-specific rules, and evolving incentive regimes means that what looks straightforward on paper can involve intricate timing and documentary requirements in practice. Always build in realistic lead-times (8–12 weeks) for complete registration and consider engaging local counsel or a professional corporate service provider to navigate SEC e-platform quirks, LGU idiosyncrasies, and the ever-shifting regulatory environment.
(This article is informational and not a substitute for individualized legal advice. Laws and regulations may change after 12 June 2025.)