Foreign Investment Regulations for Philippine Restaurant and Bar Businesses
(comprehensive legal primer, updated to 29 April 2025)

1. Snapshot

Key Variable	Threshold	Consequence for Foreign Investors
Total paid-in capital of domestic market enterprise	≥ US $200,000 (≈ ₱11 M)	Up to 100 % foreign equity allowed under the Foreign Investments Act (FIA)
	< US $200,000	Reserved to Philippine nationals (≤ 40 % foreign equity)
Retail component (selling goods direct to consumers)	≥ ₱25 M aggregate paid-up capital – or – ≥ ₱10 M per store for high-end concepts	Up to 100 % foreign equity under the Retail Trade Liberalization Act (RTLA, as amended by RA 11595)
	Capital below the above thresholds	Fully reserved to Filipinos
Land ownership	Not allowed	Foreigners must lease (max 50 yrs + 25-yr renewal, RA 7652) or use condominium/unit-holding structures
Management, voting & control	Any device giving foreigners more than their allowed equity share (e.g., nominees) violates the Anti-Dummy Law (CA 108)

(Currency conversions use a 1 US$ ≈ ₱56 reference.)

2. Constitutional & Statutory Framework

Instrument	Core rule for the food-and-beverage (F&B) sector
1987 Constitution, Art. XII	Reserves “exploration, development and utilization of natural resources” and certain “mass media” to Filipinos; restaurants/bars are not intrinsically reserved but fall under generic “investment” scrutiny.
Foreign Investments Act of 1991 (RA 7042, as amended by RA 8179 & RA 11647)	Governs all foreign participation not otherwise covered by special laws. Requires SEC registration and refers to the Foreign Investment Negative List (FINL).
FINL (11th Regular List, signed 2024; 12th List expected late 2025)	List A: activities limited by the Constitution/statutes. List B: defense, small-scale, or those with security/health considerations. Restaurants/bars appear only indirectly: a restaurant or bar with paid-in capital below US $200 k is “small-scale” and therefore reserved.
Retail Trade Liberalization Act, as amended (RA 11595, 2022)	Allows 100 % foreign ownership of retail trade, provided capital floors (₱25 M aggregate or ₱10 M per specialty store) and DTI “pre-qualification” are met. Many restaurant/bars combine service and retail; the higher of the FIA or RTLA thresholds applies.
Anti-Dummy Law (CA 108)	Prohibits surrogate arrangements that evade equity caps; imposes criminal penalties on both foreigner and Filipino dummy.
Ease of Doing Business & Efficient Government Service Delivery Act (RA 11032)	Sets processing timelines (3–20 working days) for permits; failure triggers automatic approval doctrine in certain cases.

3. Scoping the Activity

Pure food-service restaurant (no retail liquor sales to take away)
Treated as a “domestic-market service enterprise.”
- Capital ≥ US $200 k → foreign ownership up to 100 %.
- Capital < US $200 k → foreign ownership capped at 40 %.
Bar/Pub or Resto-bar selling liquor for on-site consumption
Same rule as above.

Tip: Local governments (LGUs) may impose additional Filipino-ownership requirements in the “mayor’s permit” stage for establishments classified as “night-club” or “KTV.” Always check the relevant city ordinance (e.g., Makati’s Rev. Ord. No. 2004-200).
Restaurant with a take-home deli, bottle shop, or merchandise corner
Treated as “retail trade” for that component.
- Total foreign equity can still reach 100 % if the RTLA capital floors are met; otherwise the retail piece must be spun-off to a Filipino entity or the entire venture limited to 40 % foreign ownership.

4. Choosing the Vehicle

Form	Typical use	Notes for foreign equity
Domestic corporation (SEC-registered, min. 2 incorporators)	Standard for multi-branch chains and franchises	May be 100 % foreign if capital floors met. Treasurer-in-trust must deposit 25 % of authorized capital (min. ₱5 k) with at least ₱200 k paid-in for 100 % foreign.
One-Person Corporation (OPC)	Sole foreign investor preferring limited liability	Same equity rules; local resident director/nominee is still required for compliance service.
Branch Office of foreign corporation	Global brands wishing no separate PH entity	Must obtain SEC license; required investment likewise ≥ US $200 k (or ₱25 M for retail).
Regional Operating HQ / RHQ, ROHQ	Not suited—cannot derive income from PH market	Listed only for completeness.

5. Land & Premises

Foreign entities cannot own land (Const. Art. XII § 7).
Options
1. Lease under RA 7652 (max 50 yrs + one 25-yr renewal).
2. Buy condominium units or floors (not land) if at least 60 % of the condominium corporation is Filipino.
3. Locate in an ecozone building (PEZA or Tourism Enterprise Zone) where long-term locator agreements are available.

6. Permit & Licence Stack

Stage	Agency	Salient requirements
Name reservation & incorporation	SEC (+ DTI for single-prop)	Reserve name, Articles of Incorporation & Bylaws, Treasurer’s Affidavit, proof of inward remittance.
Registration of investment	Bangko Sentral ng Pilipinas (BSP)	Foreign-currency inward remittances must be registered to secure repatriation.
Business & sanitary permits	LGU (City/Municipality Hall)	Barangay clearance → Fire Safety → Mayor’s/Business permit (renewed annually every January).
Liquor licence	City Treasurer or Licensing Office	Each city issues its own “Liquor Regulation Tax.” Some LGUs ban bars within 100 m of schools.
Food safety	Food & Drug Administration (FDA – Center for Food Regulation)	Importers of alcohol or food ingredients need LTO & CPR; restaurants need sanitary permits but not necessarily FDA license unless repacking.
Tourism accreditation (optional)	Department of Tourism	Bars in tourist districts (e.g., Boracay) need this for BOI incentives.
Tax registration	BIR	Form 1903/1906, books of account, Official Receipts, EAFS filings.
Employment	DOLE	Alien Employment Permit (AEP) & 9(g) work visa (Bureau of Immigration) for foreign chefs/managers.

7. Labor & Immigration

Alien Employment Permit (AEP): mandatory for any foreign national employed in the PH, valid 1–3 years, renewable.
9(g) Pre-arranged Employment Visa: issued after AEP; bars/restaurants must show foreigner’s unique technical skill.
Labor Standards: F&B is covered by Service Charge Law (RA 11360) – 85 % of collected service charge goes to rank-and-file employees.
Mandatory benefits: SSS, PhilHealth, Pag-IBIG, overtime & holiday pay per Labor Code, 13th-month pay (PD 851).

8. Tax Landscape

Tax	Regular rate	Special notes
Corporate income tax	25 % (RA 11534, CREATE) on net taxable income	If registered as BOI‐incentivized “tourism facility,” avail 4 to 7 years ITH + 10 years 5 % special tax regime in lieu of all local/national taxes (subject to performance).
VAT	12 % on food & beverage sales	If annual gross ≤ ₱3 M, may opt for 3 % percentage tax.
Excise tax	Applies only to manufacture/import of alcohol, not on-premise sales.
Local taxes	Up to 3 % of gross receipts (city tax); separate annual community tax certificate.
Withholding taxes	1 % / 2 % on purchases of goods/services; 15 % branch profit remittance tax for branches.
Dividends to non-residents	15 % (treaty-reduced) after tax sparing credit conditions.

9. Incentives & Special Zones

BOI – “Tourism facilities” (restaurants in accredited tourism zones or with at least ₱20 M new investment) may register.
PEZA – Bars inside IT parks or mixed-use ecozones can enjoy 5 % GIE after ITH period but cannot sell to domestic market without paying full duties & VAT.
ARMM/BARMM RBOI – Similar incentives for Mindanao-based projects.

10. Anti-Dummy & Control Pitfalls

Voting-trust agreements, guaranteed dividends, or veto powers that give foreigners de-facto control beyond their equity violate CA 108.
Penalties: up to 5 years imprisonment and ₱5 M fine; corporation may be dissolved; responsible officers liable.
Test: “Grandfather Rule” – When Filipino shareholders are mere conduits for foreigners, the SEC pierces layers to compute ultimate Filipino ownership. Apply this if corporation uses tiered shareholding structures to meet the 60-40 rule.

11. Typical Transaction Roadmap (100 % Foreign-Owned Restaurant)

Feasibility & structuring – verify capital ≥ US $200 k (₱11 M).
Reserve name & file SEC registration – 3–5 working days via e-SEC.
Open bank account & inward remit capital – secure BSP Form A.
Lease negotiations – execute lease ≥ 5 years for LGU permit support.
LGU permits – sequential clearances (barangay → sanitary → fire → mayor’s).
Liquor licence – depending on city, public hearing may be required.
BIR registration – obtain TIN, register books, apply for CAS if using POS.
Hiring & AEP applications – file at DOLE, then 9(g) visas.
Soft opening & compliance reports – monthly VAT, quarterly income tax, SEC GIS within 30 days of anniversary.

12. What to Watch in 2025–2026

12th FINL (expected Q4 2025) may lower the US $200 k “small-scale” threshold or introduce industry-specific tests (there is congressional pressure from MSME groups).
Philippine Competition Commission (PCC) guidelines on franchise arrangements could impose merger-control filing for large foreign F&B groups (threshold now ₱6.7 B).
Digital Services VAT bills in Congress propose VAT on foreign food-delivery platforms; restaurants partnering with offshore aggregators may face new withholding obligations.
Potential sin-tax increases on alcohol (scheduled 2026) may indirectly affect bar profitability forecasts.

13. Practical Tips for Foreign Entrants

Structure capital wisely. If the concept is upscale, meet the ₱25 M RTLA threshold to future-proof retail activities (souvenirs, bottle sales).
Local partner? Not legally required above capital thresholds but still helps in navigating LGU politics (curfew, noise, zoning).
Mind the lease term. Secure at least a 10-year lease with renewal options; liquor-licence transfer usually tied to the premises, not the entity.
Invest in compliance tech. POS + e-OR systems must integrate with BIR’s Invoice/Receipt Portal by July 1, 2025 (RR 6-2024).
Train on service charge distribution to avoid DOLE audits; keep payroll records for three years.

14. Conclusion

While Philippine law no longer treats restaurants and bars as “reserved” activities, capitalization level is the pivot that determines whether foreign investors may own 40 % or 100 %. Once the US $200 k (service) or ₱25 M (retail) hurdle is cleared, the playing field is virtually level—subject, of course, to the Anti-Dummy Law, local liquor-licensing politics, and an intricate multilayer of tax and labor rules. For would-be foreign restaurateurs and pub-owners, early structuring, careful capital planning, and proactive government liaison remain the best recipe for a smooth Philippine market entry.