How Foreign Companies Can Set Up an Engineering Consulting Business in the Philippines: Corporate Structures and FIA Rules

Updated for laws and practice commonly applied through mid-2025. This is a general overview and not legal advice.

1) The big picture

Foreign participation in “engineering consulting” in the Philippines turns on a single fork in the road:

Track A — Practice of a regulated profession (engineering): activities that constitute the practice of engineering (e.g., signing/sealing plans or specifications, assuming professional responsibility as engineer of record, issuing certifications, direct supervision that the law reserves to licensed engineers). This track is governed by the Constitution and professional laws administered by the Professional Regulation Commission (PRC) and the various engineering boards. Foreign equity and personnel are heavily restricted; foreign individuals typically need a PRC license or a special temporary permit tied to a specific project, plus work authority.
Track B — Technical/management consultancy not amounting to professional practice: advisory, training, project management, owner’s engineering (without signing/sealing), due diligence, software/analytics, and other knowledge services that do not cross into acts reserved to licensed engineers. This track can be open to up to 100% foreign ownership under the Foreign Investments Act (FIA), subject to minimum capital rules and general business registration.

Proper scoping and scoping discipline (what your people do and do not do) is the key compliance dial.

2) Core legal sources to know (and how they interact)

1987 Constitution: generally reserves the practice of professions to Philippine citizens unless otherwise provided by law.
Foreign Investments Act (FIA) (as amended, including 2022 amendments): sets default openness to foreign investment subject to the Regular Foreign Investment Negative List (RFINL), minimum capital, and special rules for domestic-market vs. export enterprises.
Professional laws: Civil, Mechanical, Electrical, Electronics, Sanitary, Mining, Chemical, etc. Each has a board under the PRC; they define what counts as “practice,” licensure, firm registration (where applicable), and special permits for foreigners.
Revised Corporation Code (RCC): corporate forms, including one-person corporations (OPC), and limits on corporate practice of professions (allowed only if a specific professional law authorizes it).
Local business regulation & tax: SEC/DTI registration, BIR registration, LGU (city/municipal) permits, and social registrations (SSS, PhilHealth, Pag-IBIG).
Public procurement & construction (if relevant): Government Procurement Reform Act (RA 9184) for consulting with government; and for construction contracting (separate from consulting), the PCAB licensing regime.

3) What counts as “practice of engineering”?

While definitions vary slightly by engineering law, common elements include:

Signing/sealing plans, specifications, reports, or certifications presented to clients, regulators, or courts.
Assuming professional responsibility over engineering designs or works.
Direct supervision that is expressly reserved to licensed engineers.
Use of professional titles in a way that implies licensure or authority to practice.

If your delivery model requires any of the above, you are on Track A and must structure for professional practice compliance. If you can ring-fence those activities to duly licensed Filipino engineers (or foreign engineers with PRC authority) while foreign experts provide non-reserved advisory, you may operate on Track B.

4) Corporate structures available

A. Domestic corporation (Philippine company)

Ownership: From 0–100% foreign, depending on activity classification.
- If NOT practicing a profession (Track B): up to 100% foreign ownership is generally allowed under the FIA.
- If practicing a profession (Track A): corporate practice is only allowed where a professional law authorizes it—and typically requires Filipino-licensed equity ownership and control, often up to 100% Filipino (some boards permit foreign licensed professionals on a reciprocity basis subject to PRC rules).
Capitalization (FIA):
- Domestic-market enterprise (DME) with foreign ownership: USD 200,000 minimum paid-in capital (assignable in PHP) at registration.
- Can be reduced to USD 100,000 if the enterprise (i) employs ≥50 direct employees, or (ii) uses advanced technology as certified by DOST/competent authority.
- Export enterprise (≥60% revenue from export of services) is not subject to the USD 200k threshold (but expect practical capitalization scrutiny).
Pros/cons: Clear Philippine presence; familiar to counterparties; eligible for incentives if registered with an investment promotion agency (e.g., BOI/PEZA) when criteria are met. Requires full local compliance stack.

B. Branch office of a foreign corporation

Ownership: No Philippine shareholders; the foreign company operates directly in the Philippines.
Capitalization: Assigned capital generally mirrors FIA thresholds (commonly treated as USD 200,000 for domestic-market activity; export activity can be lower).
Tax: Income from Philippine sources is taxed in the Philippines; Branch Profits Remittance Tax (BPRT) applies on profits remitted offshore.
Use case: Suitable if you want a direct extension of the foreign entity. Not suitable for Track A unless professional laws and PRC rules are satisfied (e.g., firm registration, licensed signatories).

C. Representative office

Ownership: 100% foreign allowed.
Capitalization: At least USD 30,000 annual operating funds inwardly remitted.
Restriction: Cannot earn income in the Philippines; only supports parent (information dissemination, quality control, liaison).
Use case: Market development or project coordination without revenue. Not viable for fee-earning consulting.

D. Joint venture (incorporated or unincorporated)

Ownership: Flexes to meet professional practice restrictions (e.g., Filipino professional corporation + foreign advisory company).
Use case: Common when a project requires both (i) professional acts (Track A) by duly licensed Filipino engineers, and (ii) specialized foreign advisory (Track B). The JV can segregate scopes, risks, and economics.

E. Professional corporation/partnership registered with PRC (Track A)

Ownership and officers: Typically licensed professionals as owners/officers, often Filipino unless foreign professionals qualify under reciprocity and obtain PRC licensure or special temporary permits. Boards may also impose Filipino-control percentages for firms.
Use case: Required vehicle if your business will sign/seal or hold out professional authority.

Practical hybrid: Many foreign groups form two entities—(1) a Filipino-controlled professional firm that performs acts of professional practice; and (2) a foreign-owned consultancy for non-reserved advisory. They contract with each other and/or the client with clean scope demarcations.

5) The Foreign Investments Act (FIA) rules in practice

Activity classification drives foreign equity limits.
- Practice of professions appears on the Negative List → generally reserved to Filipino citizens, with exceptions for reciprocity and special laws. Corporate participation is only where the professional law permits it and usually requires Filipino control.
- Consultancy services not constituting professional practice → open to foreign ownership up to 100%.
Minimum capital (for foreign-owned domestic-market enterprises) → USD 200,000; reducible to USD 100,000 with ≥50 direct employees or advanced technology. Export enterprises (≥60% export revenue) are not subject to the USD 200k floor.
Incentives (optional): If your activity qualifies under the Strategic Investment Priority Plan (SIPP) and you register with BOI/PEZA or other IPAs, you may access income tax holidays, enhanced deductions, or special tax regimes. (Incentive availability depends on subsector, export orientation, location, and headcount/technology commitments.)

6) Step-by-step: setting up (Track B first; Track A notes flagged)

A. Scoping & structuring

Write down your exact scope: list every service line and the deliverables. Highlight anything that might be a reserved act (signing/sealing, engineer-of-record roles).
Choose your structure:
- Pure consultancy (non-practice): Domestic corporation (100% foreign possible) or branch.
- Any practice involved: set up or partner with a PRC-registered professional firm with compliant Filipino control; foreign engineers (if any) must secure PRC authority.

B. Name clearance & constitutional/industry checks

SEC name verification (for corporations/branches).
Confirm your industry classification (PSIC) for FIA purposes; ensure your stated business purpose avoids reserved language if you are Track B (e.g., avoid “practice of engineering,” “signing/sealing” in the primary purpose).

C. Constitutive filings

Domestic corporation: Articles of Incorporation + By-laws; minimum paid-in capital evidence; foreign investor affidavits; directors’/officers’ KYC.
Branch: SEC application for foreign corporation with board resolution, apostilled certificates of existence, financial statements, and assigned capital remittance plan.
Representative office: Proof of parent support fund (≥USD 30k) and non-revenue activities.

Track A addition: PRC firm registration (if your board requires it) once the entity is formed; designate the professional-in-responsible-charge and satisfy ownership/control tests.

D. Post-incorporation registrations

BIR (taxpayer registration, invoices/receipts authority, books of accounts).
LGU (Mayor’s/Business permit, occupancy/sanitation if applicable).
SSS, PhilHealth, Pag-IBIG (employer registration).
Data privacy registration (if processing sensitive personal data at scale).
Immigration/DOLE for foreign staff (see §9).

E. Optional incentives

PEZA (export services in IT parks/buildings; provides 47(a)(2) visas and fiscal incentives if qualified).
BOI (pioneer/strategic activities; domestic or export, depending on SIPP listing).

7) Tax posture (high-level)

Domestic corporation: Regular corporate income tax (reduced rates may apply depending on size/thresholds). Dividends to non-residents may be subject to withholding; treaty relief possible.
Branch: Corporate income tax on Philippine-source income + 10% Branch Profits Remittance Tax on profits remitted abroad.
VAT: Standard 12% VAT applies to most local sales of services; zero-rating may apply to export of services (when the client and benefit are outside the Philippines) and for PEZA-registered activities.
Withholding: Expanded withholding on local payments; cross-border fees may trigger withholding unless treaty relief applies.

8) Doing Track A (professional practice) compliantly

If your model requires signing/sealing or assuming professional responsibility, plan for:

PRC firm registration (if the relevant board requires it) and Filipino professional control per board rules.
Individual licensure: Filipino engineers (or foreigners who qualify under reciprocity) must hold PRC licenses in the relevant discipline(s).
Foreign experts: PRC Special Temporary Permit tied to a specific project, typically with a Filipino counterpart; DOLE work authority and immigration status still required (see next section).
Marketing & documents: Ensure proposals, websites, and reports do not hold out unlicensed persons or entities as practicing; stamps/seals only by duly authorized engineers acting through the professional firm.
Quality control: Clear SOPs distinguishing advisory content from sealed professional work.

9) Foreign personnel: work authority & visas

Alien Employment Permit (AEP) from DOLE for foreign employees in the Philippines (exemptions exist for certain statuses).
Immigration status:
- 9(g) Pre-arranged employment visa for locally employed foreign nationals.
- 47(a)(2) Special non-immigrant visas for employees of registered enterprises (e.g., PEZA/BOI) when available.
- Temporary visitor (9(a)) for short business trips (no local gainful employment).
PRC Special Temporary Permits (Track A only) for foreign engineers who will perform regulated acts; these are in addition to AEP/visa.
Intra-group secondees: If seconding staff from an overseas affiliate, align contracts, payroll, and permanent establishment risk.

10) Government and public-sector work

Consulting services for government follow RA 9184 and its IRR: eligibility, classification (firm/individual), and Philippine Government Electronic Procurement System (PhilGEPS) registration.
Construction contracting (separate from consulting) triggers PCAB licensing; do not assume consulting status if you take on construction scope.
Professional practice on public projects requires PRC-compliant signatories and firms.

11) Common structuring patterns (with pros/cons)

100% foreign-owned consulting corporation (Track B)
- Use when: Pure advisory; deliverables exclude seals/certifications.
- Pros: Ownership/control; clean dividend pathway; optional incentives.
- Cons: Requires strict scope control to avoid accidental professional practice.
Branch of foreign parent
- Use when: You prefer a unified global balance sheet and control.
- Pros: Simplicity; no local shareholders.
- Cons: BPRT on remittances; some counterparties prefer contracting with a local corporation.
Dual-entity model (Professional firm + Consulting company)
- Use when: Projects require sealed outputs and international advisory.
- Pros: Compliance by design; lets Filipino-controlled firm handle professional acts.
- Cons: Interface management; related-party pricing documentation; client education.
JV with Philippine professional firm
- Use when: You want local sign/seal capabilities but not a standing professional firm.
- Pros: Project-by-project flexibility; leverages local licenses.
- Cons: Governance and IP allocation need tight contracts.

12) Contracting, IP, and risk allocation

Scope exhibits must delineate reserved (Track A) vs. non-reserved (Track B) activities.
Reliance language: If you supply technical advice without sealing, reference that sealed documents by licensed engineers will control for regulatory purposes.
Professional liability: Check local insurance availability and whether claims-made coverage extends cross-border.
IP: Reserve background IP; define project IP and licensing. Note export-control or data-transfer issues if using offshore design centers.

13) Governance, compliance, and audits

Board & officers: Mind resident-director/officer requirements and disqualifications.
Accounting: BIR deadlines, audited financial statements, and transfer-pricing documentation for related-party services.
Labor: Local employment contracts, minimums, and mandatory benefits; if you second personnel, align with DOLE and tax rules.
Data protection: If handling personal data (e.g., employee files, site access logs), register processing systems as required and appoint a Data Protection Officer.

14) Timelines & sequencing (typical)

2–4 weeks: Structuring, name check, drafting corporate purpose, FIA analysis, bank onboarding.
3–6 weeks: SEC/DTI approval, capital remittance, BIR/LGU permits, employer registrations.
Parallel: Incentives application (if any); immigration/AEP; PRC firm/permit processes (Track A).

(These are working estimates; actual durations vary by documentation quality, signatory availability, and any apostille/legalization steps.)

15) Red flags & practical tips

Purpose clause creep: Avoid “practice of engineering” language if you intend Track B. Use “technical advisory,” “project management,” “knowledge process” framing.
Deliverable discipline: Do not sign or appear to sign by proxy; no quasi-seals in email footers or CAD title blocks.
Marketing: Titles like “Chief Engineer of Record” imply professional practice—reserve for the PRC-compliant firm.
Foreign staffing: Secure AEP and visas before starting work; align immigration, PRC permits (if any), and payroll.
Incentives: PEZA is attractive for export service centers; ensure your revenue qualifies as export of services and your physical site is eligible.
Withholding & VAT: Get set up for e-invoicing where required; map your supply chain for VAT zero-rating (exports) and compliance evidence.

16) Decision tree (quick self-check)

Will anyone sign/seal, certify, or act as engineer of record? → Yes: You need a PRC-compliant professional setup (Track A). Consider a dual-entity or JV. → No: Proceed with FIA-compliant consulting entity (Track B) — corporation or branch.
Domestic market or export? → Domestic: Plan for USD 200k minimum paid-in capital (USD 100k if ≥50 employees or advanced tech). → Export (≥60%): Minimum capital rule does not apply in the same way; still capitalize commercially and for banking.
Need incentives or special visas? → Evaluate PEZA/BOI fit early; visa pathways (47(a)(2), etc.) depend on registration.

17) Clean launch checklist

Finalize Track A/Track B scoping memo.
Choose entity: Corp (foreign-owned), Branch, JV, or Professional firm.
Draft purpose clause aligned to track.
Prepare capital plan (FIA thresholds, remittance documents).
SEC registration (or branch license) completed.
BIR, LGU, SSS/PhilHealth/Pag-IBIG registrations.
Immigration/AEP for foreign staff; PRC permits (if Track A).
Optional IPA (PEZA/BOI) filing.
Engagement templates with scope demarcation and IP/liability terms.
Marketing review to avoid “practice” representations (if Track B).

Final word

The Philippines is welcoming to foreign knowledge-based services—provided you keep a clear line between advisory and professional practice, or you set up (or partner into) a PRC-compliant professional platform when your projects require sealed engineering outputs. If your pipeline includes both kinds of work, the dual-entity structure with tight scope governance is the most durable solution.