How to Incorporate a 100% Foreign-Owned Export Company in the Philippines

Capital Requirements and Incentives (Philippine legal context)

This is a practical, law-grounded guide. It’s not legal advice. Philippine rules evolve, and special-sector regulators (BSP, DOLE, PEZA, BOI, BIR, BOC, etc.) issue circulars that can change details. When you’re close to filing, have counsel confirm the latest implementing rules, forms, and fee schedules.

1) Can a foreigner own 100%? Yes—if you’re an export enterprise

Core rule. Under the Foreign Investments Act (FIA), a company that exports at least 60% of its output (or renders services to foreign clients for payment in acceptable foreign currency) is an “export enterprise.” Export enterprises may be 100% foreign-owned, unless the activity itself is in a restricted list (e.g., mass media, small-scale mining, private security, etc.).

Watch the lists. The Foreign Investment Negative List (FINL)—updated by Executive Orders—reserves or caps foreign equity in specific activities. If your activity appears there, the cap applies even if you export.

PEZA vs. FIA thresholds. Investment Promotion Agencies (IPAs) like PEZA (economic zones) typically treat an “export” locator as one that sells ~70% to foreign markets. This is an incentives/IPA classification. For ownership under the FIA, remember 60%.

Land. Foreign-owned corporations cannot own land, but may lease long-term under the Investor’s Lease Act (up to 50 years, renewable 25). Buildings and improvements can be owned.

2) Choose a legal vehicle

A. Domestic corporation (subsidiary)

Law: Revised Corporation Code (RCC).
Incorporators: 2–15 (can be all foreign). Or form a One Person Corporation (OPC) (single shareholder).
Capital: The RCC removed any general minimum paid-in capital (unless a special law/regulator requires one). In practice, plan enough paid-in to fund operations and satisfy bank KYC and IPA expectations.
Board/officers: No general nationality rule if your activity is fully open. The Corporate Secretary must be a Philippine resident and citizen; the Treasurer must be a Philippine resident (citizenship not required).

B. Branch office (of a foreign company)

Law: FIA + SEC rules on foreign corporations “doing business.”
Capital: SEC requires an inward remittance to fund the branch (“assigned capital”). For domestic-market branches, practice pegs this at US$200,000 (lower in some cases). Export branches are not subject to the FIA’s domestic-market minimum, but you must still show realistic funding. Keep bank certificates of remittance.
Resident agent: Mandatory (accepts service of process).
Taxes: Profits remitted to head office are subject to 15% Branch Profit Remittance Tax (treaty relief possible).

C. Representative office

No income in the Philippines, purely liaison/marketing/support.
Needs an annual operating fund remittance (commonly cited at US$30,000+).
Not suitable if you will sell/earn locally.

Subsidiary vs Branch (tax):

Subsidiary (domestic corp): subject to 25% corporate income tax (CIT) on net income. Dividends to a foreign parent are withheld at 25%, reduced to 15% under the “tax sparing” rule if the parent’s country gives a deemed credit; treaty rates may go lower.

Branch: subject to 25% CIT on net income plus 15% Branch Profit Remittance Tax** on remittances. No dividends.

3) Capital requirements—what really applies?

A. FIA minimums (when they matter)

The US$200,000 paid-in minimum under the FIA applies to domestic-market enterprises with >40% foreign ownership.
Export enterprises (≥60% exports under FIA) are not domestic-market enterprises, so this US$200,000 minimum does not apply.
There is a US$100,000 variant for domestic-market firms using advanced technology or employing ≥ 50 direct employees (doesn’t apply if you’re already an export enterprise).

B. Corporate law minimums

The RCC has no general minimum capital. The old “₱5,000 minimum paid-in” is gone. (Sectoral regulators—banks, insurance, financing, etc.—may impose their own minimums.)

C. Practical minimums for incentives & banking

PEZA/Freeport/BOI generally do not impose a fixed paid-in minimum for exporters, but projects must be credible: your application should show sufficient equity and/or debt funding.
Banks will ask how you will fund operations (treasurer-in-trust account certificates, remittance proofs).
Expect to fund at least 3–6 months of operating expenses at launch (payroll, rent, equipment, compliance).

4) Where to locate: regular Philippines vs. ecozones/freeports

Option 1: Outside zones (regular LGU jurisdiction)

You can incorporate and operate as an export company without registering with an IPA.
No special tax holiday—you pay regular taxes.
You still enjoy 0% VAT on export sales (goods actually shipped out; or services rendered in the PH to a nonresident and paid in acceptable foreign currency under BSP rules), and you may apply for VAT refunds on input VAT under the 90-day refund regime (documentation is key).

Option 2: Inside an ecozone/freeport (PEZA, Subic, Clark, AFAB, etc.) or as a BOI-registered exporter

You become a Registered Business Enterprise (RBE) under the CREATE Act framework and the current Strategic Investment Priority Plan (SIPP).
Export RBEs (meeting the zone/IPA export ratio—commonly ≥70%) can access income tax holidays and duty/VAT incentives (details below).

5) Registration roadmap (subsidiary or branch)

Step A — Pre-checks

Confirm activity not on FINL or other special restriction.
Pick the vehicle (subsidiary vs branch) and site (zone vs non-zone).
Name verification (SEC).
Capital plan (equity vs intercompany loans; document foreign remittances).

Step B — Primary registration

Subsidiary/OPC: File Articles of Incorporation and By-laws (RCC), indicate primary/secondary purpose, capital structure, directors/officers.
Branch/Rep Office: File authenticated board resolutions, latest audited financials of the parent, resident agent appointment, and proof of inward remittance (assigned capital or operating funds).

Step C — Secondary registrations & permits

BIR: TIN, Certificate of Registration, books of accounts (or computerized), invoicing system registration, withholding tax accounts, VAT or non-VAT registration.
LGU: Barangay clearance, Mayor’s/Business permit (zone locators may be exempt from local business tax under special rules but still process clearances).
SSS / PhilHealth / Pag-IBIG: employer accounts.
BOC: Importer/Exporter accreditation (Client Profile Registration), and if needed, bonded warehouse accreditation.
Special licenses: environmental (ECC), product standards, telecom/internet (if applicable), Data Privacy registration (NPC) if you meet thresholds or process sensitive data.

Step D — IPA (if pursuing incentives)

PEZA/Freeport: Letter of Intent, project brief, financial model, lease with zone developer, equipment list, export ratio commitment, employment plan.
BOI: Application under SIPP category (export activities), project timetable, economic benefits, local sourcing/employment plan.

6) Incentives menu (CREATE + SIPP) for exporters

Eligibility, durations, and exact documentation are project-specific and location-dependent. This is the high-level map.

Core incentives you may access as an RBE exporter

Income Tax Holiday (ITH): Typically 4–7 years, depending on location (NCR vs. outside NCR vs. less-developed areas) and project priority tier.
Post-ITH choice (up to 10 years):
- Special Corporate Income Tax (SCIT) at 5% of Gross Income Earned in lieu of all national and local taxes — generally available to ecozone/freeport locators, or
- Enhanced Deductions (ED) under the regular 25% CIT, e.g., additional deductions for: power, labor, training, R&D, domestic input usage, export promotion, depreciation at accelerated rates, etc.
Customs duty exemption on importation of capital equipment, raw materials, spare parts directly and exclusively used in the registered activity.
VAT privileges:
- 0% VAT on export sales.
- Zero-rating on local purchases that are directly and exclusively used in the registered activity, subject to BIR/IPA validations and supplier compliance.
Logistics regimes: Access to eco-zone customs territory procedures (or bonded warehouse regime) to suspend duties/VAT on raw materials destined for export.
Immigration: 47(a)(2) special non-immigrant visas for qualified foreign executives and technical staff of PEZA/BOI RBEs (including spouses/dependents), plus streamlined Alien Employment Permit (AEP) handling.

Outside zones (no IPA): You don’t get ITH/SCIT/ED, but you still get 0% VAT on qualifying exports and can pursue VAT refunds and duty drawback under customs law.

7) Everyday taxes for exporters (when incentives don’t fully cover them)

Corporate Income Tax (CIT): 25% on net taxable income for domestic corporations and resident foreign corporations (branches).
Final taxes on cross-border cashflows:
- Dividends from a PH subsidiary to a nonresident foreign corporate parent: 25% final withholding, reduced to 15% under tax sparing, or lower under a tax treaty.
- Branch Profit Remittance Tax: 15% on remittances of after-tax profits by a branch to its head office (treaty relief possible).
- Royalties/interest/services paid abroad: subject to final withholding taxes at statutory or treaty-reduced rates; transfer pricing documentation is essential.
VAT: 12% standard; 0% for qualifying export sales (and certain service exports). If your annual sales exceed ₱3,000,000, VAT registration is generally mandatory. Input VAT refund claims follow strict documentary and 90-day processing rules.
Local taxes: City/municipal business taxes and fees apply unless you are on SCIT 5% in lieu of all taxes in an ecozone/freeport.

8) Customs & export operations

Exporter accreditation with the Bureau of Customs (client profile, digital signatures).
Electronic export declarations; maintain proof of export (bill of lading/air waybill, export declaration, payment evidence) to defend 0% VAT.
Bonded manufacturing warehouse (if approved): imports of raw materials enter tax- and duty-suspended, then are exported after processing; limited local sales are possible but trigger duties/VAT.
Duty drawback is available for duties paid on inputs that are subsequently exported.

9) Corporate governance & compliance (subsidiary/branch)

SEC:
- General Information Sheet (GIS) filing annually (and within 30 days of the organizational meeting).
- Audited financial statements (with e-filing rules and thresholds).
- Beneficial ownership disclosures.
BIR: monthly/quarterly/annual returns; proper withholding; certified invoicing; books of accounts compliance; transfer pricing master/local files for related-party cross-border transactions; RPT Forms for related-party disclosures.
Labor: DOLE standards (wage orders, 13th month pay, OSH compliance), employment contracts, expat AEP/47(a)(2)/9(g) visas as applicable.
Privacy: If processing personal data at scale or sensitive personal information (common in BPO/IT), register with the National Privacy Commission and appoint a DPO.
Environment/sectoral: ECC or other permits if your export activity is industrial/manufacturing.

10) Common pitfalls (and how to avoid them)

Relying only on the “no minimum capital” line. Banks, IPAs, and the BIR expect credible funding. Document inward remittances meticulously.
Missing the export ratio. If you fall below the IPA’s export threshold (often 70% for zones), you can lose incentives. Build contractual and operational safeguards.
VAT zero-rating mistakes. Zero-rating hinges on documents (proof of export, foreign currency inward remittance for services, supplier VAT zero-rating authority where required).
Treaty relief timing. Apply before payment or within the allowed window; keep Certificate of Residence from the parent’s tax authority.
Transfer pricing neglect. Intercompany service fees and royalties must be at arm’s length; keep contemporaneous files.
FINL blind spots. Even if you export, you cannot engage in a restricted activity (e.g., mass media) through the back door.
Officer eligibility. Remember Corporate Secretary must be a resident-citizen; Treasurer must be a resident.
Land ownership assumptions. Use long-term leases instead.

11) Quick checklists

A. Subsidiary (exporter) – outside ecozones

FINL check (activity unrestricted)
Articles & By-laws; directors/officers; resident Corporate Secretary & Treasurer
Bank account & initial paid-in funding (proof of inward remittance)
SEC registration (CRS/eSPARC)
BIR (TIN, invoicing, books, VAT/non-VAT, e-filings)
LGU permits (Barangay, Mayor’s)
SSS/PhilHealth/Pag-IBIG
BOC exporter accreditation (if exporting goods)
Data Privacy/NPC (if applicable)

B. PEZA/Freeport/BOI RBE (exporter)

All of the above plus:

IPA application (project brief, export ratio, equipment list, employment plan)
Zone lease/MOA (if applicable)
ITH/SCIT/ED selection planning and modeling
Systems for zero-rated local purchases documentation
Customs bonded/eco-zone procedures

12) FAQs

Is there a hard minimum paid-in capital for a 100% foreign-owned exporter? No general statutory minimum (RCC), and the FIA US$200k minimum does not apply to export enterprises. Practical funding must still make sense to banks/IPA.
What export ratio should I commit to? For ownership under the FIA: ≥60%. For incentives with PEZA/freeports: plan on ≥70% unless your IPA says otherwise.
Can a single foreigner own the company? Yes, via an OPC (except in activities where special rules apply).
What’s better—branch or subsidiary? Subsidiary avoids the 15% branch profit remittance tax, but dividends will face withholding (25%/15%/treaty). Branches are simpler structurally and can upstream intercompany charges differently. Model both with your tax adviser.
Do service exporters get 0% VAT? Yes, if services are performed in the Philippines for a non-resident engaged in business outside the Philippines, paid in acceptable foreign currency, and all documentary rules are satisfied.

13) Practical capital planning tips

Set initial equity to cover 3–6 months burn + import/security deposits + permits.
Keep bank certificates of inward remittances and BSP-compliant documentation—these are crucial for future dividend/capital repatriation.
If you will import raw materials for export, weigh bonded warehouse vs eco-zone vs drawback based on volume and local supply-chain needs.
Design intercompany pricing (management fees, royalties, cost-sharing) early to fit transfer pricing and withholding frameworks.

Final note

If you share your proposed activity (what you’ll export, where you plan to locate, headcount, capex/opex), I can map the exact capital posture and which CREATE incentives you’d most likely qualify for, plus a filing sequence with draft language for your Articles and PEZA/BOI application.