How to Register a Foreign-Owned Retail Business in the Philippines (SEC, DTI, and Local Permits)

Philippine legal/practical guide for foreign retailers—covering entity setup, capital rules, national/ local permits, taxes, labor, and ongoing compliance. This is general information, not legal advice. Laws and fees change; confirm specifics with the relevant agencies or counsel before you act.

1) Can a foreigner own a retail business in the Philippines?

Yes—subject to the Retail Trade Liberalization Act (RTLA). Under Republic Act (RA) 8762, as amended by RA 11595 (2022), 100% foreign ownership is allowed in retail trade if you meet capitalization requirements (see next section). “Retail trade” means selling goods directly to end-consumers—from a physical shop or online. Wholesaling to resellers is not “retail.”

Other nationality rules (e.g., the general Foreign Investments Act and the Foreign Investment Negative List) do not restrict retail if the RTLA thresholds are met.

2) Capitalization rules for foreign retailers

Under RA 11595:

Minimum paid-up capital for the retail enterprise: ₱25,000,000 (approx. “paid-in capital” placed at the time you start).
Per-store investment: ₱10,000,000 per physical store (store fit-out, inventory, equipment, leasehold improvements, etc.).
Capital must be maintained (not merely momentary). Proof typically includes bank certificates and inward remittance documents.
Franchisees that are foreign-owned must also meet these thresholds.
Micro/small retailing (e.g., sari-sari/mini-shops) is not open to foreign ownership below the RTLA thresholds.

Practical note: Most foreign retailers use a Philippine domestic corporation (or One Person Corporation—OPC) so the capital is clearly booked locally and to simplify LGU/BIR permitting.

3) Choose your legal vehicle

Best practice: a domestic corporation (stock) under the Revised Corporation Code (RA 11232)

Ownership: Up to 100% foreign.
Shareholders/Directors:
- Standard corporation: at least 2 incorporators (may be 100% foreign; directors must be natural persons).
- OPC: 1 shareholder/director (a natural person, can be a foreigner), plus a nominee/alternate nominee.
Capital: Align with RTLA: ₱25M paid-up + per-store capex plan.
Pros: Familiar to banks/landlords/LGUs; easier branch-by-branch permits and tax registrations; clean exit (share sale).

Alternative: branch office of a foreign corporation

Possible in principle, but retail-specific rules, LGU practices, and banks may complicate things.
SEC license to transact is required; you must still meet RTLA capital and per-store thresholds.
Commonly avoided for multi-store retail due to local operational friction.

Avoid sole proprietorship for foreign retail. While foreigners can register a DTI Business Name for a sole prop in narrow cases, the RTLA capital and practical hurdles make corporate vehicles overwhelmingly preferred.

4) End-to-end registration roadmap

Here’s the sequence most retailers follow when opening their first store.

A. Pre-SEC groundwork

Name check (SEC’s name reservation). Ensure trademark clearance with IPOPHL if you’re protecting a brand.
Capital plan: Document how you’ll meet ₱25M paid-up and ₱10M per store (fit-out budget, initial inventory, equipment).
Lease term sheet: Most malls/landlords want a registered entity, but you can pre-negotiate terms. Foreigners can’t own land but may lease:
- Private land: up to 50 years + 25-year renewal (RA 7652).
- Commercial units in condos: you may lease units; ownership in condo corps is capped at 40% foreign equity overall.

B. Incorporation with the SEC

Prepare: Articles of Incorporation and By-laws (or OPC Articles), primary purpose = retail trade, RTLA capitalization statements, proof of identity, local address/lease intent, treasurer-in-trust (or equivalent) undertaking for capital.
Submit & obtain: SEC Certificate of Incorporation (or SEC License for a branch).
Bank account & capital: Open a corporate account; inwardly remit capital and secure bank certifications.

Some SEC processes now issue TINs automatically or transmit basic info to BIR; in practice you still register with BIR to activate taxes and e-invoicing status.

C. DTI items

DTI Business Name (BN) registration is not required for corporations using their SEC name.
If you will use a trade name different from the corporate name (e.g., “Brand X” stores), register it as a Business/Trade Name with DTI.
DTI also issues/implements retail-sector guidelines (consumer protection, price tags, “No Return/No Exchange” rules, online disclosure).

D. Local Government Unit (LGU) permits (city/municipality where the store is)

Expect each store to have its own set:

Barangay Clearance (store’s barangay).
Mayor’s/Business Permit (city hall; under the Ease of Doing Business Act—RA 11032, many LGUs use eBOSS portals).
Zoning/locational clearance (usually embedded in the Mayor’s Permit workflow).
Fire Safety Inspection Certificate (BFP), Sanitary Permit (City Health), and, if required, Environmental Compliance (DENR/EMB) for certain store types.
Signage permit, occupancy permit (post-fit-out), and electrical/mechanical clearances as applicable.
Annual local business tax (LBT) and fees (re-assessed every January).

E. BIR (Bureau of Internal Revenue)

BIR registration (Form 1903 for corporations) and Payment Form 0605.
Books of accounts (manual/loose-leaf/computerized) and invoicing system registration (POS/CAS/ERP enrollment).
Authority to Print (if using printed ORs/invoices) or Acknowledgment/permit for POS/CAS.
VAT or Non-VAT registration:
- VAT (12%) mandatory once gross sales exceed ₱3,000,000 in a 12-month period; most foreign retailers opt to be VAT-registered from day 1.
Withholding taxes (compensation & expanded), monthly/quarterly filings, and annual ITR.
E-invoicing/EIS obligations may apply if you are a large taxpayer/selected pilot—plan for e-receipt readiness.

F. Other mandatory registrations

SSS, PhilHealth, Pag-IBIG: employer registration; enroll every employee.
DOLE: post labor standards requirements; secure Alien Employment Permits (AEPs) for foreign hires; comply with OSH rules (RA 11058) and designate trained safety officers.
Sector-specific licenses (if your goods require them):
- FDA (food, cosmetics, medical devices, drugs, supplements).
- BPS/DTI and product standards for electronics/appliances.
- NTC for telecom/wireless devices.
- PNP/BOC clearances for controlled or imported goods.
- BOC accreditation if you’ll import regularly.

5) Taxes and money matters (quick primer)

Corporate Income Tax (CREATE Act—RA 11534):
- 25% regular CIT (most corporations), or 20% for qualifying small corporations (net taxable income ≤ ₱5M and total assets ≤ ₱100M excluding land).
VAT: 12% output VAT on sales; claim input VAT on purchases/capex.
Local taxes: Local Business Tax (rate/measure varies by LGU, often based on gross sales) and Real Property Tax (for owned improvements; landlords pass RPT via rent).
Withholding taxes: on salaries (compensation), on rent and certain supplier payments (expanded).
Transfer pricing & related-party disclosures if you buy from or sell to affiliates abroad.
Repatriation of profits/dividends: generally allowed through banks; coordinating with your bank on inward investment documentation makes outflows smoother.

6) Employment & immigration

Hiring locals: Philippine labor standards apply (minimum wage by region, OT/holiday pay, 13th-month pay, leave benefits).
Foreign employees:
- AEP from DOLE + corresponding visa (e.g., 9(g) pre-arranged employment).
- Senior investors/executives may look at SIRV, 47(a)(2) variants, or other special visas.
Contracting/outsourcing: follow DOLE rules (e.g., no labor-only contracting).
Data privacy: if you process customer/employee personal data, comply with the Data Privacy Act (RA 10173)—privacy notices, security measures, possible registration of your DPO depending on thresholds/tasks.

7) Consumer-facing compliance for retailers

Price Tag Law / Consumer Act (RA 7394): visible price tags, truthful advertising, warranty/returns handling (“No Return, No Exchange” is not an absolute rule—defective goods must be remedied).
Receipts: issue BIR-registered receipts for every sale; keep copies and Z-readings for POS.
After-sales warranties: comply with mandatory warranties for certain products.
Online sales: disclose business name, address, contact info, and handle data privacy/payment security; honor delivery/return policies you publish.
CCTV & store security: post notices; respect privacy rules.

8) Opening additional stores

Each new branch/store usually requires:

LGU permits for that address (Barangay/MCI/Fire/Sanitary/Mayor’s Permit).
BIR facility/branch registration and POS enrollment for that location.
Per-store investment evidence to support ₱10M threshold.
Leases and fit-out permits/inspections.
Signage permit for each facade.

9) Typical timeline & dependencies (first store)

Entity formation (SEC): prepare docs → submit → release of SEC Certificate.
Bank account + capital infusion: after SEC; secure bank certificates.
Lease & fit-out approvals: run in parallel with permits.
LGU permits: barangay → city (often parallel with Fire/Sanitary).
BIR registration & POS approval: before opening.
SSS/PhilHealth/Pag-IBIG, DOLE/AEP: before employees start.
Industry-specific licenses: before stocking regulated goods.

Expect the store to open only after LGU, Fire/Sanitary and BIR steps complete and POS is permitted/acknowledged.

10) Documents & data you’ll be asked for (checklist)

Identity of shareholders/directors/officers (passports, addresses, tax IDs if any).
Articles of Incorporation/By-laws (or OPC Articles) with Retail Trade purpose.
Lease or proof of business address (head office and store).
Paid-in capital evidence: bank certificates/inward remittance.
Store investment plan (fit-out, inventory, equipment) to substantiate ₱10M per store.
Fire & sanitary plans, contractor permits, occupancy/signage drawings.
BIR forms, POS documentation, books of accounts.
Employment records, payroll setup, AEP/visa paperwork for foreign staff.
Sector-specific licenses (FDA/BPS/NTC/etc.), if applicable.
Privacy documentation (privacy notice, DPO designation if needed).

11) Governance & ongoing compliance

SEC: file General Information Sheet (GIS) annually (or within 30 days of changes); Audited FS annually (timing depends on FY end/SEC rules).
BIR: monthly/quarterly VAT/percentage tax and withholding returns; annual ITR; maintain e-invoicing if covered; keep POS logs and stock records.
LGU: renew Mayor’s Permit & LBT every January; update when you add or close a branch.
SSS/PhilHealth/Pag-IBIG remittances monthly.
DOLE: OSH compliance, holiday pay, 13th-month pay (by Dec 24), workplace posters, service incentive leave, etc.
Licenses (FDA, NTC, BPS, etc.): renew before expiry; batch-track regulated SKUs.
Leases: watch escalation, fit-out reinstatement obligations, and assignment/early exit clauses.
Data privacy & cybersecurity: incident response plan; vendor DPAs; secure POS and payment systems (PCI DSS where applicable).

12) Common pitfalls (and how to avoid them)

Under-documenting capital: Keep clear bank evidence of the ₱25M paid-up and per-store spend.
Opening with incomplete permits: Malls may allow soft openings; BIR/Fire/Sanitary non-compliance can stop operations and incur penalties.
Wrong tax setup: Delaying VAT when you will definitely exceed the threshold leads to amendments/penalties.
POS not registered: Every device/system must be BIR-registered/acknowledged per branch.
Skimming labor rules: DOLE inspections are active; ensure contracts, timekeeping, 13th-month pay, and OSH.
Regulated products: Stocking cosmetics/food/e-cigs/electronics without the right FDA/BPS/NTC approvals is a fast path to seizures/fines.
Lease blind spots: Hidden CAM charges, restoration obligations, exclusivity carve-outs, and short “kick-out” rights if sales underperform.
“Nominee” arrangements: The Anti-Dummy Act penalizes schemes to circumvent ownership rules; not needed in retail if you meet RTLA capital anyway.

13) Quick startup checklist (first store)

Decide corporate vehicle (Corp vs OPC) and capitalization.
Reserve SEC name; draft Articles/By-laws (Retail purpose).
Incorporate at the SEC; open bank account; remit capital.
Finalize lease; begin fit-out permits.
Barangay clearance → Mayor’s/Business Permit (+ Fire/Sanitary/Occupancy/Signage).
BIR registration: books, POS/CAS permit/acknowledgment, VAT status.
SSS/PhilHealth/Pag-IBIG employer accounts; DOLE AEP/visa for foreign staff.
FDA/BPS/NTC/BOC registrations (if applicable).
Privacy & consumer policies; price tags, receipts, return/warranty workflows.
Open store; calendar SEC/BIR/LGU renewals and tax deadlines.

14) FAQs

Q: Can I operate only online? Yes, but RTLA capital thresholds still apply if you are a retailer to Philippine consumers with a Philippine presence. You still need SEC/BIR/LGU registrations (LGU of your office/warehouse), and DTI consumer rules apply online.

Q: Can I start with one kiosk under ₱10M? Not if you are a foreign-owned retailer. The per-store investment requirement applies even to small formats.

Q: Do I need a Filipino director or officer? No nationality quota for directors/officers for retail, but at least one resident corporate officer (e.g., corporate secretary or treasurer) is typically required for practical reasons and service of notices.

Q: Are tax holidays/incentives available? Retail is generally not PEZA/BOI-incentivized (as it serves the domestic market). Don’t plan on tax holidays unless you qualify under a special program.

15) What to prepare for your lawyer/consultant (starter pack)

Brand/trademark status; target product categories.
3-year store rollout plan and capex per store.
Corporate structure chart and officer list; signatories.
Proposed leases (drafts/term sheets).
POS/ERP vendor shortlist.
Labor plan (headcount mix, shifts, foreign vs local).
Import plan and supplier compliance (certifications, labeling).
Privacy/security approach for POS, loyalty app, and ecommerce.

If you want, I can turn this into a tailored checklist + timeline for your exact brand (number of stores, city, product types), and draft model board resolutions and a permit tracker you can use with your team.