How to Register a Foreign-Owned Subsidiary in the Philippines (SEC → BIR → DOLE)

Philippine legal context • Practical, step-by-step • Up to date as of mid-2025 practice, but always confirm agency circulars before filing. This is general information, not legal advice.

1) What a “foreign-owned subsidiary” is (and why choose it)

A subsidiary is a Philippine domestic corporation whose shares are owned by a foreign parent (often 100%, if the activity isn’t restricted). It is a separate legal person from its parent, with limited liability; it pays Philippine corporate income tax on Philippine-source income and does not pay the branch-profits remittance tax (that applies to branches). A subsidiary can sign contracts, hire employees, and hold permits in its own name.

Other vehicles (for context):

Branch office: Same foreign entity, registered to do business in PH; profits remitted abroad are subject to branch profits remittance tax. Often faster to start but less ring-fencing.
Representative office: Cost-center, no income from the Philippines; funded by the head office.
One Person Corporation (OPC): Single-shareholder corporation; the sole shareholder must be a natural person (or estate/trust)—not a foreign company—so this is usually not the fit for a corporate parent.

2) Foreign ownership rules & minimum capital (can you own 100%?)

A. Sectoral limits. The Constitution, statutes, and the Foreign Investment Negative List (FINL) restrict or cap foreign equity in certain activities (e.g., mass media, small-scale mining, some public utilities, land ownership, and others). If your line of business appears on the FINL or a special law, follow that cap (e.g., 40% foreign max, 25% max, or reserved for Filipino citizens). If not restricted, 100% foreign equity is generally allowed.

B. “Domestic Market Enterprise” vs “Export Enterprise.”

Export Enterprise: At least 60% of output is exported (by volume or value). These are usually not subject to the US$200,000 minimum paid-in capital rule.
Domestic Market Enterprise (DME): Sells mainly to the Philippine market. Where foreign equity exceeds 40%, the Foreign Investments Act typically requires minimum paid-in capital of US$200,000, reducible to US$100,000 if the enterprise uses advanced technology or employs at least 50 direct employees (documentation required). Conversions use the prevailing BSP exchange rate.

C. Special regimes may override general rules. Retail trade, financing/lending, education, construction, PPPs, banking, insurance, and others have their own capitalization, licensing, and ownership tests (e.g., the amended Retail Trade Liberalization Act uses peso thresholds). Check the special law if you’re in a regulated sector.

D. Land. A corporation over 40% foreign-owned cannot own private land. Long-term leases (up to 50 years, renewable once for 25) are typical.

3) Pre-incorporation planning checklist

Define exact business activities and NAICS/PSIC equivalents to screen for FINL or special-law limits.
Choose the corporate name (distinctive + compliant with SEC rules).
Share structure: Authorized capital, par value, initial subscriptions and paid-in amounts that meet FIA or special-law minima.
Directors/officers: At least 2 and up to 15 directors (each must own at least one qualifying share).
- Corporate Secretary: must be a Filipino citizen and resident.
- Treasurer: generally must be a resident (often an individual).
- President: must be a director (may be non-resident, but note immigration/work rules if physically working in PH).
Principal office address in the Philippines (for permits and BIR registration).
Banking & capital remittance plan: Some banks let you open an account after incorporation; for foreign capital, plan inward remittance documentation.
Document legalization: For foreign corporate shareholders/directors, prepare board resolutions/POAs, certificates of incumbency/existence, and passport/ID copies, all apostilled or consularized as required.
If incentives are important: Map whether you qualify as a Registered Business Enterprise (RBE) under CREATE with an Investment Promotion Agency (e.g., PEZA, BOI)—this can change the steps and timing.

4) SEC incorporation (company formation)

The SEC is the gatekeeper. Registrations are filed online (platform names and forms evolve). In practice, you’ll do:

Name reservation
- Propose 3–5 variants that reflect your primary purpose and avoid restricted words (e.g., “bank,” “insurance”) unless licensed.
Draft and file Articles of Incorporation (AOI) + By-laws
- Primary & secondary purposes (be consistent with FINL/special laws).
- Principal office address (city/municipality specified).
- Authorized / subscribed / paid-in capital (comply with FIA or special law).
- Directors (2–15), officers (list at least President, Treasurer, Corporate Secretary).
- If a juridical foreign shareholder: include its jurisdiction, address, authorized representative, and attach apostilled/consularized resolutions authorizing the investment and appointing a local signatory.
Treasurer-in-Trust (TITF) and paid-in capital evidence
- On filing, you designate a TITF who attests the receipt/availability of the paid-in capital for the corporation-to-be.
- The SEC may accept an undertaking to submit the bank certificate or proof of inward remittance within a set period. Plan to deposit capital and keep the bank certificate/swift advices ready.
Upload identity and authority documents
- Passports/IDs of signatories, proof of address, and apostilled corporate docs for foreign shareholders.
Pay SEC fees
- Filing fees scale with authorized capital; there are add-ons (legal research fee, name reservation, etc.). Budget also for documentary stamp tax later (handled at BIR).
SEC Certificate of Incorporation
- Once issued, your company exists as a legal person. You can now finalize corporate bank account opening, sign contracts, and move to local permits and tax registration.

Practical tips:

Keep your purpose clauses aligned across SEC filings, the lease, mayor’s permit application, and BIR registration to avoid queries.
Decide early whether you will apply for incentives (PEZA/other IPA); some IPAs prefer you to apply soon after SEC (others allow pre- or post-incorporation applications).

5) Local Government Unit (LGU) permits (Barangay → City/Municipality)

Before BIR registration, most jurisdictions require you to secure the Mayor’s/Business Permit:

Barangay Clearance (from the barangay where your principal office is located).
Locational/Zoning clearance (city/municipality).
Occupancy/Fire/Sanitary clearances depending on the office setup.
Mayor’s/Business Permit and Business Plate (fees depend on capital/lease area/line of business).
Annual renewals every January (plan ahead for inspections and payments).

If working from a flexible/virtual office: confirm that the building operator supports permitting for your line of business; some LGUs require actual seats or restrict “virtual” registrations.

6) BIR registration (tax)

Core steps you will typically complete:

Company TIN and Certificate of Registration (BIR Form 2303)
- File the application to register a corporation (currently BIR Form 1903) with supporting docs (SEC Certificate & AOI, Mayor’s Permit/Barangay Clearance or proof of application, IDs, lease/Title/authority to use address, and board resolution designating authorized signatory).
- Choose tax types (e.g., VAT at 12% or Percentage Tax if eligible; withholding taxes on compensation and on vendors; income tax).
- As of recent reforms, the Annual Registration Fee has been removed by law; confirm the current circulars of your RDO to avoid legacy requests.
Books of Accounts
- Register manual books or apply for loose-leaf/computerized books (if you run an ERP). Keep the BIR approval on file.
Invoicing/Receipting
- Apply for an Authority to Print (ATP) or adopt an approved computerized/e-invoicing solution if required (large taxpayers/e-invoicing pilot groups have special rules). Coordinate with your accredited printer/provider.
Documentary Stamp Tax (DST)
- Original issue of shares is subject to DST (rate computed on par value/issue price). File and pay via eDST/eFPS/eBIRForms within the statutory deadline after issuance.
- DST also applies to certain leases, loans, and other instruments—calendar these.
Enrollment to eBIRForms/eFPS and official email designation
- File returns electronically and pay through authorized banks or online channels. Maintain the company’s official BIR email and keep proofs of e-filing/e-payment.
Ongoing taxes (high level)
- Corporate Income Tax: 25% standard; 20% for qualifying small corporations (asset/income thresholds apply). MCIT rules apply after the initial years (rate and applicability per current law).
- VAT (12%) or Percentage Tax (if VAT-exempt/eligible).
- Withholding taxes on compensation and on suppliers (expanded/creditable and final).
- Local business taxes (paid to LGU, usually annually/quarterly).
- Transfer Pricing & Related Party: keep transfer pricing documentation and file BIR Form 1709 (RPT) when thresholds apply; align intercompany agreements (services, royalties, loans).

7) DOLE registration & employment compliance

A. DOLE Reporting of Establishment (Rule 1020). Within 30 days from start of operations, file the Report of Establishment with the DOLE Regional/Field Office (online systems may be used; keep proof of submission).

B. Occupational Safety & Health (OSH). Comply with the OSH Law and rules: appoint Safety Officer(s), designate First Aiders, conduct mandatory orientations, and maintain safety programs and incident logs appropriate to your risk classification and headcount.

C. Hiring foreign nationals (if any).

Obtain a DOLE Alien Employment Permit (AEP) for each foreign national working in the Philippines, unless exempt (e.g., certain board directors not acting as officers).
With an AEP (or proof of filing), apply at Bureau of Immigration (BI) for a 9(g) Pre-Arranged Employment Visa. While pending, a Provisional Work Permit (PWP) may be used.
Firms registered with IPAs (e.g., PEZA) may sponsor special 47(a)(2) non-immigrant visas for eligible foreign staff. Check your IPA guidelines.

D. Statutory benefits & labor standards.

Register as an employer with SSS, PhilHealth, and Pag-IBIG, enroll your employees, and remit contributions on time.
Provide 13th-month pay, service incentive leave, and comply with hours of work, overtime, holiday pay, night shift differentials, wage orders, and final pay/COE rules.
Maintain employment contracts, company policies/handbook, and data privacy notices/consents (see NPC below).

8) Data privacy (NPC) & beneficial ownership

If you process personal data of customers or employees (you will), implement a privacy management program under the Data Privacy Act: appoint a Data Protection Officer (DPO), conduct a Privacy Impact Assessment, draft privacy notices, and secure data-sharing agreements where applicable. Certain entities must register data processing systems with the National Privacy Commission (NPC)—confirm current thresholds.
Banks and the SEC require ultimate beneficial owner (UBO) disclosures; keep UBO ledgers and IDs updated for KYC and anti-money-laundering compliance.

9) Banking & foreign exchange

Inward remittance of capital via an Authorized Agent Bank (AAB) and keep swift/credit advices. Ask your bank about BSP registration of foreign investments where needed; proper bank records facilitate repatriation of capital and dividend remittances in foreign currency.
Dividend withholding: Dividends to non-resident foreign corporations are generally subject to final withholding tax (often 25%, possibly 15% under “tax sparing,” or treaty-reduced rates where a treaty applies and requirements are met). Plan documentation early.

10) Optional: Incentives (CREATE) & special locations

If you qualify as an RBE under CREATE and register with an Investment Promotion Agency (IPA) such as PEZA, BOI, SBMA/Clark, etc., you may obtain:

Income Tax Holiday (ITH) for a period, followed by either
- Special Corporate Income Tax (SCIT) at 5% of gross income or
- Enhanced Deductions in lieu of SCIT (the availability depends on your activity/location and current SIPP).
VAT zero-rating on local purchases, customs duty exemptions, and facilitated visas for foreign staff. Registration sequencing varies by IPA, but you typically incorporate first at SEC, then apply for RBE status, then secure BIR zero-rating endorsements and LGU/PEZA permits for your site.

11) After you’re live: ongoing corporate housekeeping

A. SEC corporate filings

General Information Sheet (GIS): file annually (within the prescribed period after your annual meeting or anniversary, per SEC circulars).
Audited Financial Statements (AFS): file annually through the SEC e-filing portal (deadlines may be staggered).
Report changes promptly: directors/officers, principal office, by-laws/AOI amendments, increases in authorized capital, share issuances/transfer restrictions, and beneficial ownership disclosures.

B. BIR tax calendar

Monthly/quarterly returns for withholding and VAT/percentage tax; annual ITR with AFS and RPT Form 1709 if applicable.
Keep transfer pricing files (master/local file) where required.
Issue compliant ORs/SIs; maintain books and inventory of invoices.
Track DST for new share issues, leases, loans.

C. LGU & other compliance

Renew Mayor’s Permit/Business Plate every January; secure fire and sanitary renewals.
SSS/PhilHealth/Pag-IBIG monthly remittances and annual reports as required.
DOLE: labor standards/OSH reports, AEP renewals, and postings (labor law posters, OSH signages).

12) Step-by-step summary (SEC → LGU → BIR → DOLE)

Screen activities against FINL/special laws; decide ownership %, capital, directors/officers.
Reserve name and draft AOI/By-laws; line up apostilled foreign docs.
File with SEC (with TITF and capital commitments) → get Certificate of Incorporation.
Lease/confirm office → Barangay Clearance → Mayor’s/Business Permit (and related clearances).
Open bank account; remit capital; obtain bank certificate/SWIFT.
Register with BIR (TIN/2303, books, invoicing, DST on share issuance, e-filing).
Register as employer with SSS/PhilHealth/Pag-IBIG.
DOLE Rule 1020 filing; set up OSH compliance.
If hiring expatriates: AEP → 9(g) visa (or IPA-sponsored visas).
(Optional) Apply for CREATE incentives with your IPA, if eligible.
Operate and comply with SEC/BIR/LGU/DOLE calendars.

13) Frequently asked questions

Q: Can a foreign company own 100% of a Philippine subsidiary? A: Yes, if the activities are not in a restricted/capped list or subject to a special law that imposes caps.

Q: How many directors do we need? A: At least 2, up to 15 (each must own one share). The Corporate Secretary must be a Filipino citizen and resident; the Treasurer is typically required to be resident.

Q: What is the minimum capital? A: For DMEs with >40% foreign equity, the general rule is US$200,000 paid-in (can drop to US$100,000 with advanced technology or ≥50 direct employees). Export enterprises (≥60% export) typically have no FIA minimum, but sector-specific laws may. Special sectors use peso-denominated thresholds.

Q: Can we use a “virtual office”? A: Many LGUs require a physical site for permitting/inspection; some allow serviced/flex offices. Confirm with your building and LGU first.

Q: Dividends to the parent—what tax applies? A: Generally final withholding applies (commonly 25%; may be 15% tax-sparing or treaty-reduced if requirements are met). Plan documentation in advance.

Q: Do directors need visas? A: Non-resident directors attending meetings remotely do not need Philippine visas. If they live/work in the Philippines or act as officers, they generally need AEP + 9(g) (or an IPA visa).

14) Smart documentation pack (what to prepare)

From the foreign parent: Apostilled/consularized Board Resolution approving the investment; certificate of existence/good standing; articles/by-laws (if requested by SEC/bank); passport/IDs of signatories; authority to sign for SEC and bank.
For SEC filing: AOI, By-laws, lists of directors/officers, TITF affidavit, KYC IDs, proof of office address (lease/consent/Title).
For LGU: Lease, building permits/clearances as needed, SEC docs, IDs, floor plan/DTI occupancy docs if applicable.
For BIR: SEC docs, Mayor’s/Barangay permits (or proof of application), lease, IDs, board resolution authorizing tax signatory, books registration, ATP/computerized system application, DST filings.
For DOLE/SSS/PhilHealth/Pag-IBIG: SEC docs, 2303 (if already issued), list of employees, IDs, and company policies/OSH designations.

15) Common pitfalls (and how to avoid them)

Purpose/activity mismatch across SEC, LGU, and BIR → align descriptions early.
Under-documented capital for FIA minima → remit through AAB and keep SWIFT/bank certifications.
Missing Filipino Corporate Secretary or non-resident Treasurer → fix officer slate before filing.
Late DST on share issuance, or missing BIR books/ATP → calendar tax steps immediately after permitting.
Assuming visas aren’t needed for foreign “advisers” who actually work on-site → AEP/9(g) them.
Forgetting annual renewals (Mayor’s Permit in January, SEC GIS/AFS per calendar) → create a compliance calendar.

16) Indicative timeline & costs (very general)

SEC incorporation: generally measured in days to a few weeks depending on document legalization and queries.
LGU permits: days to weeks, varying by city/building readiness.
BIR registration: often days post-LGU, longer if adopting computerized systems.
AEP/9(g): can add weeks; IPA visas vary.

Fee drivers: SEC fees (capital-based), notarization/legalization, LGU assessments, DST on shares, printer/system costs, and professional fees.

17) Quick start template (you can copy/paste into your project plan)

Week 0: Finalize activities, ownership %, directors/officers; start apostilling foreign corporate docs. Week 1: Name reservation; draft AOI/By-laws; line up lease. Week 2: SEC filing; receive incorporation; bank KYC; remit capital. Week 3: Barangay + Mayor’s Permit; BIR 2303; books & ATP; DST on shares. Week 4: SSS/PhilHealth/Pag-IBIG; DOLE Rule 1020; OSH setup; (If needed) AEP/9(g) initiation; (Optional) IPA application.

Final notes

Rules evolve. Agencies regularly refine portals, forms, and deadlines; confirm the latest circulars (especially on BIR e-systems, SEC e-filings, DOLE Rule 1020 portals, and CREATE implementing rules).
Coordinate sequencing: Some LGUs want the Mayor’s Permit before BIR 2303; some RDOs accept proof of application. Plan for these local nuances.
Document everything. Philippine agencies value complete, consistent, and authenticated papers.

If you want, I can also tailor the steps to your industry, city, and headcount and generate a custom compliance calendar you can share with your team.