The landscape for foreign investment in the Philippines has undergone significant liberalization in recent years, primarily through amendments to the Foreign Investments Act (FIA), the Retail Trade Liberalization Act (RTLA), and the Public Service Act (PSA). Central to these reforms is the determination of minimum paid-up capital, which varies based on the nature of the business and its target market.

1. General Categorization: Export vs. Domestic Market Enterprises

Under the Foreign Investments Act (R.A. 7042, as amended), a corporation’s capital requirement is primarily dictated by its classification:

Export Market Enterprise: A business that exports at least 60% of its output or services. These entities generally have no specific minimum paid-up capital beyond the basic requirements of the Revised Corporation Code (often as low as ₱5,000.00, though larger amounts are recommended for operational feasibility).
Domestic Market Enterprise (DME): A business that produces goods or renders services for the local market, or exports less than 60% of its output. If the foreign equity in a DME exceeds 40%, specific capital thresholds apply.

2. The $200,000 Threshold for Domestic Market Enterprises

The default rule for foreign-owned domestic corporations (more than 40% foreign equity) is a minimum paid-up capital of US$200,000.00.

This amount must be inwardly remitted to the Philippines and converted into Philippine Pesos. This serves as a barrier to ensure that only substantial foreign players enter the local market, protecting small and medium-sized local enterprises.

Reduction to $100,000.00

Foreign investors may qualify for a lower minimum paid-up capital of US$100,000.00 if they meet either of the following criteria:

The enterprise involves advanced technology (as determined/certified by the Department of Science and Technology); or
The enterprise employs at least fifteen (15) direct Filipino employees.

3. Retail Trade Corporations (R.A. 11595)

Retail trade was historically one of the most protected sectors. However, the 2021 amendments to the Retail Trade Liberalization Act significantly lowered the entry barriers.

Feature	Requirement
Minimum Paid-up Capital	₱25,000,000.00 (Approx. US$450,000 - $500,000)
Minimum Investment per Store	₱10,000,000.00
Reciprocity	The foreign retailer's country of origin must allow Filipino retailers to enter their market.

Previously, the requirement was as high as US$2.5 million, making the current ₱25 million threshold a major incentive for foreign retail brands.

4. The 12th Foreign Investment Negative List (FINL)

Even if a corporation meets the capital requirements, it must comply with the Foreign Investment Negative List. This list specifies areas of economic activity where foreign ownership is prohibited or limited:

List A: Areas reserved for Filipino nationals by mandate of the Constitution and specific laws (e.g., Mass Media [0% foreign], Practice of Professions [0%], Retail Trade with capital below ₱25M [0%]).
List B: Areas limited for reasons of security, defense, risk to health and morals, and protection of small and medium-sized domestic enterprises.

5. Public Services and Liberalization (R.A. 11659)

The amendment to the Public Service Act has redefined "Public Utilities." Historically, public services were capped at 40% foreign equity. Under the new law, only specific sectors remain "Public Utilities" (and thus subject to the 40% cap):

Distribution and Transmission of Electricity
Petroleum and Petroleum Products Pipeline Transmission
Water Pipeline Distribution and Wastewater Pipeline Systems
Seaports
Public Utility Vehicles (PUVs)

Sectors not on this list—such as telecommunications, airlines, and railways—can now be 100% foreign-owned, provided they meet the standard capital requirements and reciprocity rules.

6. Compliance and Practical Considerations

Paid-up vs. Authorized Capital: For foreign-owned DMEs, the US$200,000 (or $100,000) must be Paid-up Capital. This means the funds must actually be deposited into the corporation's treasurer-in-trust account (TITP) or the corporate bank account during or after registration.
SEC Registration: The Securities and Exchange Commission (SEC) requires a Bank Certificate of Remittance to prove that the foreign capital has been transferred to a local bank.
One Person Corporations (OPC): Foreigners can form an OPC, but if it is a Domestic Market Enterprise, the same US$200,000 capital requirement applies.
PEZA and BOI Incentives: Foreign corporations that register as "Export Enterprises" with the Philippine Economic Zone Authority (PEZA) or the Board of Investments (BOI) may enjoy tax holidays and duty-free imports, often with lower initial capital burdens than DMEs.

Summary Table: Capital Requirements at a Glance

Entity Type	Foreign Equity %	Min. Paid-up Capital
Export Enterprise	Up to 100%	No specific minimum (General SEC rules)
Domestic Market (DME)	0% to 40%	No specific minimum (General SEC rules)
Domestic Market (DME)	40.01% to 100%	US$200,000
DME (High-Tech/15+ Staff)	40.01% to 100%	US$100,000
Retail Trade	Over 40%	₱25,000,000