Representative Office in Philippines
The most popular option for foreign entrepreneurs is to establish a Representative Office. It is basically a legal entity in the Philippines that can conduct marketing research, promote products and services of the overseas parent company, and get other assistance for local operations without being able to earn any revenue in the country. The company’s activities cannot directly generate revenue; it can only conduct marketing research and analysis on behalf of its parent office and provide support to the parent company’s products in the Philippines. The Representative Office can hire administrative personnel but is barred from hiring more than five (5) employees. Any marketing research done and the results brought in by the staff of the Representative Office in the Philippines are not to be sold or compensated to the Representative Office, whether it was done locally or was done by the parent office employees. Furthermore, it would be beneficial for the Representative Office to undergo its registration process, but the registration process relevant to obtaining a PEZA registration would have to be coursed through ULI as ULI is the locator and the beneficiary of the PEZA incentives.
The Philippines is a great location to start and expand business operations in Southeast Asia. Among the several benefits for foreign entrepreneurs who want to enter this market are a relatively cheap workforce, rights, and a good level of English language skills among Philippines employees. Located geographically in the center of the region, the country provides great connections with other promising markets like Vietnam, Taiwan, and Indonesia with numerous international flights. The capital of the country, Metropolitan Manila, is a very big market itself with a population of 13 million. With more than 100 million population, the Philippines attracts many foreign entrepreneurs who want to sell their products to local residents. Our representative office Philippines facilitates seamless interactions with local clients and partners, strengthening our market position.
Representative Office in the Philippines
The head office can fund a foreign exchange account up to US$30,000.00 for the initial operations and rent. It can only remit a maximum of US$30,000.00 for its operational expenses in the Philippines, on top of the US$30,000.00 in its foreign exchange account, without documents required by the Anti-Money Laundering Council. This is good news for foreign corporations intending to set up ROs in the Philippines, as the US$30,000.00 foreign exchange account established for the initial operations and rent may be used for any expenses, hence sparing the head office from the trouble of obtaining documents to remit other operational expenses to the Philippines. Furthermore, ROs are duty-bound to notify the Bureau of Internal Revenue (BIR) of its closure within one (1) month from the date of the closure. However, the Chief Representative Officer must ensure that this registered branch office has no liabilities or pending administrative violations before its closure, as any liabilities incurred after closure are the obligation of the remaining members.
The head office will also be exempt from the importation obligation of its equipment because the office is temporary in nature and does not partake in generating revenues in the Philippines. As such, no other LGUs will require ROs to obtain local business permits in areas where they are located.
A representative office (RO) is not allowed to generate revenues in the Philippines or obtain local earnings. Its activities in the Philippines are limited to information dissemination, promoting the company’s visibility and image, exploring business opportunities, making investments in the Philippines, and disseminating information on products to be sent to the head office. You can also employ up to five personnel in its head office outside the Philippines to establish and operate a representative office. These foreign nationals do not need an alien work permit (AEP) or employment permits since they are visa-exempted (SEC Memorandum Circular No. 6, Series of 2013). The representative office in the Philippines provides essential services and support to expand our business operations in the region.
Business Permit for Branch Office
After securing the BIR Certificate of Registration, the company must obtain clearance to print receipts and invoices before a printer may print its receipts or invoices. The business permit must be renewed every January of the year the certificate of registration was secured. The permit has to be displayed in the workplace or business location of the company. The information on the requirements to obtain business permits for foreign-owned branch offices are as provided by the Bureau of Permit and License Section of Makati City which may be applicable to other local governments. The Makati City Hall Business Permit and License Division issues business permits based on the city’s Revenue Code. The code was passed pursuant to the Republic Act No. 7160 of the Local Government Code which grants the City the power to generate its own revenue and to apply its resources to the development and improvement of the local jurisdiction.
Upon registration with the Philippines Securities and Exchange Commission (SEC), the branch of a foreign corporation should obtain the necessary business permit to legally engage in business activities in the Philippines. The process can be started as soon as the foreign corporation has obtained its License to Do Business in the Philippines. The business permit for the branch office is issued by the Local Government Unit (LGU), and the requirements of the LGU to issue the permit may vary depending on the local government, Barangay, or City where the branch office is located. Aside from the business permit, general requirements for the establishment and operation of a business are: 1) SEC registration of the branch office; 2) Documentary stamp tax; 3) Application for registration of branch office; 4) Sales book; and 5) Stock transfer book. Obtaining a business permit for branch office is a crucial step to ensure compliance with local regulations and enable smooth functioning.
