Business in the Philippines

The Philippines is undeniably one of the most attractive investment sites in the South East Asian region. The country boasts abundant supply of skilled and competent English speaking workers at a relatively cheap labor cost. It has specific business districts found in key cities of the country where investors can strategically position their businesses. Corollary to this, these business areas are equipped with the necessary infrastructures and facilities such as transportation systems, communication systems i.e. broadband connections and shopping malls which promote the efficient flow of business. On top of these positive attributes, the Philippine government is spearheading a lot of business-friendly initiatives to encourage foreign investments in the country through its various trade and industry agencies.

While the formalities of setting up a business in the Philippines are straightforward and doable in your own, it can get complicated and tiring at times owing to bureaucratic red tapes and unnecessary delays due to unfamiliarity with the country’s corporate laws and policies. Hence, it’s recommended that you enlist the services of a local attorney to assist you with the process.

Business Structures

Just like in any other countries in the world, three basic kinds of business organizations in the Philippines exist. These are sole proprietorship, partnership and a corporation. Corporation can be further classified into either foreign or domestic owned. Moreover, businesses may be registered in the Philippines as foreign branch or a representative office.

General Procedure

Below is a general outline of the steps involved in setting up a company in the Philippines. Charges are applicable and it varies according to where the company will be located. Also, the timing for each step varies with one takes longer than the other.

• Procure a certificate of deposit of the paid-in capital from the bank
• Come up with desired company names and check their availability with the Securities and Exchange Commission (SEC).
• Register incorporation with the Securities and Exchange Commission
• Apply for a community tax certificate (CTC)
• Obtain a Barangay or district clearance
• Apply for a mayor’s permit/municipal license to operate at the Licensing Section of the Mayor’s Office
• Allow inspection from the Mayor’s Office
• Secure special books of account at bookstore
• VAT Registration
• Payment of documentary stamp taxes
• Apply for an authority to print receipt/invoices with the Bureau of Internal Revenue (BIR)
• Print receipts and invoices at the print shops accredited by the BIR
• Submit receipts and invoices to the BIR for approval, have receipts/invoices and books of accounts stamped by BIR
• Register with the Social Security System (SSS)
• Register with Philippines Health Insurance Company (PHIC)

Businesses that qualify the criteria of the country’s Board of Investments and EPZA may avail tax incentives and other benefits.