Company Registration in the Philippines for Foreign Investors

A comprehensive legal‑practitioner’s guide

1. Governing Legal Framework

1987 Philippine Constitution – sets overarching nationality restrictions and the 60‑40 rule for “nationalized” activities such as land ownership, mass media, and certain public‑utility operations.
Republic Act (RA) 7042, as amended (Foreign Investments Act, “FIA”) – guarantees full foreign participation in all areas not on the Foreign Investment Negative List (FINL) and prescribes minimum capital rules.
RA 11232 (Revised Corporation Code, 2019) – modernized corporate formation, introduced the One‑Person Corporation (OPC), perpetual corporate term, remote meetings, and corporate rescue mechanisms.
RA 7042 Implementing Rules; Securities Regulation Code; Anti‑Dummy Law; Local Government Code; National Internal Revenue Code; labor, immigration, and social‑security statutes.

2. Choosing a Legal Vehicle

Vehicle	Foreign‑ownership ceiling	Minimum paid‑in capital*	Distinctive features
Domestic Stock Corporation	Up to 100 % unless activity is restricted	US $200,000 (≈ ₱11.2 M)† or US $100,000 if advanced technology or employs ≥ 50 locals	Separate juridical entity; can own land if ≥ 60 % Filipino
One‑Person Corporation (OPC)	Same as above	Same as above	Single shareholder; no minimum number of directors
Branch Office	100 % foreign	US $200,000 (waived for export‑oriented branch: ≥ 60 % revenues from abroad)	Extension of foreign entity; cannot own land
Representative Office	100 % foreign	US $30,000 inward remittance annually	Non‑income‑generating; liaison & quality‑control only
Regional Headquarters (RHQ)	100 % foreign	US $50,000 annual operating budget	Supervisory, no income in PH; tax‑favored
Regional Operating HQ (ROHQ)	100 % foreign	US $200,000 one‑time	May derive income from affiliates abroad; 10 % income tax
*Capital must be remitted in foreign currency and inward‑remittance certificate secured from an AAB (authorized agent bank).
†Capital may be lower (₱5,000) if the enterprise falls under FINL List B (e.g., defense‑related) or PEZA/BOI export enterprise exemptions.

3. Foreign Investment Negative List (FINL)

Updated biennially by Malacañang.

List A – activities reserved to Filipinos by the Constitution/statute (e.g., mass media, fisheries, small‑scale mining, recruitment, retail w/ paid‑up < US $2.5 M).
List B – activities limited for reasons of security, defense, health, morals, or protection of small/medium enterprises (e.g., firearms manufacture limited to 40 % foreign).

If an activity is not on the FINL, 100 % foreign equity is allowed, subject to FIA capital rules.

4. Step‑by‑Step Incorporation / Licensing

Name Verification & Reservation (SEC’s e‑FAST system) – reserve for 30 days, extendable.
Draft Constitutive Documents
- Articles of Incorporation (domestic corp/OPC) or Application for License (branch/RHQ/etc.)
- By‑laws (not required for OPC).
Capitalization – inward remittance; SEC bank certificate (for domestic) or certificate of inward remittance & parent board resolution (for branch).
Online Filing with SEC – upload documents; pay filing fees (0.2 % of authorized capital stock + ₱2,020 filing fee).
SEC Certificate of Incorporation / License to Do Business – legal personality begins upon issuance.
Post‑Registration
- BIR – secure TIN, authority to print official receipts, register books of accounts.
- Local Government Unit (LGU) – Mayor’s/Business Permit, Barangay clearance, Fire Safety inspection.
- Social Agencies – SSS, PhilHealth, Pag‑IBIG registration.
- DOLE – if ≥ 10 workers, file establishment report and rule‑compliant workplace policies.
- PEZA/BOI/CDC/Subic – if seeking incentives, register concurrently or within 30 days from SEC issuance.

5. Tax & Incentive Landscape

Regime	Corporate Income Tax	VAT	Customs & Other	Notes
Regular domestic / branch	25 % (or 20 % if net taxable < ₱5 M & assets < ₱100 M)	12 %	—	Dividends to non‑residents: 25 % or treaty rate
RHQ	Exempt	Exempt	Exempt on importations	Employees taxed at 15 % fringe & income
ROHQ	10 %	12 %	Duty‑free capital equipment (import VAT 0 %)	Employees taxed at 15 %
PEZA enterprise	0 %–5 % GIT or 25 % CIT post‑transitory	0 % on local purchases, 0 % export sales	Duty‑free importation	Administered by PEZA; requires ≥ 70 % export sales
BOI‑registered pioneer/non‑pioneer	4–6 years ITH, then 10 % CIT	VAT zero‑rating	Duty‑free capital equipment	National incentive, location‑agnostic

6. Foreign Personnel & Immigration

9(g) Pre‑Arranged Employment Visa – sponsored by employer; requires Alien Employment Permit (AEP) from DOLE.
Special Non‑Immigrant 47(a)(2) – available to PEZA, BOI, ROHQ/RHQ staff; expedited, no AEP.
Special Investor’s Resident Visa (SIRV) – min. US $75,000 investment; indefinite stay.
Special Retirement Resident Visa (SRRV) – for retirees; flexible deposits.
Quota immigrant visa (Sec. 13) – limited to 50 per nationality per year.

7. Land & Real‑Property Issues

Foreign corporations cannot own land directly unless ≥ 60 % Filipino‑owned. Alternatives:

50‑year long‑term lease (renewable for 25 years) under Investor’s Lease Act.
Condominium units if Filipino co‑owners hold ≥ 60 % of total project.
PEZA/Freeport ecozones allow 75‑year leases (25 + 25 + 25).

8. Compliance & Reporting

Filing	Deadline	Authority	Key contents
General Information Sheet (GIS)	Within 30 days of AGM / license anniversary	SEC	Ultimate beneficial ownership disclosure
Audited Financial Statement (AFS)	120 days after fiscal year end	SEC + BIR	IFRS‑compliant; stamp‑received BIR copy needed for SEC filing
Income Tax Return (ITR)	15th April (calendar year) / 15th day 4th month after FY end	BIR	Annual + quarterly (1702Q)
Transfer‑pricing (TP) documentation	On request; file related‑party form w/ AITR	BIR	Applies if transaction ≥ ₱90 M/year
Anti‑Money Laundering (AML) registration	Within 30 days of start of operations	AMLC (for covered persons)	Designate compliance officer

Failure to file may lead to revocation of SEC license, fines, and disqualification of directors/officers.

9. M&A, Capital Changes, and Exit

Share transfers – require BIR Certificate Authorizing Registration (CAR) before SEC recording.
Increase/decrease of capital – 2/3 stockholder approval, amended articles, SEC fees.
Merger/consolidation – plan of merger, fairness opinion, SEC/Philippine Competition Commission (PCC) clearance if transaction value ≥ ₱6 B (2023 threshold, CPI‑adjusted).
Dissolution / License Withdrawal
1. Board & shareholder resolution (majority for corp; board/parent for branch).
2. Publish notice & secure tax clearance.
3. Liquidation & SEC approval; residual assets repatriated subject to BIR confirmation of tax compliance.

10. Practical Tips & Common Pitfalls

Confirm FINL status early – investors often assume 100 % ownership is allowed for retail or consultancy; many of these are capped at 40 % or require higher capitalization.
Mind the inward‑remittance evidence – remittances through SWIFT to an AAB are critical; transfers through fintech wallets or intercompany offsets are unrecognized.
Use English in constitutional documents – SEC rejects bilingual drafts or notarizations with untranslated vernacular.
Prepare for e‑FAST quirks – large PDFs (> 4 MB) or non‑searchable scans often stall approval.
Leverage tax treaties – check if the investor’s home country has an effective treaty (e.g., Japan, Singapore, Germany) to cut dividend/WHT rates, but secure a BIR Certificate of Residence for Treaty Relief (CORTT) before payment.
Factor LGU lead‑times – Metro Manila cities may take weeks for occupancy and fire clearances; provincial ecozones can be far quicker.
Regularize expatriate visas early – overstaying fines accrue daily; AEP processing now requires in‑person biometrics.

11. Recent and Forthcoming Reforms (as of April 2025)

Public Service Act amendments (RA 11659) – liberalized telecoms, shipping, airlines, railways; up to 100 % foreign equity now allowed, subject to reciprocity.
E‑Commerce Act amendments – drafts propose mandatory local presence for large digital platforms; watch FINL classifications.
Corporate Recovery & Tax Incentives for Enterprises (CREATE) 2 bills – pending changes to further cut CIT to 20 % flat and streamline incentives menu.

12. Conclusion

Registering and operating a foreign‑owned business in the Philippines is straightforward if investors: (1) verify FINL restrictions, (2) choose the right vehicle, (3) comply with capitalization and reporting, and (4) plan for immigration and incentive timelines. With recent liberalization of public services and continually improving digital processes at the SEC and BIR, the country’s regulatory environment is increasingly welcoming—yet meticulous planning and local professional guidance remain indispensable.

(This article is current up to April 19 2025. It is general information, not legal advice. Engage Philippine counsel for transaction‑specific guidance.)