A foreigner’s guide to business incorporation in the Philippines

A foreigner’s guide to business incorporation in the Philippines

As a foreign entrepreneur about to set up shop in the Philippines, you may be wondering how to register a corporation in the country. It’s a common route as incorporating your business offers the following advantages:

  • Limited liability – Once a corporation is formed, it becomes a separate legal entity (juridical person). You and your shareholders’ personal assets can be protected in the event that the corporation incurs debt or goes bankrupt.


  • Ease of raising capital – Garnering financial support for an incorporated company is relatively easier. You can issue stocks to interested shareholders.


  • Sophisticated form of ownership – If you’re starting a company with a partner or a group of people, the ownership of the company can be split equally or according to capital contribution.

On the flip side, registering a corporation in the Philippines requires more money and paperwork compared to a single proprietorship or a partnership (general or limited).
Furthermore, an incorporated company is subject to stricter government regulations. Depending on the chosen industry, certain provisions will have far-reaching effects on business operations.

Basic requirements of a corporation

Once you or your group of co-founders have decided to incorporate your business, prepare the following requirements:

  • A minimum of two and a maximum of 15 directors upon incorporation. The majority of them must at least reside in the Philippines. Filipino citizenship isn’t required.


  • Four people must hold the following positions: president, corporate secretary (must be a Filipino citizen), treasurer (must be a valid resident), and compliance officer.

Ownership and equity stake
Domestic corporations in the Philippines can make use of varying degrees of foreign equity. Thus, a corporation can have:

  • Less than or equal to 40% foreign equity (minimum capital requirement: USD 100); or

  • Greater than 40% foreign equity (minimum capital requirement: USD 200).

Regardless of equity composition, if your business currently employs at least 50 Filipino employees, your company must pay a minimum capital requirement of USD 100,000.
Your company’s equity composition will also determine the sectors or industries that it can join. For instance, internet-based businesses and wellness centers are open to 100% foreign ownership. Recruitment agencies are limited to 25% foreign ownership.
You can review the 11th Negative Investment List to see which business areas are open to full or partial foreign ownership.
Your company needs to have the following documents for incorporation:

  • Articles of Incorporation containing the company’s name, purpose, incorporators, and total amount and value of shares.


  • Each shareholder’s valid ID, Tax Identification Number (TIN), and copy of passport (for foreign shareholders).


  • By-laws containing the company’s meeting rules and procedures for electing officers and directors.


  • Treasurer’s Affidavit, which certifies that at least 25% of the authorized stock has been subscribed to and paid for the benefit of the corporation.


  • Contract of lease (if company office is rented) or certificate of land title (if company office sits on land you own) that shows proof of address.


Steps to take towards incorporation and registration


  1. Obtain Securities and Exchange Commission (SEC) certification

    Register your proposed company name with the Securities and Exchange Commission (SEC). This can be done in-person or online (via the SEC Company Registration System).


  3. Obtain barangay clearance

    A company is required to secure clearance from the barangay, the smallest political unit in the Philippines. Check your company address to find out where your barangay is.


  5. Secure city permit to operate

    Often referred to as the mayor’s business permit. Pay a visit to the municipal or city hall and submit all required documents (e.g. SEC certification, barangay clearance, proof of address).


  7. Register for tax compliance with the Bureau of Internal Revenue (BIR)

    Since you’ll be creating a corporation, you’ll need to fill out BIR Form 1903. Once you’ve processed all the requirements, your business will obtain its unique TIN and certificate of registration (BIR Form 2303).


You’ve successfully incorporated and registered your business. Now what?

From here, it’s a matter of maintaining your company’s corporate status and good standing. This includes following the company’s internal rules, annually renewing the business permit, complying with special licensing permits, and paying taxes diligently. Any misstep may result in fines or other penalties that can be levied against your company’s assets.
Staying on top of the revenue-generating and administrative aspects of a business is no easy feat. That’s why savvy foreign entrepreneurs turn to FilePino to make company incorporation, recruitment, payroll processing, and other administrative tasks, much more bearable.
Find out how you can make use of our services today by calling +63.917.892.2337 or filling out this short contact form.