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Foreign Corporation Requirement for Philippines Business Incorporation

Foreign Corporation Requirement for Philippines Business Incorporation

Under the Revised Corporation Code of the Philippines, a foreign corporation is one formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state.

 

 

It shall have the right to transact business in this country in accordance with this Code and a certificate of authority from the appropriate government agency.

 

The Foreign Investment Act enumerates the kinds of Foreign Corporations:

 

  1. Branch Office – corporation carries out the business activities of the head office and derives income from the Philippines
  2. Representative or liaison office – deals directly with the clients of the Foreign Corporation but does not derive income from the Philippines and is fully subsidized by its head office. It undertakes activities such as but not limited to information dissemination and promotion of the company’s product as well as quality control of products.
  3. Regional Operating Headquarters (ROHQ) – means a foreign corporation is permitted to derive income in the Philippines by performing qualifying services to its affiliates, subsidiaries or branches in the Philippines, in the Asia-Pacific Region and other foreign markets.
  4. Regional or Area Headquarters – shall mean an office whose purpose is to act as an administrative branch of a multinational company engaged in international trade which principally serves as a supervision, communications and coordination center for its subsidiaries, branches or affiliates in the Asia-Pacific Region and other foreign markets and which does not earn or derive income in the Philippines

 

In applying for Branch or Representative Office, the foreign corporation must file the below, as applicable:

 

  1. Form F-103 for Branch Office
  2. Form F-104 for Representative Office
  3. Form F-108 for Non-stock
  4. Other documentary requirement (SEC, Licensing of Foreign Corporation, FAQs, www.sec.gov.ph/faqs)

 

How much is the minimum paid-up capital for the Domestic Market? 

 

For Foreign Corporations or Corporations majority owned by foreigners, and the business is reserved to Philippine nationals, the minimum paid up capital is 500,000 USD following the below provision:

 

Under Sec, 8, R.A.No. 7042, Foreign Investment Act of 1991:

Small and medium-sized domestic market enterprises with paid-in equity capital less than the equivalent of five hundred thousand US dollars (US$500,000) are reserved to Philippine nationals, unless they involve advanced technology as determined by the Department of Science and Technology. Export enterprises which utilize raw materials from depleting natural resources, with paid-in equity capital of less than the equivalent of five hundred thousand US dollars (US$500,000) are likewise reserved to Philippine nationals.

 

For Foreign Corporations or Corporations majority of by foreigners, with the intent to do business in the Philippines and the business is NOT reserved to Philippine nationals and the majority of the revenues will come from local sales, the minimum paid up capital is 200,000 USD.

 

How much is the filing fee for Application of Stock Corporations for Branch office?

 

According the SEC the filing fee for inward remittance of the Stock Corporations for Branch office is 1% and should not be less than P3,000 to read:

 

“The filing fee is 1% of the actual inward remittance of the corporation converted into Philippine Currency but not less than P 3,000.00.” (SEC, Licensing of Foreign Corporation, FAQs, www.sec.gov.ph/faqs)

 

How much is the filing fee for the Representative office?

 

The SEC provides that the filing fee of the actual inward remittance for Representative office of the corporation is:

 

“1/10 of 1% of the actual inward remittance of the corporation into Philippine currency but not less than P3,000.00.” (SEC, Licensing of Foreign Corporation, FAQs, www.sec.gov.ph/faqs)

 

How much is the filing fee for non-stock foreign corporations?

 

For a non-stock foreign corporation, the SEC states that:

 

“the filing fee is P3,000.00, plus 1% of the filing fee (LRF)” (SEC, Licensing of Foreign Corporation, FAQs, www.sec.gov.ph/faqs)

 

How much is the filing fee for application for area or regional headquarters? 

 

SEC Memorandum Circular No. 9 s. 2004 provides that the filing fee is P5,000.00, plus 1% of the filing fee (LRF).

 

How much is the filing fee for application for Regional operating headquarters or petition for conversion of an Area or Regional Headquarters into a Regional Operating headquarters? 

 

The filing fee application for Regional operating headquarters or petition for conversion of an Area or Regional Headquarters into a Regional Operating headquarter under SEC Memorandum Circular No. 9 s. 2004 is 1% of the actual remittance but not less than 1% of peso equivalent of $200,000 at the time of remittance.

 

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