Under Philippine law, any foreign corporation – provided that it is currently engaged in international trade in the Asia-Pacific (APAC) region and other foreign markets – can set up a regional headquarters (RHQ) to function as its administrative branch.
Here’s what you need to know about regional headquarters, as well as how to register one in the Philippines:
The role of an RHQ in the Philippines
- An RHQ and its parent company are considered to be one and the same
An RHQ is considered to have the same legal personality as its parent corporation. This means that the liabilities it incurs are passed onto its parent corporation’s head office. Furthermore, the laws governing its formation, existence, and dissolution are subject to the laws of the country where the parent company originated.
- An RHQ is only allowed to supervise and coordinate a company’s operations
As mentioned, the primary purpose of an RHQ is the supervision and coordination of a corporation’s subsidiaries, branches, and affiliates in the APAC region. As an administrative branch, an RHQ also engages in business planning, and data processing and communications.
An RHQ registered with the Securities and Exchange Commission (SEC) cannot derive income in the Philippines, just as its parent corporation is barred from marketing or selling its products within the country. This restriction sets an RHQ apart from a Regional Operating Headquarters or ROHQ, which is allowed by the Philippine constitution to generate income in the country.
- An RHQ enjoys fiscal and non-fiscal tax incentives in the Philippines
Incentives that benefit RHQs include:
- Exemption from corporate income tax
- Exemption from branch profits remittance tax
- Exemption from value-added tax
- Zero-rated sale or lease of goods and property and services to the RHQ
- Exemption from local taxes, fees, or charges imposed by a local government unit, except real property tax on land improvements and equipment
- Tax- and duty-free importation of locally unavailable equipment and training materials for conferences, subject to the prior approval of the Board of Investments (BOI)
- Importation of brand new motor vehicles subject to taxes and duties
Expatriates managing RHQs also enjoy the following perks:
- A multiple-entry visa for expatriates, including their spouse and unmarried children below the age of 21
- Exemption from payment of fees except for reasonable administrative costs
- Exemption from securing an Alien Certificate of Registration
- Non-immigrant visa processed within 72 hours upon submission of requirements to the Bureau of Immigration
- Preferential tax rate of 15% on salaries, annuities, and other types of compensation applicable for expatriates
- Exemption from travel tax
- Tax- and duty-free importation of used household goods and personal effects
Guide: How to register your regional headquarters in the Philippines
Registering an RHQ for your corporation in the Philippines is fairly straightforward and only requires a License to Do Business in the Philippines from the SEC.
In order to get a License to Do Business, a foreign company needs to provide the following documentary requirements:
- A Name Verification Slip
- Certification by the Philippine Consulate or equivalent offices in the company’s country of origin verifying the company’s engagement in international trade with subsidiaries, branches, or affiliates in the Asia-Pacific (APAC) region and other foreign markets
- Certification from the Principal Officer of the foreign company authorizing its Board of Directors or a similar governing body to establish an RHQ in the Philippines
- A bank certificate as proof of inward remittance of $50,000
- Registration Data Sheet
- Endorsement or clearance from applicable government agencies
- Endorsement from the Board of Investments (BOI)
- Latest authenticated financial statements showing the solvency of the company’s head office
Once a corporation has acquired a License to Do Business from the SEC, it can proceed to operate.
Contact FilePino to set up your RHQ in the Philippines
If you need help setting up a regional headquarters for your corporation in the Philippines, contact the FilePino Team today.
At FilePino, we offer a wealth of experience and access to extensive local resources, which makes our company uniquely positioned to help you establish your RHQ. We focus on providing the highest quality of service to help you setup your business, from registration, identifying and acquiring ideal office space solutions, providing legal consultation, to supporting your expanding business, and beyond.
Founded by experts and made up of experienced professionals, FilePino can help you get your business up and running in the Philippines without a hitch.
Contact FilePino today at +63.917.892.2337, [email protected], or drop your inquiries here for more information.