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Things You Need to Know About a Representative Office in the Philippines

Things You Need to Know About a Representative Office in the Philippines

A representative office is a foreign corporation established and organized according to the laws of its origin country.
 
A representative office in the Philippines does not have a separate legal identity from its parent company, and cannot engage in any income-generating activity in the country. As such, it is also not subject to income tax, and is not qualified for PEZA or BOI incentives.
 

Allowed activities of a representative office

A representative offices’s activities are limited only to the following:

  • Promoting and disseminating information about the parent company’s products

  • Conducting market research

  • Doing quality audits of products exported or imported to and from other countries

  • Facilitating orders of local customers from the parent company

  • Other administrative activities for the parent company

 

Advantages of opening a representative office in the Philippines

While a representative office cannot make an income from operations in the country, it can serve as a cost center for its parent company, which can be a tax deductible expense.
 
Foreign corporations can also transfer some of its internal operations to the representative office and get savings on labor costs and salaries. Bookkeeping and accounting, customer service, and other administrative functions are some of the most commonly transferred functions to Philippine representative offices.
 

Steps in establishing a representative office in the Philippines

A representative office is the easiest type of business to register in the Philippines. The process generally takes around two to three months to complete.
 
In setting up a representative office, the parent company must establish funding with an inward transfer of at least $30,000 to a corporate bank account, and remit the same minimum amount annually.
 
These are the steps that need to be taken to secure a business license for a representative office:
 

  1. Have the company name verified with the Securities and Exchange Commission

  2.  

  3. Obtain a Certificate of Registration from the SEC. The following documents are needed for the process:

    • Name verification slip

    • SEC Application Form F-104 or the Application of a Foreign Corporation to Establish a Representative Office in the Philippines

    • Certified copy of a board resolution by the parent company, which authorizes the establishment of the representative office, and designates the Resident Agent for the Philippines

    • The Resident’s Agent acceptance of the designation

    • Copy of the latest audited financial statements of the parent company certified by an independent auditor and authenticated by the Philippine embassy or consulate in the origin country

    • Certification of the inward remittance of at least $30,000

    • An affidavit executed by the Resident Agent or the head of the parent company stating that the parent company is financially sound and stable

  4. Obtain a Mayor’s Permit from the Office of the Mayor of the municipality where the office is located

  5. Obtain a Certificate of Registration from the Bureau of Internal Revenue

 

Designating a Resident Agent in the Philippines

As mentioned above, one of the requirements in establishing a representative office in the Philippines is the designation of a resident agent who will be responsible for receiving summons, notices, and legal procedures on behalf of the parent company.
 
A representative office’s resident agent can be a Filipino citizen or a foreign national, but must be a resident of the Philippines. As an alternative, the resident agent can be a domestic corporation, provided it obtains a certification from the SEC declaring that it is of good standing and sound financial health.
 
The designation of the resident agent must come with a Board Resolution, and must be executed in writing by representatives of the corporation and the designated resident agent.
 
The resident agent must have written authorization to sign legal documents on behalf of the parent company, including the required paperwork for government entities like the SEC, SSS, and BIR.
 
The resident agent designation is not permanent and may be revoked by the parent company at any time. If this happens, the corporation must submit a copy of the board resolution revoking the appointment of the resident agent, and must designate a new resident agent through an authenticated written power of attorney.
 
Failure to designate a resident agent can lead to the revocation of the representative’s license to operate in the Philippines.
 
If you need help in establishing a representative office in the Philippines, we at Filepino are the local experts to call. Get in touch with us at +63.917.892.2337 or send us a message here.