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Updated 3 weeks ago

If you are looking for business opportunities in the Philippines, here are a few guidelines to help you determine which type of company best suits your needs.

The Philippines is very open towards foreign investment. In fact, the country has been able to come forward on the Asian economic landscape, offering various opportunities in several fields. Indeed, many foreign businessmen have successfully managed to set up a business in the country over the years. Procedures and conditions may be quite tedious. But you can definitely take this challenge if you have sufficient information, both on related formalities and on the local market's requirements.

 Good to know:

The country has recently implemented the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, which is a reform to ensure competitiveness and promote the ease of doing business in the country. That means the business permitting process will be easier, faster, and more convenient.

Business structures

Before starting, it is best to be aware of the different business structures existing in the country and on the conditions regarding the setting up of a company by an expatriate. Here is an overview:

The Corporation

The Corporation is a company requiring 5 to 15 incorporators and is regulated by the Securities and Exchange Commission (SEC). Once the company has been set up, more shareholders can join in. At least 60% of the shareholders must be Filipino nationals in order for the corporation to be considered Filipino-owned. As regards the minimum capital of 5,000 pesos, 25% of this amount has to be subscribed and another 25% must be released. Each partner's liability is limited to the amount contributed. It can be either Stock or Non-stock.

The Close Corporation

The Close Corporation is a closed joint-stock company requiring a maximum of 20 associates and partners. There is no minimum capital requirement, but 25% of the paid amount has to be subscribed and 25% of it must be released during the setting up. Each partner's liability is limited to the amount contributed.

The Partnership

The Partnership is formed by at least two partners with a minimum capital of 3,000 pesos and must register with the SEC if the capital exceeds this amount. A General Partnership is where each partner's liability is unlimited, while in a Limited Partnership each partner’s liability is limited to the amount contributed.

The Sole Proprietorship

This business structure is owned by a single individual who must apply for a Business Name and be registered with the Department of Trade and Industry (DTI).

Procedures

Once you have understood and decided which type of company will best suit your activities, you have to gather the required documents and present them to local authorities responsible of the setting up of businesses in the Philippines.

Under the new process, thanks to the Ease of Doing Business Act, the process has been streamlined (from 28 days to 16 days):

  • SEC verification of your company name, submission of SEC registration, and documentary requirements (ie. approved company name, articles of incorporation, treasurer’s affidavit, statement of assets and liabilities, and company particulars including information on directors, officers, and stockholders). These are all done online (1 day).
  • Notarize (Php500) your Articles of Incorporation and Treasurer’s affidavit that the minimum paid-up capital has been paid, instead of a bank certificate deposit as with the old process (1 day).
  • Pay the SEC fees online and claim the certificate of SEC registration (1 day).
  • Submit the documents required for a business permit at the Quezon City Government One-Stop Shop (1 day). Unlike before, there is no need to present a barangay clearance.
  • Pay the taxes, fees and charges, and claim the business permit (Php500) from the One-Stop Shop (1 day).
  • Submit your application and documents (you need the book of accounts for Php400, which consists of four books where you record the company's collections and disbursements. In the case of computerized accounts, you can request for a Form No. 1900); pay the fees and documentary stamp tax at the Bureau of Internal Revenue (BIR).
  • You will then be issued a certificate of registration and authority to print receipts (Php3,500). Unlike before, there is no to have BIR stamp the printed receipts and invoices; the printer just submits the certificate of delivery of receipts and invoices (7 days). You will also be issued a Taxpayer Identification Number (TIN) from the BIR.
  • Register your new employees with the Social Security System (SSS) (1 day).
  • Register your new employees with Philhealth (1 day).
  • Register your new employees with Pag-IBIG Fund (1 day).

Social Security System

Prepare the following in order to register with the SSS:

  • the company registration form (R-1 Form);
  • the employment report (R-1A form);
  • a list of employees, specifying their birth dates, positions, salary and date of hire;
  • the company's statutes, regulations; and
  • the SEC registration certificate.

A Social Security number will then be issued, both to employers and employees. Note that employees are entitled to information and training on their rights and obligations.

Philhealth

Prepare the following in order to register with Philhealth:

  • the ER1 form containing information on the employer;
  • the ER2 form containing the list of employees and their details;
  • proof of registration at the SEC;
  • proof of registration at BIR; and
  • a copy of the company's operation permit.

An affiliation number will be issued within three months.

Pag-IBIG Fund

Prepare the following in order to register with the Home Development Mutual Fund or Pag-IBIG:

  • an EDF form [FPF040] containing the company's information;
  • a SSF form [FPF170] containing specimen signatures;
  • a copy of the company's incorporation certificate issued by the SEC;
  • a copy of the company's approved articles and regulations; and
  • the Board Resolution or Secretary's Certificate indicating an authorized representative.

Once you have paid the relative fees, a Pag-IBIG Fund number and registration certificate will be issued.

 Useful links:

Securities and Exchange Commission
Department of Trades and Industries
Bureau of Internal Revenue (BIR)
Revenue District Office (RDO)
Republic of the Philippines Social Security System
Pag-IBIG Fund
Philhealth

We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.