A Guide on Starting a Business in the Philippines
The country of Philippines is represented by one of the most beautiful set of islands in the world which is attractive not only to tourists, but also to investors interested in doing business here. With a friendly legislation towards foreign investments, the Philippines government allows for the establishment of companies here under very advantageous conditions.
If you want to open a company in Philippines, the guide below will take you through a tour of the company registration procedure in this country.
Types of companies available for registration in the Philippines
The first step related to company formation in the Philippines
is to select a type of structure which will be registered with the Securities and Exchange Commission. From this point of view, the choice is quite easy as the government offers the following options: the sole proprietorship, the partnership and the corporation. Foreign companies also have several types of business forms
they can choose from. Among these are representative office, the branch office and the regional headquarters.
If in the case of sole proprietorships and partnerships there are no special requirements in relation with the company registration procedure in the Philippines
, in the case of the other types of companies, available certain conditions apply.
which can be a stock or non-stock corporation. The stock corporation is the most popular business form in the Philippines among foreign investors and requires a minimum share capital of 5,000 PHP which is the equivalent of approximately 85 EUR or close to 100 USD. The stock corporation must have at least 5 shareholders and 15 at most.
With respect to the types of structures available for foreign companies, our company formation experts
can offer detailed information.
Documents related to opening a company in the Philippines
The main set of documents required to start a company in the Philippines is the Memorandum and Articles of Association. These must be prepared in accordance with the requirements of the Corporation Code in the Philippines and must be notarized. The other documents related to the company registration process are:
- the documents stating the approval of the company’s name which must be approved by the Trade Register;
- a notarized affidavit related to the decision of forming the company from the treasurer’s office;
- a declaration with all the assets and liabilities of the shareholders;
- a document with personal information on the directors, managers and directors of the company;
- a notarized written statement in which the officers of the company acknowledge the reporting requirements imposed by the Commission.
You can rely on our local company registration agents for assistance in drafting the incorporation documents for any type of company. Moreover, if you are interested in expanding your business in another country, for example in Singapore, our Singapore partners who are specialists in company formation matters can help you.
The company formation procedure in the Philippines
The first step related to starting a company in the Philippines is to choose and reserve a company name with the Securities and Exchange Commission, followed by the opening of the corporate bank account where you'll have to deposit the share capital. Based on these, the company will receive the Barangay clearance. The last steps imply registering for tax purposes and applying for the business licenses required to start the activities.
Brief comparison between the main types of companies in the Philippines
| Type of Company || Number of shareholders || Minimum share capital |
| Corporation || 5 || 200,000 USD |
| Partnership || 2 || No mimum share capital required |
| Sole proprietorship ||1 || No mimum share capital required |
Taxation of companies in the Philippines
The following taxes
must be paid by a company in the Philippines
- the corporate tax which is applied at a rate of 30% on the global income of the business;
- the dividend tax which is levied at a rate of 15% to non-resident shareholders;
- the interest withholding tax which is applied with a tax rate of 20% on foreign shareholders;
- the withholding tax on royalties payments which are imposed with a rate of 30%;
- the value added tax, also known as the sales tax, which has a standard rate of 12%.
It should be noted that small and medium-sized enterprises (SMEs) can benefit from several tax incentives, such as deductions and exemptions from the corporate tax.
For assistance in starting a company
in this country, please contact our Philippines company formation advisors