How to Register Representative Office in Philippines?

By: Tax and Accounting Center Philippines

A Philippine representative office is form of a resident foreign corporation in the Philippines where the legal entity of a foreign corporation is being brought into the Philippines to engage in some activities allowed by law. For the purpose, a foreign corporation is required to secure a License to do Business in the Philippines for its representative office in the country and is allowed to deal directly with the clients of its parent company abroad based on the following limited activities:

• Facilitate orders of customers or clients in the Philippines of its head office;
• Disseminate information and conduct promotional activities about the products of its head office;
• Undertake quality control of products of its head office; and,
• Undertake other related administrative activities for its head office.

A Philippine representative office is a cost center and is not allowed to earn income in the Philippines, thus, exempted from 30% income tax and 12% value added tax. It is however subject to withholding taxes on its income payments and compensation, and could be passed on 12% value added tax on its purchases from VAT-registered suppliers.

To support its operations in the Philippines, it is required an initial capitalization of US$30,000.00 to be inwardly remitted to the Philippines. It is likewise required to appoint a resident agent on whom summons and other legal processes against the same may be served in all actions or other legal proceedings against the Company.

Requirements for License to Do Business in Philippines

To secure Securities and Exchange Commission (SEC) approval of the License to do Business in the Philippines of a representative office of foreign corporation, you need to have the following documentary requirements:

Basic SEC Requirements

• SEC Application Form No. F-104 – Application of a Foreign Corporation to Establish a Representative Office in the Philippines;
• Name verification slip of the company name to be used that cost PhP100;
• Certified copy of the Board Resolution of the Parent company authorizing the establishment of an office in the Philippines and designating a Resident Agent who may be an Philippine resident individual or a domestic corporation;
• Latest audited financial statements of the parent company certified by an independent certified public accountant and authenticated by the Philippine consulate/embassy;
• Certified copies of the Articles of Incorporation of the parent company with an English translation, if in a foreign language;
• Certificate of Inward remittance and Certificate of Bank Deposit of the US$30,000.oo initial capitalization;
• Resident Agent acceptance of appointment, unless, the agent is the signatory in the application form; and,
• Affidavit executed by the President or Resident Agent stating that the applicant is solvent and sound in its financial condition.

SEC in the Philippines has a set of prescribed forms for some of the above documentary requirements that you may either do it yourself or secure the assistance of experienced professionals.

SEC application and approval of License to do Business in the Philippines

Initial registration papers carefully prepared for the purpose will undergo initial evaluation of the SEC, and finding the same in order will be assessed filing and other fees based on the proposed capitalization. Payment of the filing and other fees marks the formal filing of the application and normal approval procedures would immediately follow. Approval normally comes in a couple of days to about ten (10) days.

Tax Authority Registration

SEC will assign a tax identification number (TIN) upon release of the License to do Business in the Philippines and such TIN shall be formally registered with the Bureau of Internal Revenue (BIR). Certain registration fees and taxes will be paid and other registrations for books of accounts, and official receipts or invoices will follow. For tax exemptions of non-stock non-profit corporation in the Philippines, you need to secure BIR ruling with the tax authority with the Revenue District Office (RDO) of registration.

Business Permits & Licenses

For the legality of its local operations, business permit has to be secured with the local government unit of business location. Certain fees and other registrations are likewise required such as community tax certificate, barangay clearance, fire permit, occupancy permit, and the likes.

Employee safeguards registrations

Employer registration with the Social Security System (SSS), Philippine health Insurance Corporation (Philhealth), and Home Development Mutual Fund (HDMF) is likewise mandatory and will proceed independent of the above.

Complete Processing Timetable

With the improved processing system of the government agencies, complete processing of the above will take three (3) to four (4) weeks from filing with the Securities and Exchange Commission. We suggest you secure the services of professionals to assist you in the complete registration of your Philippine Company that you may be able to simply concentrate on operational matters.

Processing fees for securing license to do business

Should intend to engage the services of a professional for the assistance in securing License to Do Business in the Philippines, professional fees could vary and the range could start from US$1,000.00.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments and further assistance in registering your Philippine Representative Office, you may please send mail at in**@************er.ph.)