A Guide to Registering a Foreign Branch/Representative Office in the Philippines

Expanding a business internationally can be a lucrative venture, and the Philippines has emerged as a promising destination for foreign investors due to its strategic location, growing economy, and large English-speaking workforce. If you’re considering establishing a presence in the Philippines, registering a foreign branch or representative office is one of the viable options to explore. In this article, we’ll guide you through the process of registering a foreign branch/representative office in the Philippines.

Understanding the Difference between a Foreign Branch and a Representative Office:

Before proceeding with the registration, it’s crucial to understand the distinction between a foreign branch and a representative office, as each has its purpose and limitations:

1. Foreign Branch: A foreign branch is an extension of the parent company and carries out commercial activities similar to those of the parent company. It can engage in profit-generating activities, enter into contracts, and conduct business operations on behalf of the parent company. However, a foreign branch is subject to regular corporate income tax.
2. Representative Office: On the other hand, a representative office is limited to non-revenue-generating activities, mainly acting as a liaison or coordinating office. It serves to promote the interests of the parent company, conduct market research, and facilitate communication with clients and affiliates in the Philippines. A representative office cannot enter into contracts, make sales, or generate revenue. As a result, it is generally subject to a lower tax burden.

Step-by-Step Guide to Registering a Foreign Branch/Representative Office:

1. Pre-Registration Requirements:

• Reserved Name: Choose a unique name for your branch or representative office and reserve it with the Securities and Exchange Commission (SEC).
• Local Representative: Appoint a resident agent or representative in the Philippines who will act as the liaison between your office and local authorities.
• Bank: A treasurer-in-trust (TITF) account with the required paid-up capitalization shall be maintained with the bank as proof of such capitalization evidenced by a bank certificate and inward remittance, if applicable. TITF account is for deposit only and restricted for withdrawal except upon approval of the Securities and Exchange Commission (SEC) of the registration papers.

2. SEC Registration:

• Draft application to the Securities and Exchange Commission (SEC) online platform.
• Submit the necessary documents to the SEC, which may include:
  • i. Authenticated copy of the parent company’s board resolution approving the establishment of the branch/representative office in the Philippines.
  • ii. Authenticated copy of the Articles of Incorporation/Partnership with an English translation thereof if in a foreign language other than English
  • iii. Authenticated Audited Financial Statement or if unaudited, with a certification signed under oath by an officer of a responsible regulatory institution or by the applicant’s legal counsel that the applicant is not required to prepare and submit an audited financial statement with citation of the law or regulation on which it is based.
  • iv. Notarized proof of inward remittance such as bank certificate of inward remittance or credit advances
  • v. Endorsement or clearance from regulatory agencies, if applicable (e.g., Bangko Sentral ng Pilipinas for financial institutions).
• Pay the required registration fees and obtain the SEC Certificate of License to do Business here in the Philippines.

3. Other Registrations:

• Tax Identification Number (TIN): Register with the Bureau of Internal Revenue (BIR) to obtain a TIN for tax purposes.
• Local Business Permits: Obtain necessary business permits from the local government unit (LGU) where your branch/representative office will operate.
• Employer Registration: Register with the Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (Pag-IBIG) if you plan to hire employees.

4. Bank Account Opening:

• Open a local bank account in the Philippines to facilitate financial transactions.

5. Post-Registration Compliance:

• Books of Accounts: Comply with accounting and bookkeeping requirements and maintain books of accounts in accordance with Philippine accounting standards.
• Annual Reporting: Submit annual reports to the SEC and other government agencies, as required.
• Renewal of Permits: Ensure timely renewal of business permits and registrations to operate legally in the country.