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How to Register a Subsidiary of a Foreign Company in Philippines

By: Tax and Accounting Center Philippines

A Philippine subsidiary is essentially a local domestic corporation registered and existing under the laws of the Philippines enjoying the rights, duties, and privileges of a local domestic corporation. It is duly owned and controlled by a foreign entity that is treated as an entity separate and distinct from each other. This ownership and control makes it a subsidiary of the foreign company in the Philippines and you could use this set-up in a number of operations in the Philippines such as in business process outsourcing, consultancies, and more.

For the purpose, a foreign corporation will become an investor-stockholder of the local domestic corporation entity of such ownership allowing the same material participation in the management and control of the local company in the Philippines. For registration purposes, percentage of ownership should be to the extent allowed by law in relation such factors as nature of business in the Philippines, target market – export market or Philippine domestic market, and capitalization. For ownership exceeding 40% of subscribed capitalization, it is required to file an application under Foreign Investments Act (FIA) or SEC Form No. F-100 For New Corporations with more than 40% foreign equity.

A Philippine subsidiary is by nature a profit oriented entity and as such, for tax purposes, it is subject to the following:

30% income tax based on taxable net income;
12% value added tax on local sales;
30% final withholding tax on dividends to non-resident foreign corporation, save those under Philippines Tax Treaties with lower tax rates;
0% value added tax on export sales of services;
withholding taxes on its income payments and compensation; and,
could be passed on 12% value added tax on its purchases from VAT-registered suppliers.

For the payment of the subscription of the foreign corporation, it could be inwardly remit through the treasurer-in-trust account (TITF) account of the proposed corporation set-up for the purpose. This foreign investment could be registered with the Bangko Sentral ng Pilipinas (BSP) for ease in sourcing foreign currencies in the future upon repatriation of foreign investments and related profits thereto.

Requirements for registering a Philippine Subsidiary in Philippines

To secure Securities and Exchange Commission (SEC) approval of the subsidiary of foreign company in the Philippines, you need to have the following documentary requirements:

Basic SEC Requirements

Articles of Incorporation
By-laws
Treasurer’s Affidavit
Name verification slip of the company name to be used. This should be reserved manually with the Securities & Exchange Commission (SEC) for minimal fees – P40.00 for every 30 days up to a maximum of 90 days subject to renewal or online through the SEC -Register;
SEC Form F-100 for foreign equity of more than 40%
Such other documents SEC may further require

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 Philippine Subsidiary of Foreign Entity

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

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.

By: Garry S. Pagaspas, CPA

As most would be aware, a foreign corporation outside of the Philippines could have a number of choices on what to register in the Philippines for its intended operations such as the following:

Philippine subsidiary where the foreign corporation would own majority of shares of stock of the local domestic company;
Domestic corporation where the investor would along with the rest would incorporate a local corporation without the foreign corporation becoming a stockholder;
Philippine branch – How to Register Philippine Branch?;
Regional Operating headquarters (ROHQ) – How to Register ROHQ in the Philippines? ;
Regional or Area headquarters (RAHQ); and,
Representative Office in the Philippines – How to Register Representative Office in the Philippines?

A good choice of legal entity to be used in the Philippines would be a challenging one for the foreign investor and would depend on a number of factors like intended operations, capitalization, target market, extent of foreign ownership .

In one instance, a foreign investor set-up a local domestic corporation that engaged in business process outsourcing related to information technology. Upon completion and during operation, they noticed the tax implication hurting the cash flows. In an attempt to remedy the situation, they ended up trying to know as to whether or not the domestic corporation could be converted to a tax-exempt entity or cost center entity to save on cash flow.

Foreign investors should be fully aware of the applicable alternatives and related tax implications so the type of legal entity to be established should correspond to the targeted tax implications. Below are two (2) choices of tax-exempt foreign corporations in the Philippines:

Philippines Representative Office of foreign corporations

A Philippine representative office is a cost center entity that is allowed to interact with clients of foreign corporation’s parent to facilitate orders, information dissemination, undertake quality control and undertake other administrative matters. To fund the operations, the foreign corporation will be required to inwardly remit US$30,000.00 initial capitalization. It is required to secure License to Do Business in the Philippines and appoint a resident agent in the Philippines for the service of notices, summons, and other communications.

For tax purposes, a representative office in the Philippines Philippine branch office is not subject to 30% corporate income tax, and 12% value added tax being a cost center in the Philippines. However, it is subject to withholding taxes on its income payments covered by expanded withholding tax, withholding tax on compensation, and could be passed on 12% value added tax on its purchases from VAT-registered suppliers.

Click here on How To register Philippine Representative Office…

Philippine or Regional Area Headquarters (RAHQ)

A regional or area headquarters in the Philippines (RAHQ) is a Philippine administrative office of foreign corporation that will serve as a communication, supervision, and coordination center for the subsidiaries, branches, affiliates within the Asia-Pacific Region and abroad. To fund the operations, it is required to inwardly remit US50,000.00 initial capitalization. It is required to secure License to Do Business in the Philippines and appoint a resident agent in the Philippines for the service of notices, summons, and other communications.

For tax purposes, a representative office in the Philippines Philippine branch office is likewise not subject to 30% corporate income tax, and 12% value added tax being a cost center in the Philippines. However, it is subject to withholding taxes on its income payments covered by expanded withholding tax, withholding tax on compensation other than those managerial and technical employees covered by the 15% final withholding tax, and could be passed on 12% value added tax on its purchases from VAT-registered suppliers.

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 or Regional or Area Headquarters, you need to have the following basic documentary requirements:

Basic SEC Requirements

SEC Application Form
Name verification slip of the company name to be used. This should be reserved manually with the Securities & Exchange Commission (SEC) for minimal fees – P40.00 for every 30 days up to a maximum of 90 days subject to renewal or online through the SEC -Register;
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 initial capitalization; and,
Resident Agent acceptance of appointment, unless, the agent is the signatory in the application form;

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. 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.

Processing fees for securing license to do business

By: Tax and Accounting Center Philippines

A Regional Operating Headquarters (ROHQ) in Philippine branch 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 qualifying services allowed by law only to its branches, subsidiaries, or affiliate. Below is the list of those qualifying services allowed by Philippine law to be rendered by a regional operating headquarter in Philippines to its branches, subsidiaries, or affiliates in the Asia Pacific Region or abroad:

general administrative and planning;
business planning and coordination;
sourcing and procurement of raw materials and components;
corporate finance advisory services;
marketing control and sales promotion;
training and personnel development;
logistics services;
research and development service and product development;
technical support and maintenance;
data processing and communication; and,
business development.

For the purpose, a foreign corporation is required to secure a License to do Business in the Philippines for its Philippine branch operations. This structure is typical for back office of multinational companies others would term as “knowledge process outsourcing”.

A Regional Operating Headquarters (ROHQ) in the Philippines is by nature a profit oriented entity though it could only offer specific services enumerated above. Its required capitalization is US$200,000.00. For tax purposes, it is subject to the following:

10% income tax based on taxable net income;
12% value added tax on local sales;
15% branch profit remittance tax on repatriation of profit to parent company;
0% value added tax on export sales of services; and,
15% final withholding tax on managerial and technical expatriate employees and to Filipinos holding similar positions based on certain conditions (N.B. – Eliminated by TRAIN Law – RA No. 10963)

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 to inwardly remit its initial capitalization to the Philippines through the treasurer-in-trust account it could set-up for the purpose. 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 Regional Operating Headquarters Philippine, you need to have the following documentary requirements:

Basic SEC Requirements

SEC Application Form for Regional Operating Headquarters
Name verification slip of the company name to be used. This should be reserved manually with the Securities & Exchange Commission (SEC) for minimal fees – P40.00 for every 30 days up to a maximum of 90 days subject to renewal or online through the SEC -Register;
Indorsement from the Board of Investments (BOI) Philippines;
Certification from the Philippine Consulate or Embassy, or Philippine Commercial Office or from equivalent office of the Philippine Department of Trade and Industry (DTI) in the applicant’s home country that said firm is an entity engaged in international trade with affiliates, subsidiaries, or branch offices in the Asia Pacific Region and other foreign markets.
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$200,000.oo initial capitalization; and,
Resident Agent acceptance of appointment, unless, the agent is the signatory in the application form;

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

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

Employee safeguards registrations

Complete Processing Timetable

Processing fees for securing license to do business

By: Tax and Accounting Center Philippines

Business process outsourcing (BPO), knowledge process outsourcing (KPO) or back support operations in Philippines is a stronghold industry in the Philippines taking into account the qualifications of Filipino manpower, the English speaking, work quality, the culture, and the work environment, among others. For the purpose, there could be some options on the type of legal entity to set-up for the purpose and one of which is the Philippine Branch where the legal entity of the foreign company abroad (e.g. Australia, Singapore, United States of America, etc.) is secured a License to Do Business in the Philippines as a Branch Office.

Taxation of BPO under Branch Office set-up in Philippines

A Philippine branch office is by nature a profit oriented entity that could operate similar to a local company in the Philippines. For tax purposes, it is subject to the following:

30% income tax based on taxable net income;
0% value added tax (VAT) on export sales,
12% (VAT) on local sales, if any; and,
15% branch profit remittance tax on repatriation of profit to parent company;

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 manage the above tax liabilities, the business process outsourcing in the Philippines under Branch Office set-up could opt to locate in an IT Zone or IT Part accredited by Philippine Economic Zone Authority (PEZA) and register for tax incentives as follows:

Income tax holiday (ITH) for 4 years (non-pioneer) or 6 years (pioneer) and subject to extension of up to 8 years where the business process outsourcing in the Philippines under Branch Office set-up will not be liable for 30% income tax; and/or
5% special tax on gross income in Philippines, in lieu of all internal revenue and local taxes, instead of the 30% income tax, along with other incentives.

Capitalization of BPO under Branch Office in Philippines

As business process outsourcing operations are export oriented where at least 60% of its output are exported to clients abroad, its required capitalization would depend on its reasonable needs, e.g. working capitalization requirements. Such preferred capitalization is required to inwardly remit its initial capitalization to the Philippines through the treasurer-in-trust account it could set-up for the purpose and the bank will issue Certificate of Inward Remittance and Certificate of Deposit as proof of capitalization that SEC will require submission.

Appointment of Resident Agent of Branch Office in Philippines

A BPO under branch office set-up in Philippines 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. Resident agent could be a resident local or foreign individual, or a domestic corporation. Read more about Resident Agent in the Philippines…

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 Philippine Branch office of foreign corporation, you need to have the following documentary requirements:

Basic SEC Requirements

SEC Application Form No. F-103 – Application of a Foreign Corporation to Establish a Philippine Branch Office
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 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 online through the Company Registration System (CRS), 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 and once approved, the branch office can initially commence its operations such as hiring employees, setting-up physical office, and etc.

Security Deposit for Branch Office in Philippines

Within sixty (60) days from SEC approval, the business process outsourcing in the Philippines under Branch Office set-up is required a security deposit of at least PhP500,000.00. Please read more about Security Deposit of branch Office in Philippines…

Tax Authority Registration

Business Permits & Licenses

Employee safeguards registrations

PEZA Registration of Branch Office in Philippines

In case you opt for tax incentives and decided to register with Philippine Economic Zone Authority, you can commence this process simultaneously with the SEC registration. Certain documents and forms will be required by PEZA and evaluation will be made on such documentary requirements while SEC registration is ongoing. PEZA approval will be released after SEC approval is released. Alternatively, you can opt to process PEZA registration after all other registrations are completed.

Complete Processing Timetable

Seminar Schedules

Revenue Regulations No. 014-2025 – VAT on Digital Services

Revenue Memorandum Circular No. 34-2025

Revenue Memorandum Circular No. 32-2025

Revenue Regulations No. 13-2025

Republic Act No. 12079

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