TITLE XV – FOREIGN CORPORATIONS
Section 140. Definition and Rights of Foreign Corporations. – For purposes of this Code, a foreign corporation is one formed, organized or existing under laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or State. It shall have the right to transact business in the Philippines after obtaining a license for that purpose in accordance with this Code and a certificate of authority from the appropriate government agency.
Section 141. Application to Existing Foreign Corporations. – Every foreign corporation which, on the date of the effectivity of this Code, is authorized to do business in the Philippines under a license issued to it shall continue to have such authority under the terms and conditions of its license, subject to the provisions of this Code and other special laws.
Section 142. Application for a License. – A foreign corporation applying for a license to transact business in the Philippines shall submit to the Commission a copy of its articles of incorporation and bylaws, certified in accordance with law, and their translation to an official language of the Philippines, if necessary. The application shall be under oath and, unless already stated in its articles of incorporation, shall specifically set forth the following:
Attached to the application for license shall be in a certificate under oath duly executed by the authorized official or officials of the jurisdiction of its incorporation, attesting to the fact that the laws of the country or State of the applicant allow Filipino citizens and corporations to do business therein and that the applicant is an existing corporation in good standing. If the certificate is in foreign language, a translation thereof in English under oath of the translator shall be attached to the application.
The application for a license to transact business in the Philippines shall likewise be accompanied by a statement under oath of the president or any other person authorized by the corporation, showing to the satisfaction of the Commission and when appropriate, other government agencies that the applicant is solvent and in sound financial condition, setting forth the assets liabilities of the corporation as of the date not exceeding one (1) year immediately prior to the filing of the application.
Foreign banking, financial, and insurance corporations shall, in addition to the above requirements, comply with the provisions of existing laws applicable to them. In the case of all other foreign corporations, no application for license to transact business in the Philippines shall be accepted by the Commission without previous authority from the appropriate government agency, whenever required by law.
Section 143. Issuance of License. – If the Commission is satisfied that the applicant has complied with all the requirements of this Code and other special laws, rules and regulations, the Commission shall issue a license to transact business in the Philippines to the applicant for the purpose or purposes specified in such license. Upon issuance of such license, such foreign corporation may commence to transact business in the Philippines and continue to do so for as long as it retains its authority to act as a corporation under the laws of the country or State of its incorporation, unless such license is sooner surrendered, revoked, suspended, or annulled in accordance with this Code or other special laws. Within sixty (60) days after the issuance of the license to transact business in the Philippines, the license, except foreign banking or insurance corporations, shall deposit with the Commission for the benefit of the present and future creditors of the license in the Philippines, securities satisfactory to the Commission, consisting of Bonds or other evidence of indebtedness of the Government of the Philippines, its political subdivisions and instrumentalities, or of government-owned-or-controlled corporations and entities, shares of stock or debt securities that are registered under Republic Act No. 8799, otherwise known as “The Securities Regulation Code”, shares of stock in domestic corporations listed in stock exchange, shares of stock in domestic insurance companies and banks, any financial instrument determined suitable by the Commission, or any combination thereof with an actual market value of at least Five hundred thousand pesos (P500,000.00) or such other amount that may be set by the Commission; Provided, however, That within six (6) months after each fiscal year of the license, the Commission shall require the licensee to deposit additional securities or financial instruments equivalent in actual market value to two percent (2%) of the amount by which the licensee’s gross income for that fiscal year exceeds Ten million pesos (P10,000,000.00). The Commission shall also require the deposit of additional securities or financial instruments if the actual market value of the deposited securities of financial instruments has decreased by at least ten percent (10%) of their actual market value at the time they were deposited. The Commission may, at its discretion, release part of the additional deposit if the gross income of the licensee has decreased, or if the actual market value of the total deposit has increased, by more than ten percent (10%) of their actual market value at the time they were deposited. The Commission may, from time to time, allow the licensee to make substitute deposit for those already on deposit as long as the licensee is solvent. Such licensee shall be entitled to collect the interest or dividends on such deposits. In the event the licensee ceases to do business in the Philippines, its deposits shall be returned, upon the licensee’s application and upon proof to the satisfaction of the Commission that the licensee has no liability to Philippine residents, including the Government of the Republic of the Philippines. For the purpose of computing the securities deposit, the composition of gross income and allowable deductions therefrom shall be in accordance with the rules of the Commission.
Section 144. Who May be a Resident Agent. – A resident agent may either be an individual residing in the Philippines or a domestic corporation lawfully transacting business in the Philippines: Provided, That an individual resident agent must be of good moral character and of sound financial standing; Provided, further, That in case of a domestic corporation who will act as resident agent, it must likewise be of sound financial standing and mush show proof that it is in good standing as certified by the Commission.
Section 145. Resident Agent; Service of Process. – As a condition to the issuance of the license for a foreign corporation to transact business in the Philippines, such corporation shall file with the Commission a written power of attorney designating a person who must be a resident of the Philippines, on whom summons and other legal processes may be served in all actions or other legal proceedings against such corporation, and consenting that service upon such resident agent shall be admitted and held as valid as if served upon the duly authorized officers of the foreign corporation at its home office. Such foreign corporation shall likewise execute and file with the Commission an agreement or stipulation executed by the proper authorities of said corporation, in form and substance as follows:
“The (name of foreign corporation) hereby stipulates and agrees, in consideration of being granted a license to transact business in the Philippines, that if the corporation shall cease to transact business in the Philippines, or shall be without any resident agent in the Philippines on whom any summons or other legal processes may be served, then service of any summons or other legal processes may be made upon the Commission in any action or proceedings arising out of any business or transaction which occurred in the Philippines and such service shall have the same force and effect as if made upon the duly authorized officers of the corporation at its home office.”
Whenever such service of summons or other process is made upon the Commission, the Commission shall within ten (10) days thereafter, transmit by mail a copy of such summons or other legal processes to the corporation at its home office or principal office. The sending of such copy by the Commission shall be necessary part of and shall complete such service. All expenses incurred by the Commission for such service shall be paid in advance by the party at whose instance the service is made.
It shall be the duty of the resident agent to immediately notify the Commission in writing of any change in the resident agent’s address.
Section 146. Law Applicable. – A foreign corporation lawfully doing business in the Philippines shall be bound by all laws, rules and regulations applicable to domestic corporations of the same class, except those which provide for the creation, formation, organization or dissolution of corporations or those which fix relations, liabilities, responsibilities, or duties of stockholders, members, or officers of corporations to each other or to the corporation.
Section 147. Amendments to Articles of Incorporation or Bylaws of Foreign Corporations. – Whenever the articles of incorporation or bylaws of a foreign corporation authorized to transact business in the Philippines are amended, such foreign corporation shall, within sixty (60) days after the amendment becomes effective, file with the Commission, and in proper cases, with the appropriate government agency, a duly authenticated copy of the amended articles of incorporation or bylaws, indicating clearly in capital letters or underscoring the changes made, duly certified by the authorized official or officials of the country or State of incorporation. Such filing shall not in itself enlarge or alter the purpose or purposes for which such corporation is authorized to transact business in the Philippines.
Section 148. Amended License. – A foreign corporation authorized to transact business in the Philippines shall obtain an amended license in the event it changes its corporation name, or desire to pursue other or additional purposes in the Philippines, by submitting an application with the Commission, favorably endorsed by the appropriate government agency in the proper cases.
Section 149. Merger or Consolidation Involving a Foreign Corporation Licensed in the Philippines. – One or more foreign corporations authorized to transact business in the Philippines may merge or consolidate with any domestic corporations if permitted under the Philippine laws and by the law of its incorporation: Provided, That the requirements on merger or consolidation as provided in this Code are followed.
Whenever a foreign corporation authorized to transact business in the Philippines in the Philippines shall be a party to a merger or consolidation in its home country or State as permitted by the law authorizing its incorporation, such foreign corporation shall, within sixty (60) days after the effectivity of such merger or consolidation, file with the Commission, and in proper cases, with the appropriate government agency, a copy of the articles of merger or consolidation duly authenticated by the proper official or officials of the country or State under whose laws the merger or consolidation was affected: Provided, however, That if the absorbed corporation is the foreign corporation doing business in the Philippines, the latter shall at the same time file a petition for withdrawal of its license in accordance with this Title.
Section 150. Doing Business Without a License. –No foreign transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause or action recognized under Philippine laws.
Section 151. Revocation of License. – Without prejudice to other grounds provided under special laws, the license of a foreign corporation to transact business in the Philippines may be revoked or suspended by the Commission upon any of the following grounds:
Section 152. Issuance of Certificate of Revocation. – Upon the revocation of the license to transact business in the Philippines, the Commission shall issue a corresponding certificate of revocation, furnishing a copy thereof to the appropriate government agency in the proper case.
The Commission shall also mail the notice and copy of the certificate of revocation to the corporation, at its registered office in the Philippines.
Section 153. Withdrawal of Foreign Corporations. – Subject to existing laws and regulations, a foreign corporation licensed to transact business in the Philippines may be allowed to withdraw from the Philippines by filing a petition for withdrawal of license. No certificate of withdrawal shall be issued by the Commission unless all the following requirements are met:
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By: Garry S. Pagaspas, CPA
Every country has each own set of rules for documentation and process on company registration and for foreign investors registering a company or legal entity in a particular country like Philippines would be most concern on how soon he could register. Notably, Philippine government agencies are working hand-in-hand to make doing business in the Philippines easier to attract more investors.
These simplifications on government processes (say, 1 day approval, or 2 days, etc.) are normally taken from the time of filing with the related government agencies and preparatory to that stage could be lots of stories to tell. In reality, processing of your company registration may prolong, in a way or another, that could be brought about by lack of familiarity of SEC documentary requirements for registration and or lack of preparation. At times, securing a seasoned professional for the purpose is a big factor to fast track securing SEC approval on your company registration.
In this article, items that may prolong company registration in the Philippines with the Securities and Exchange Commission (SEC) will be cited and discussed based on personal views of the author in relation to his long experience in setting-up legal entities in the Philippines with the end view of giving foreign investors to the Philippines a clue on how to speed-up company registration in Philippines and not to impute anything negative on the SEC documentation and/or processes or that of any other government agency.
Whether securing a License to do Business in the Philippines or registering a subsidiary, corporate documents abroad (certificate of registration, equivalent of articles of incorporation and by-laws in Philippines) of the parent entity is necessary, in a way or another. These documents are normally required to be generally consularized (Red Ribbon document as we loosely call it) or certified by the Philippines Embassy/Consular office in the country of location for the same to be acceptable with the government agencies in the Philippines and some private entities such as banks. The purpose of this is to give the document the character of authenticity and due execution of private entity abroad or due issuance of appropriate agency abroad equivalent to certified true copies issued by a government agency in the Philippines or notarization for executed documents.
Some countries may take days, others may take weeks, and the rest may take month/s and as soon as you have them, sending them to the Philippines by courier may take few days. It is recommended that foreign investors secure such corporate documents for the purpose of company registration in Philippines as early as possible and 2 to 3 copies (e.g. for SEC, for bank opening, file reference) so there will be no need to repeat the process if you just secure one set.
Securing a License to Do Business for a branch office, representative office, regional area headquarters (RAHQ), regional operating headquarters (ROHQ) in the Philippines would require a Board Resolution authorizing the establishment of such office or entity in the Philippines and appointing a resident agent required by the SEC. This would likewise require to be consularized abroad where the document is executed. Notably, Philippines does not seem to adopt an electronic signature on documents for SEC registration so you have to manually sign the same on the place of location and secure consularization in such country where you sign on them.
Opening bank accounts (e.g. treasurer-in-trust-account (TITF), regular bank account, online banking account) would likewise require such resolutions from parent company so it is recommended to execute such board resolution in such manner as to anticipate other requirements. Same in No. 1, it is recommended that you secure 2-3 copies of these documents.
Securing a License to Do Business for a branch office, representative office, regional area headquarters (RAHQ), regional operating headquarters (ROHQ) in the Philippines would require a financial statements as SEC would be interested on the financial capacity to establish and support Philippine operations. It should be a complete set of financial statements based on accounting/auditing standards (e.g. income statement, balance sheet, statement of cash flows, statement of changes in equity, and notes to financial statements) with a cut-of of not later than one (1) year as of date of filing and is normally required to be audited, unless, not required to be audited in the country of origin, in which case, an opinion of the auditor/accountant/or counsel with the citation of the provision in law/rules not requiring audit. At time minimum financial ratios are required such as current ratio of at least 1:1, solvency ration of 1:1, and a debt-to-equity of not more than 3:1.
Failure to provide an audited financial statements, an opinion required for unaudited financial statements, or failure to comply with required financial ratios would require more time to deal with to comply with SEC requirements for registration of company in the Philippines. As such, it is recommended that you determine ahead the applicable requirement, and then again, this is required to be consularized in same manner as in Nos. 1 and 2 above.
For SEC purposes, a TIN from the Bureau of Internal Revenue (BIR) is required to be indicated in the SEC registration papers. Process normally takes a couple/few days based on complete documentation. For a parent company of an intended subsidiary, BIR normally requires consularized corporate documents (almost same as in No. 1 above) along with board resolution authorizing securing TIN and appointing a representative in the Philippines for the purpose.
For an individual incorporator, a Special Power of Attorney (SPA) is normally required – consularized if signed outside Philippines, notarized if singed while in Philippines, and a photocopy of passport page with personal details. Other BIR documents for the purpose can be executed and signed by the authorized representative/tax agent. Accordingly, it is recommended to secure ahead the TIN for company registration purposes.
Another requirement of SEC is a complete address of the company’s principal office in the Philippines. For a domestic company who do not have a legal entity as yet prior to SEC approval of the corporation it intends to register in Philippines, this becomes a challenge dealing with. For a foreign corporation Securing a License to do Business in the Philippines, it could use its foreign legal entity to secure an address for company registration in Philippines. Normal lease contracts are for yearly and local lessors are keen to securing the usual corporate documentation and registrations. For this, some virtual office providers provide an option for shorter term for such purpose and for minimal cost although you may have to reprocess transfer of address if you take it temporarily.
Another common requirement of SEC for registration is proof of inward remittance for those securing a License to Do Business for a branch office, representative office, regional area headquarters (RAHQ), regional operating headquarters (ROHQ) in the Philippines. For this purpose, a treasurer-in-trust (TITF) account is being opened that the parent could make inward remittance of the required minimum paid-up capitalization for SEC registration. This would normally require consularized corporate papers of parent company, consularized board resolution, bank forms and other basic documents.
One approach is to have a local signatory to facilitate opening a TITF account and ensure the exact key-in of TITF details along with ensuring that the minimum paid-up capital (e.g. US$30,000.00 for representative office) will be credited to the TITF. Error in TITF details may keep it hanging or local bank would need to cancel that would require redoing the remittance, while failure to credit the minimum required amount may require subsequent remittance of the deficiency and in either case, may take more time to deal with. Once remittance is credited to the TITF account, next step is to closely coordinate with the depository bank to facilitate the issuance of the depository bank of Certificate of Inward Remittance for SEC registration and Certificate of Inward Remittance for Central Bank of the Philippines required for registration of foreign direct investment (FDI) relative to sourcing of foreign currency for future repatriation of capital and earnings.
The above items could either be simple or technical but should not be taken for granter for a simple failure to anticipate the basic requirements of the SEC, BIR, bank and other related agencies could take you time to deal with and ruin your target timeline to commence. Notably, those items are matters of concern during the documentation stage – completing the documentary requirements for SEC registration. The clue is to complete the required documentation as fast as you can to facilitate uploading of the required documentation with the Company Registration System (CRS) of the SEC and the ultimate approval of the application for company registration in Philippines. While foreign investors are welcome to process their own applications for company registration in the Philippines, securing professional services of well-versed and seasoned professionals could prove to facilitate completion of such company registration in Philippines.
Garry is a Certified Public Accountant (CPA) and a law degree holder in tax practice for about seventeen (17) years now helping out taxpayers on securing BIR Rulings, appeal of BIR Ruling denials, company registrations in Philippines, tax compliance, tax savings, tax assessments, tax refunds, and other related professional tax services. He has likewise been helping out foreign investors/clients determine the most appropriate legal entity to register in the Philippines based on intended operations, the eventual registration of such legal business entity and other related professional services such as securing Ph Visa, payroll, and business consultancy. He was formerly with the academe and is presently a frequent speaker of Tax and Accounting Center, Inc. and other seminar entities.
Disclaimer: This is for purposes of academic discussions only as personally summarized by the author, not of Tax and Accounting Center, Inc. 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, you may also please send mail at info(@)taxacctgcenter.org, or you may post a question at Tax and Accounting Center Forum and participate therein.
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:
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 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
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: 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:
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:
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.
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:
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.
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Revenue Memorandum Circular No. 34-2025
Revenue Memorandum Circular No. 32-2025
Republic Act No. 12079
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Revenue Regulations No. 012-2025
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