Establishing a representative office in the Philippines is an effective way for international companies to create a base without commencing full-scale business. This setup serves primarily as a support hub, enabling a parent company to handle client communications and quality control within the region.
The Nature of the Entity
A Philippines representative office is considered an branch of a foreign corporation. Unlike a domestic subsidiary, it cannot derive revenue locally. Rather, all costs must be completely funded by the head office. Since it is not a revenue-generating unit, it is usually exempt from local income taxes, making it a strategic entry point for foreign firms.
Registration Requirements
To register a representative office, the Securities and Exchange Commission stipulates a minimum capital deposit of US$30,000. This fund is intended to handle the office's startup operating costs. Furthermore, the foreign corporation must designate a local representative who lives in the country to receive court documents on its account.
Permitted Activities
While the range of activities is restricted, it delivers valuable opportunities:
Surveys: Executing feasibility studies to gauge the Philippine market landscape.
Advertising: Sharing details about the head office's products.
Assurance: Ensuring that locally sourced materials meet the corporate standards.
Communication: Acting as a point of contact between customers and the overseas headquarters.
How to Register
The journey to establishing your representative office involves several essential phases:
Name Verification: Securing the business name with the SEC.
Paperwork: Preparing legalized copies philippines representative office of the Articles of Incorporation and financial statements from the home country.
Capital Remittance: Remitting the required $30,000 into a local corporate account.
Filing: Presenting the application form and attachments for approval.
Licensing: Securing Mayor's permits and registering with philippines representative office the BIR.
Benefits of This Structure
Opting for a representative office is a smart decision for businesses aiming to test the waters before committing to philippines representative office complex philippines representative office financial obligations. It allows efficient back-office support and establishes visibility in one of the region's fastest-growing markets. Once philippines representative office the market opportunity is proven, the entity can later transition into a branch for commercial operations.