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Foreign Ownership of Corporations in the Philippines
The Foreign Investment Act (R.A. 7042, 1991, amended by R.A. 8179, 1996) liberalized the entry of foreign investment into the Philippines. Under the Act, foreign investors are generally treated like their domestic counterparts and must register with the Securities and Exchange Commission (SEC) (in the case of a corporation or partnership) or with the Department of Trade and Industry’s Bureau of Trade Regulation and Consumer Protection (in the case of a sole proprietorship).
Businesses with Foreign Investment Restrictions
Within the 1991 Foreign Investment Act (FIA) there are two negative lists also know as the “Foreign Investment Negative List” which defines the foreign investments which are limited or restricted by the constitution and specific laws. Negative List A & Negative List B
Domestic Corporations
The general rule of ownership for a Philippine Domestic Market Enterprise is 60% Filipino ownership and 40% foreign ownership of a business.**
More than 40% and up to 100% foreign ownership of a Domestic Market Enterprise is allowed as long as the paid-in capital is a minimum of USD 200,000.00. Employing a minimum of 50 direct employees or using advanced technology may allow a paid-in capital of less than USD 100,000.00 (R.A. 7042 as amended by R.A. 8179).**
Retail Trade Enterprises
100% foreign ownership is allowed for Philippine retail trade enterprises: (a) with paid-up capital of USD 2,500,000.00 or more provided that investments for establishing a store is not less than USD 830,000.00; or (b) specializing in high end or luxury products, provided that the paid-up capital per store is not less than USD 250,000.00 (Sec. 5 of R.A. 9762). No foreign equity is allowed in Retail Trade Enterprises with less than the above mentioned capital.
Export Businesses
An export enterprise is defined as a business who exports at least 60% of its output.
Export Business Enterprises may be 100% fully foreign owned and may file with the SEC for an exemption of the paid-up capital requirement of USD 200,000.00.
KPO, BPO, Back Office and call centers are considered Export Enterprises.
** Unless otherwise indicated in the Philippine Foreign Investment Negative List
Comments
I am a Canadian Citizen and would like to invest 300,000 USD in a franchised fast food business in the Philippines. Could I own 100% of this business. Would I require inporporation in the Philippines. What would the options be for securing the land for this investment.
James, foreigners are not allowed to own a retail business of that size and may not own land in the Philippines. For more information use the contact form to get in touch.
I’m a dual citizen married to an American. We’d like to start a business school and convenience store with a pharmacy. Can we incorporate on a 50-50? If not, tell me how we can incorporate.
Eva, foreigners can not be owners of schools and retail businesses. Yous husband can not be a shareholder but, indirectly he is a owner as the corporation will conjugal property.
I’m American citizen. Can i have corporation engaging in distribution of luxury goods (like watches) to be distributed to retail stores in the philippines? if yes, can i own 100% of this business?
When and what kind of business can a non-filipino citizen owned a corporation 100%?
Hope to hear from you the soonest. thanks
Leah, you may own 100% of a distribution company as long as the paid-in capital is USD 200,000.00.
You can see the lists of restriction of foreign ownership: Negative List A List B
Hi,thanks for the quick response. in the Negative List A, it says retail trade, is this the same as wholesale (which is related to my question above?
Let me rephrase my question, can i own 100% as a wholeseller?
thanks.
I invested into a Thai Massage business with an agreement on contract that I receive 60% of the profits. Technically do I own 60% of the business?
JR, you would own 60% of the business if you bought 60% of the business. If the agreement shows that you loaned money, you are not technically an owner of the business.
I am canadian looking On the island of Boi?? I think that is how it is spelt. I am intersted in a tourist restaurant and bar facility. I have heard that the government is relaxing some of thier standards to bring tourism to the island. Would this fall under the category of 100% ownership?
Bob, small retail business such as restaurants are not allowed to be owned by foreigners.
Goog day
I am in Australia and Australian citizen.
I want to start a Junk shop in Phillipines to collect scrap metal and export 100% overseas.
Do I require usd 200,000 paid up capital, since more than 60% is exported?
With best regards
Rob
Rob, the SEC would probably accept.
Gentlemen,
We would like to put up a 100% foreign-owned corporation in your country. The nature of our business operation involves manufacture and distribution (in wholesale terms) of steel components of residential, commercial or industial building construction. I guess that does not fall either in Negative List A or B of the Foreign Investment Act of your country.
My question revolves around corporate registration with your SEC. How can we prove to the Philippine government that we inwardly remitted through the Philippine banking system our foreign investment of USD 200,000.00 when pending approval of application for registration,the certificate of bank deposit is in the name of the corporate treasurer? Would Philippine government acknowledge our inward remittance that is not in the name of the corporation that we are going to put up?
Rate, on the bank certificate which is given to the SEC is written treasurer in trust (name) for (company x). So no problem.
Good day! I am an American citizen looking forward to acquiring an IT software division of a company in the Philippines. 100% of the output will be used by my company here in the United States. Is my company subject to any taxes in the Philippines? What is the best way for my company (which will be 100% foreign owned) to register as a corporation in the Philippines? thank you and looking forward to your response.
Ron, yes your company Philippine company/branch will liable for income tax on any income sources in the Philippines. There are tax exemptions for companies who export 100% of their production/service.
My wife is a Pilipino/US citizen and I am a US citizen. We are moving to the Philippines next year. Can a non-Pilipino citizen (me) own and/or run a beach resort or a pension house business in the Philippines if we lease the land long term? I am concerned that if something were to happiness to my wife and the business was all in her name
Glen, you can work in he business but you can not own it (small retail businesses can not be foreign owned). You can own the building. If something would happen to your wife you would have to sell the business to a Filipino.
Similarly to previou s post, I am a Filipino with dual citizenship. We are planning to put up a corporation (myself included in the corporation as stock holder) to run a tourist resort.
I will buy the lot under my name and lease it long-term to the corp. Do you see any problem with this setup? Thanks in advance and bravo for yout very clear and informative website.
Jojo, Yes, you may own the land and lease it to the corporation running the resort. I am presuming you will have foreign partners in the corporation running the resort. If more than 40% of the shares will be foreign owned the minimum paid-in capital will be US$ 200,00.00.
Thank you for your prompt reply, yes my partners are foreigners. Do you have other info or article regarding your comment:
“If more than 40% of the shares will be foreign owned the minimum paid-in capital will be US$ 200,00.00.”
Is this the paid-in capital for a hotel/guesthouse business?
What if their share remains at 40%. Does it affects the paid-in capital?
Is it possible to setup a holding company with 30% foreign stockholders, 60% domestic and 10% preffered shares owned by a foreigner.
The preffered shares will be 30 times the value of the other shares.
Would it be possible to form other domestic companies from this companany that have less restrictions?
Rune, it will depend on the kind businesses the holding company will invest in and the voting rights of the preferred shares. You need to consult a lawyer and give full details of the business to see all the possibilities.
hi there,
we are korean company we would like to establish a 100% foreign owned company in the philippines..our company is engaged in new and renewable energy development..is is possible to own 100% foreign?and how much is the minimum paid up capital? thank you
Jenith, yes 100% foreign ownership is possible, minimum paid-up capital is US$ 200,000.00. but there are exemptions which can allow a paid -up capital of US$ 100,000.00.
hi,
what will be the condition of using my name by a foreign investor for him to operate a retail store. do i have some advantage if agree? what will be its implication to me?
thank you
Leo, it is illegal for you to lend your name to a foreigner to own a retial store. You would be violating the anti-dummy law.
Hello. I am an American citizen and am interested in starting a telecommunications company in the Philippines (office phone systems). Is it possible for me to have the company based in the US and offer services in the Philippines? How does the government feel about advertising products to Philippine citizens via the internet from overseas? Would that be regulated?ou
Joe, you can market through the internet to the Philippines. Your clients will have to pay customs and value added tax on products which you will ship to the Philippines.
I currently have a call center in the US and would like to put a call center in the Philippines. The center would service people who are in the US. Can I create a separate entity in the Philippines and have it be 100% foreign owned?
Layne, yes a call center can be 100% foreign owned.
I am a Singaporean who owned a freight forwarding company. How much share (%) is required from a foreigner and how much should be owned by Filipinos?
Eugie, a freight forwarding company may be 100% foreign owned.
Good day Sir
My boss wants to put up a construction service company here in the Philippines is it possible that they own the company 100% and how much must be their initial investment and how much they must pay the government for them to put up the the company and run the business here in the Philippines … thank you and More POWER =)
Maria, there are many restrictions as to what kind of business a foreigner can operate in the Philippines and the percentage of foreign ownership. I will need more details to be able to answer your question.
Greeting,
Thank you for taking the time to answer all these questions.
I own a software development company in the US and we currently use a lot of contractors in the Philippines. If I were to move to the Philippines for awhile to work on a few of our projects closer with the team, would I be violating any laws or incurring any additional taxes?
Jason. it depends what you consider awhile? You can assist for a short time but you may become liable to pay taxes in the Philippines and need a work permit.
Hi,
I have a internet service company in Germany. I want to open satellite office to Philippines where I can outsource most of the operations (website design, building etc.) and this how get economies of scale compared to my local competitors in Germany.
How should I do it? Is this foreign branch office and as well 60/40 case (foreign ownership) or can I establish office in e.g. in PEZA? Can I somehow get into these Freeport Zones?? 200 000 USD sounds very big money for service company at this point.
Oscar, you will be opening an outsourcing company, an outsourcing company (for export) may file for an exemption and the minimum required paid-in capital will be Php 100,000.00. Establishing an office in PEZA is for obtaining tax incentives and does not change the amount of the required paid-in capital.
hi i am filipino holding canadian citicen do i have i right to buy an rice land for the extended property.to support my bro. and sister…in there in the philippines?
Ed, foreign ownership of land is explained here:
http://www.bcphilippineslawyers.com/foreign-ownership-of-land-in-the-philippines/371/
Hello
I have a question. I am native born-chinese citizen (born and gorwn up here in the philippines), now maried to Pilipino wife. I like to put up a BPO-KPO export business. Can I have 100% ownership of it as a single proprietor and am I excepted to paid up capital of US $ 200,000.00? Am I treated by the government agencies equally as a foreign investor?
Or can I have my pilipina wife 100% own it? as an option? Thanks
Danny, I would not advise you to open a sole proprietorship as you would have unlimited liability if something goes wrong. Better to incorporate. As foreigner you may own 100% of BPO-KPO export business, but even though the business may not be in your wife’s name she is still co-owner as the business would be a part of your conjugal property. For an export business you may obtain an exemption for the amount of paid-in capital. You may have a paid-in capital of Php 100,000.00.
Hi
Can a 100% filipino owned BPO Company apply for BOI tax holiday same way as foreign investors has? Where to apply?
thanks
Danny, yes Filippino investors may avail of tax incentives. You can apply or directly at the BOI.
can a foreign purchase stocks or be a partner in a shipping and local cargo transportation corporation in Philippine if so what is the max ownership of foreign and what is the min paid up capital or capital limitation
Khalid, local cargo transportation corporation can not have any foreign ownership.
Hi, I am a German and want to open a restaurant in the Philippines. I would like to invest money but only under some conditions:
1. I want to own the land that I am going to build the restaurant on it.
2. I want to be 100% the owner of the restaurant.
3. I don’t want any illegal acts and want to do everything legally.
Is this possible?
Thank you for your advice.
Torsten,
1. Foreigners can not own land in the Philippines in their name.(A corporation which owns land can have up to 40% foreign ownership)
2. Foreigners may not own any part of a small restaurant business. (small retail businesses can not have any foreign participation)
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