Category Archives: business registration

Philippines Partnership

Philippine Partnerships must be registered with the Securities and Exchange Commission (SEC).

Steps and requirements to register a partnership with the SEC are:

1 – Verification and reservation of the name of the partnership at the SEC. Once the name is accepted the SEC will issue a Name Verification Slip.

2 – Articles of Partnership:

The Articles of Partnership define the obligations, responsibilities and roles of each partner and how the profits and losses will be shared and states who the general and limited partners are. Unless otherwise stated a general partner may act on behalf of the partnership without any limitations. By law a limited partner is not allowed to participate actively in the management of the partnership or control of the business operations.

3 – Affidavit of a general partner undertaking to change partnership name (not required if Articles of Partnership has provision on this commitment)

+ Additional requirements:

– Endorsement/clearance from other government agencies, if applicable

For partnership with foreign partners:

SEC Form No. F-105 (Application to do Business under the Foreign Investments Act of 1991 R.A. 7042, as amended

Foreign Investment Agent Application Form if foreign partner is not a resident of the Philippines.

Bank certificate on the capital contribution of the partners

For foreign partners who want to register their investments with the BSP: Proof of inward remittance or affidavit manifesting intention not to register investment with the Banko Sentral ng Pilipinas.

4. File all the documents with the SEC, upon payment of the requisite filing fees.

Notes:

Partnership must be dissolved upon the death of one of its general partners.
General partners are personally legally responsible for all the obligations of the partnership.

Limited partners are personally legally responsible only up to the amount of their capital contribution to the Partnership.

A partnership is taxed like a corporation.

Partnerships are subject to the restrictions on foreign ownership in Foreign Negative List A & B

Foreigners can not be a partner in a partnership which owns land.

A corporation may not be a partner in a partnership.

In the case of a limited partnership, the word “Limited” or “Ltd” must be added to the partnership name. Articles of Partnership of limited partnerships should be under oath only (Jurat) and not recognized before a notary public.

Documents signed outside of the Philippines must be authenticated by the Philippines Embassy/Consulate where it was executed.

Doing Business in the Philippines

37 Replies

Foreign companies doing business in the Philippines by opening an office whether it is a domestic subsidiary, a foreign branch office or a foreign representative office have the requirement to be licensed to do business in the Philippines. This includes registering the business with different government agencies after issuance of the Certificate of Incorporation.

Requirements for incorporating a company in the Philippines:

A corporation in the Philippines requires at least 5 incorporators and 5 directors. 3 of the directors must be residents of the Philippines. The corporate secretary must be a Filipino citizen and resident of the Philippines.

Philippine law restricts the operations of certain kinds of business by foreigners or the percentage of ownership by foreigners. Foreign Negative List A & List B.

1 - Verification and reservation of the corporate name: the SEC will check if the name is not already taken or too similar to the name of an existing business. If the name is available the SEC will issue a Name Verification Slip reserving the name for 30 days. The verification slip may be renewed for additional 30 day periods.

2 - Registration Data Sheet: This form contains information of the Capital Structure of the company, names, nationalities and other details of the: incorporators, stockholders, directors, officers.

3 - Written Undertaking to Change Corporate Name: In the case an opposition to the use of the name happens the incorporators agree to change the name.

4 - Deed of Assignment: In the case where property is contributed to the capital a deed of assignment is required from the stockholder who is the owner in favor of the corporation. If the contribution consists of a parcel of land or a building the must be submitted to the Registrar of Deeds for registration along with the OCT/TCT numbers, registered owner, , lot and block number, area, location and encumbrances, if any

5 - Treasurer's Affidavit: This is an affidavit executed by the Treasurer In Trust attesting that the capital has been received by him and allowing the SEC and the Bangko Sentral to examine and verify the deposit of capital. , lot and block number, area, location and encumbrances, if any

6 – Bank Certificate of Deposit: Attestation by the bank that the capital was deposited. Banks require a board resolution allowing the Treasurer In Trust to open the account.

7 - Articles of Incorporation and Bylaws: The drafting of the Articles of Incorporation and the By-laws, should be done with the help of your lawyer to ensure the best corporate structure.

Certain kinds of corporations will need the endorsement of other government agencies.

Companies may also register with PEZA and BOI to take advantage of tax incentives offerd by the Philippines.

Philippines Corporate Taxation

8 Replies

Companies that are resident of the Philippines are taxed on worldwide income. Non-resident companies are taxed only Philippines income (branch office in the Philippines). Dividends received by Philippine Corporations or resident foreign corporations are not taxed.

Capital Gains Taxes

Capital Gains Taxes are usually taxed as income. The sale of shares that are not listed on the stock exchange are taxed as capital gains:

– 5% withholding tax on the first Php 100,000.00 and 10% on anything above.

The sale of shares listed and traded on the stock exchange is taxed at ½ of 1 % of the gross selling price.

Real Estate Sales are taxed at 6% on the sales price or the zonal value; whichever is higher.

Corporate Income Tax

The tax rate for Domestic Corporations is 30% on worldwide income.

Foreign Branch Offices have a tax rate of 30% on Philippines based income.

Withholding Taxes

Dividends:

Dividends distributed to non resident entities are subject to a 15% withholding tax as long as the country where the foreign corporation resides allows for a tax credit of 15%. Otherwise all dividends are subject to a 30% tax.

Interest:

Interest paid to Non-residents is taxed at 20%.

Royalties:

Royalties paid to non-residents are taxed at 30%. Royalties paid to a domestically to a Filipino entity or a resident foreign corporation are taxed at 20%.

Branch Office Profit Remittances:

After tax profits remitted by a branch office to its parent are taxed at 15%

VAT (Value Added Taxes)

Most sales of goods and services are subject to a value added tax of 12%

Last updated May, 2009.

Tax incentives are available to investors who register with BOI or PEZA

BOI - Board of Investments Tax Incentives

5 Replies

A corporation investing in the Philippines may avail of tax breaks and incentives by registering with the BOI - Board of Investments. The company must operate a business which has been recognized as a preferred area of investment in the Philippines Investment Priority Plan (IPP). For business activities not covered by the IPP incentives may still be available if:

1. at least 50% of production / service is for exports, if Filipino-owned enterprise,; and

2. at least 70% of production / service is for exports, if majority foreign-owned enterprise (more than 40% foreign equity),

Fiscal incentives includes the following:

* Income Tax Holiday
* Exemption From Taxes And Duties On Imported Spare Parts
* Exemption From Wharfage Dues And Export Tax, Duty, Impost And Fees
* Tax Exemption On BreedingStocks And Genetic Materials
* Tax Credits
* Additional Deductions from Taxable Income.

Income Tax Holiday (ITH) Advantages

Companies registered with the BOI are eligible for income tax holidays which range form 3 - 8 years. 4 years for new projects without pioneer status and 6 years for projects with pioneer status.

A 100% foreign owned corporation may be entitled to incentives if their business has been categorized as a pioneer project and at least 70% of production / service is exported or the project is in one of the less-developed areas mentioned in the IPP. Companies not exporting 100% of their production / services are obliged to have 60% Filipino ownership within a period of 30 years from time of registration with the BOI. Foreign ownership of corporations in non-pioneer projects is limited to 40% except if the company exports more than 70% of its production / service.

How to apply for Board of Investment incentives:

Submission of a notarized application specifying the nature of the projects, its inclusion in the IPP or not, percentage of production for export, the investors details and a 5 year feasibility study.

PEZA offers other tax breaks.

Email or call us Tel.: 63 2 474-2732 for a consultation

Philippines BPO KPO Registration Incorporation

6 Replies

Setting up a Call Center, BPO or KPO in the Philippines starts with registering a company. Companies engaged in outsourcing as long as the clients are overseas are considered export companies and can be one hundred percent (100%) foreign owned (Fully Foreign Owned Domestic Corporation).

Philippine tax incentives are available to all companies engaged in outsourcing. To avail of tax breaks the outsourcing corproation may register with either PEZA (Philippines Economic Zone Authority) or the BOI (Philippine Board of Investments).

The Philippines is known for the outsourcing of:

Medical Transcription
3D Animation
Call Center (Inbound, Outbound, Chat)
Website Design and Development
Legal Outsourcing
KPO (Knowledge Process Outsourcing)
BPO (Business Process Outsourcing)
Architecture (Cad Cam)
Programming
Data Entry
Human Resources (HR) and Accounting

Setting up an outsourcing company in the Philippines has many advantages. Filipinos are highly skilled and almost everyone speaks English. Outsourcing in the Philippines whether as an in-house operation or for others will save and increase your company’s earnings.

BC Philippines lawyers will assist you in choosing the best corporate structure for your operations in the Philippines and registration with government authorities to avail of tax breaks. Email a Lawyer.

Philippines Incorporation

Philippine Branch Office

Email or call us Tel.: 63 2 474-2732 for a consultation

Grounds for Annulment of Marriage in the Philippines

Art. 45 of The Family Code of the Philippines states 6 grounds by which the court can annul a marriage.

The grounds for annulment of marriage are:

1. Absence of Parental Consent. A marriage was solemnized and one or the other party was eighteen (18) years of age or over but below twenty-one (21) and consent was not given by the parents, guardian or person having substitute parental authority. The Petition of Annulment must be filed within five (5) years of having attained the age twenty-one. However, if the parties freely cohabited with the other as husband and wife after having reached the age of twenty-one (21) a Petition of Annulment can no longer be filed.

2. Mental Illness. One or the either party was of unsound mind at the moment of the marriage. But if the parties freely cohabited with each other after he or she came to reason the law prohibits the filing of a Petition.

3. Fraud. That the consent of either party was obtained by fraud, unless such party once having knowledge of the fraud freely cohabited with the other as husband and wife. The petition must be filed within five (5) of finding out the facts of the fraud.

4. That the consent of either party was obtained by force, intimidation or undue influence. Except when the same has ceased and the party filing the petition freely cohabited with the other as husband and wife. The injured party must file within five (5) years from the point in time the force, intimidation or undue influence disappeared or came to an end.

5. One or the other party was physically incapable of consummating the marriage, and such incapacity continues and appears to be incurable. The filing of the Petition of Annulment must be filed within five (5) years after the marriage.

6. Either party was at the time of marriage afflicted with a sexually-transmitted-disease (STD) found to be serious and seems to be incurable. This may also constitute fraud. The filing of the Petition of Annulment must be filed within five (5) years after the marriage.

SEPARATION: being separated from your spouse with or without communication is not grounds for annulment. It does not matter how many years you are separated. There is no law that annuls or voids a marriage automatically. Only a judge in a court of law can annul, void or nullify a marriage.

INFIDELITY: is not grounds for annulment.

We file petitions for annulments only in Metro Manila.
Email

Philippine Representative Office

16 Replies

The procedure for obtaining a license from the SEC to operate a Foreign Company Representative Office in the Philippines is similar to that of the Foreign Company Branch Office.

The required minimal inward remittance of funds for a Foreign Representative Office as working capital is US$ 30,000.00 as opposed to the minimum paid up capital of US$200,000.00 of a Foreign Branch Office as mandated by the SEC regulations. Every year the parent company must remit at least US$ 30,000.00 to cover operating expenses.

A Representative Office of a foreign corporation is not allowed to derive income from its operations in the Philippines. All of its expenses must be covered by remittances from the parent company. Usual activities allowed are dissemination of information, promotion of company products and quality control of products for export. It is not allowed to offer services to 3rd parties.

A Representative Office is not subject to income taxes as none of its income is derived from the Philippines and is not qualified to register with the BOI or PEZA authorities.

BC Philippines Lawyers will assist you with the procedure and registration of your business with the pertinent government agencies for a quick opening of a representative office in Philippines.

Philippines Foreign Corporation Branch Office

15 Replies

A branch office of a foreign corporation may start transacting business in the Philippines once it has been licensed by the SEC.

The corporation code of the Philippines in Title XV gives the definition and rights of a foreign corporation in the Philippines to conduct business.

Required documents needed to apply for a license to operate a foreign branch office:

1 – Name Verification Slip (A name search will be done at the SEC to determine if the corporate name has any similarity with an existing corporation already registered with the SEC).

2 – Certified copy of Board resolution authorizing the establishment of an office in the Philippines: designating the resident agent to whom summons and other legal processes may be served in behalf of the foreign corporation and stipulating that in the absence of such agent or upon cessation of its business in the Philippines, any summon of legal processes may be served to SEC as if the same is made upon the corporation at its home office.

3 – Financial statements for the immediately proceeding year at the time of filing the application, certified by an independent Certified Public Accountant of the home country.

4 – Certified copies of the Articles of Incorporation/By-laws/Partnership with an English translation thereof if in a foreign language.

5 – Proof of Inward Remittance such as bank certificate of inward remittance or credit advices.

6 – Resident Agent’s acceptance of appointment (not necessary if agent is the signatory in the application form.

7 – Copy of passports, names and addresses of the present Corporate Directors and Officers with English translation.

The foreign corporation must make an inward remittance of USD 200,000.00 as capital investment. Branches which use advanced technology or employ at least 50 direct employees may be allowed a reduced paid-in capital of USD 100,000.00. Companies which export more than 60% of their products or services may apply for an exemption.

The capital remittance should be registered with the Central Bank of the Philippines, Bangko Sentral ng Pilipinas.

A foreign corporation operating in the Philippines without having been licensed by the SEC does not have the right to file any action, suit or proceedings in Philippine courts of law.

Philippine tax incentives may be available by registering with the PEZA or BOI.

Philippines Business Registration

70 Replies

Businesses may be registered in the Philippines as:

Foreign Branch
Foreign Representative Office
100% Foreign Owned Domestic corporation
60/40 Owned Domestic Corporation
Partnership
Sole Proprietorship

Foreign Branch Office, Foreign Representative Office, Partnerships and Domestic Corporations need to be registered with the Securities and Exchange Commission (SEC).

Sole Proprietorships are registered with the Department of Trade and Industry (DTI).

Philippines Incorporation

To incorporate or form a corporation in the Philippines it is a requirement to have a minimum of 5 incorporators (a corporation may not be an incorporator of another corporation). Each incorporator must hold at least one share in the corporation. Corporations must have a minimum of 5 directors and can have a maximum of 15. The majority of the Directors must be residents of the Philippines.

The Incorporation Procedure

Reservation of Company Name
Submission of Articles of Incorporation and Bylaws
Bank Certificate of Paid in Capital

The Foreign Investment Act as well as the Foreign Investment Negative List A and List B contain the restrictions on foreign ownership of corporations in the Philippines.

Minimum paid-up capital requirements vary according to the kind business the company engages in. For a Domestic Market Enterprise (DME) to be 100% foreign owned the minimum paid-up capital requirement is USD 200,000.00. DMEs which use advanced technology or employ at least 50 direct employees may be allowed a reduced paid-in capital of USD 100,000.00. Companies which export more than 60% of their products or services may apply for an exemption.

Corporations who qualify may avail of tax incentives by registering with the BOI or PEZA.

Branch Office Registration

Foreign Ownership of Land in the Philippines

101 Replies

Real Estate Ownership in the Philippines

Philippines real estate law does not allow outright ownership of real property by foreign nationals. Filipinos and former Filipino citizens and Philippine majority owned corporations (Take note of the Anti Dummy Law) are permitted to own land, buildings, condominiums and townhouses.

Foreign nationals may buy condominiums units in Philippine condos (shares in condominium corporations) as long as not more than 40% of the units in a project are acquired by foreigners (Republic Act No. 4726, otherwise known as the Condominium Act).

Exceptions to the 40% Foreign Ownership of Philippine Real Property

Land Aquired before the 1935 constitution
Acquisition through hereditary succession if the foreigner is a legal or natural heir
Foreigners who acquired Philippine property when they used to be Filipino citizens, will maintain ownership of those properties even after their change of citizenship.
Former natural-born Filipino citizen subject to the limitations prescribed by Law (Batas Pambansa 185 and R.A. 8179)

1 – For residential purpose – 1,000 square meters of urban land or one (1) hectare of rural land (BP 185)
2 – Cannot own both urban and rural land. Choose one type only.
3 – Previous ownership (when still a Filipino citizen) of residential urban or rural land will lower the 1,000 sq meter and 1 hectare limits above.
4 – Can own a maximum of two (2) lots only.
5 – Those lots must be in different cities or municipalities in the Philippines.
6 – A transferee of residential land acquired under Batas Pambansa Blg. 185 may still avail of the privileges granted under R.A. 7042 as amended by R.A. 8179.
For business or other commercial purpose – 5,000 square meters of urban land or three hectares of rural land. Section 5 of Rule XII states: “the land should be primarily, directly and actually used in the performance or conduct of the owner's business or commercial activities in the broad areas of agriculture, industry and services including the lease of land but excluding the buying or selling thereof.”
– Ownership (when still a Filipino citizen) of urban or rural land used for business purposes will lower the 5,000 square meter and 3 hectare limits.
– Ownership of only one type of land is allowed either urban or rural not both.
– Ownership is restricted to 2 lots. Each lot must be in a different municipality.

Ownership Of Houses or Buildings by Foreigners in the Philippines

Foreigners my own buildings or houses in the Philippines legally; as long as they do not own the land on which it is built.

Foreign individuals, corporations or associations may lease land for a period of 25 years renewable for another 25 years. (P. D. No 471, Fixing a Maximum Period for the Duration of Leases or Private Lands to Aliens)

Companies or individuals investing in the Philippines may receive government permission to lease land for up to 50 years renewable for another 25 years. (Republic Act No. 7652, otherwise know as the Investors’ Lease Act)