Setting up a representative office in the Philippines is an ideal method for international companies to build a base before commencing full-scale business. This legal structure serves primarily as a support hub, enabling a parent company to handle client communications and quality control within the region.
What is a Representative Office?
A Philippines representative office is considered an arm of a foreign corporation. In contrast to a branch office, it cannot derive income from Philippine sources. Instead, all operating expenses must be completely funded by the parent company abroad. Because it is not a revenue-generating unit, it is typically exempt from local income taxes, making it a strategic entry point for foreign firms.
Registration Requirements
To incorporate a representative office, the Securities and Exchange Commission mandates a minimum capital deposit of US$30,000. This capital is intended to pay for the entity's initial expenses. philippines representative office Furthermore, the parent firm must appoint a local representative who lives in the philippines representative office country to receive official notices on the company's behalf.
Scope of Operations
While the range of activities is restricted, it delivers valuable opportunities:
Market Research: Executing feasibility studies to gauge the Philippine market landscape.
Advertising: Sharing information about the head office's products.
Inspection: Verifying that locally sourced materials meet the global standards.
Client Support: Serving as a point of contact between customers and the main headquarters.
Steps to Incorporate
The path to opening your representative office requires several essential phases:
Name Verification: Securing the business name with the Securities and Exchange Commission.
Document Preparation: Compiling legalized copies of the Articles of Incorporation and financial statements from the head office.
Capital Remittance: philippines representative office Transferring the mandatory USD 30,000 into a local bank account.
Filing: Presenting the application form and supporting documents for license issuance.
Licensing: Obtaining Barangay clearance and registering with the BIR.
Final Thoughts
Choosing a Philippines representative office is a prudent move for enterprises aiming to explore the market without taking on heavy tax burdens. It permits efficient back-office outsourcing and creates philippines representative office brand awareness in one of the region's thriving economies. When the business potential is validated, the office can potentially philippines representative office conversion into a full corporation for revenue-generating operations.