Establishing a representative office in the Philippines is an effective way for global businesses to create a footprint without starting direct trading activities. This business entity acts primarily as a liaison hub, permitting a parent company to coordinate client communications and product inspections 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 multinationals.
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 pay for the office's startup operating costs. Furthermore, the parent firm must designate a local representative who lives in the country to receive official notices on its account.
Permitted Activities
While the range of activities is restricted, it provides 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 corporate standards.
Communication: Serving as a point of contact between customers and the main headquarters.
How to Register
The journey to establishing your representative office requires several essential phases:
Name Verification: philippines representative office Securing the business name with the SEC.
Paperwork: Compiling legalized copies of the Articles of Incorporation and financial statements from the head office.
Capital Remittance: Transferring the mandatory USD 30,000 into a philippines representative office local bank account.
Filing: Presenting the application form and supporting documents for approval.
Licensing: philippines representative office Getting Barangay clearance and registering with the BIR.
Final Thoughts
Selecting a Philippines representative office is a prudent decision for enterprises looking to explore the waters without committing to heavy financial obligations. It philippines representative office permits seamless back-office outsourcing and establishes brand awareness in one of the region's thriving markets. When the market potential is proven, the entity can be considered for conversion into philippines representative office a full corporation for commercial operations.