Home Blog Tax Incentives in the Philippines Philippines Tax Incentives in the Philippines InCorp Editorial Team 14 June 2024 3 minute reading time Table of Contents Tax Incentives in the Philippines: Options Available to Foreign Companies Philippine Economic Zone Authority (PEZA) Board of Investments (BOI) Cagayan Economic Zone Authority (CEZA) The Tourism Infrastructure and Enterprise Zone Authority (TIEZA) Tax Incentives in the Philippines: Options Available to Foreign Companies Philippine Economic Zone Authority (PEZA) Foreign companies engaging in the export industry in the Philippines, including outsourcing and offshoring business operations, may consider registering with PEZA. If deemed eligible, foreign enterprises will be entitled to tax holidays with a validity of either four, six or eight years. After the validity period expires, foreign enterprises will be subject to 5% tax on gross income. This applies as a substitute for all taxes, both local and national. To qualify for PEZA’s tax breaks and tax incentives, business operations must be situated in one of these places: PEZA-registered economic zones, technology parks, IT parks or office buildings. Enterprises are also required to export 100% of their production. To apply for tax incentives from PEZA, foreign enterprises must fulfill necessary documents, which are as follows: SEC Certificate of Registration. Articles of Incorporation and By-Laws. Project Brief. Anti-Graft Certificate. Filing and designation of a representative authorised by Board Resolution. Project Feasibility Study. Board of Investments (BOI) Foreign companies whose business activities are mainly related to business process outsourcing, such as call centers and IT services, may consider registering their businesses with BOI. Other companies engaging in activities that promote the general economic development of the country or activities determined to be part of investment priorities are also allowed to apply for tax incentives offered by BOI. If deemed eligible, foreign enterprises will be entitled to income tax holidays of four to eight years as well as being exempted from local business taxes of four to six years (for pioneer and non-pioneer industries, with different requirements). To qualify for tax breaks and other incentives from the BOI, foreign companies are required to have an equity investment in a legal Philippine corporation. To apply for tax incentives from the BOI, documents to be submitted include: Project Type. Enterprise’s Capital Structure. How business activities are related to the ones under the Investment Priorities Plan. Nationality of investors. Feasibility Report. Cagayan Economic Zone Authority (CEZA) Foreign companies engaging in tourism-related activities (entertainment, amusements, games, etc.) and sports and recreation-related activities (horse racing, gambling, virtual gaming, online gaming, etc.) in may consider registering their businesses with CEZA. If deemed eligible, foreign enterprises will be entitled to tax incentives that include income tax holidays of four to six years, 5% special tax on gross income as a substitute for all taxes both local and national, tax credits, tax and duty-free importation of capital equipment and zero-rating for articles admitted to the zone under legal permit. To apply for tax incentives by CEZA, documents to be submitted include: Accomplished Application Form. Project Feasibility Study. Evidence of intended enterprise’s physical location within the Cagayan Special Economic Zone and Freeport. List of assets and other properties. The Tourism Infrastructure and Enterprise Zone Authority (TIEZA) Foreign companies engaging in tourism-related activities (such as travel and tour agencies, tour guides, restaurants, spas, theme parks, and galleries) within the Tourism Enterprise Zone, with the main purpose of attracting as many visitors as possible to travel to and in the Philippines, may consider registering their businesses with TIEZA. If deemed eligible, foreign enterprises will be entitled to fiscal incentives that include income tax holidays, 5% tax on gross income and exemption from local duties and non-fiscal incentives that include work visas, Special Investor’s Resident Visa, and repatriation of investment. Want to know more about tax incentives in the Philippines to maximise your company’s financial savings? Start by filling out the form below. Read Full Bio Pandu Biasramadhan Senior Consulting Manager at InCorp Indonesia An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.
Home Blog Visa Services in the Philippines Philippines Visa Services in the Philippines InCorp Editorial Team 14 June 2024 4 minute reading time Table of Contents Visa Options for Foreigners Entering the Philippines Non-Immigrant Visas Immigrant Visas Special Visas Special Work Permits Visa Options for Foreigners Entering the Philippines Broadly speaking, visa options for foreigners fall into two categories: non-immigrant visas and immigrant visas. Non-Immigrant Visas Temporary Visitor’s Visa The most common type of visa that belongs to this category is the Temporary Visitor’s Visa. A temporary visitor’s visa is issued for purposes of pleasure (travel), business and medication. However, those who meet the following requirements will not be required to obtain this visa to enter the Philippines: Applicants are from countries that have an agreement on visa waiver or exemption with the Philippines; Applicants do not intend to stay for more than 30 days; Applicants with passport validity of at least 6 months from the day of arrival in the Philippines; and Applicants can show original copies of their return tickets. Other non-immigrant visas include transit visa, diplomatic visa, student visa, pre-arranged employment visa, investor visa, non-commercial missionary visa, and seaman’s visa. Immigrant Visas Two common visa types that belong to this category are quota immigrant visas and marriage visas. Branch Office in the Philippines Marriage Visa A Marriage Visa, on the other hand, is granted to applicants who are legally married to a Philippine citizen under Philippine laws. Some of the requirements to be satisfied to be granted this visa include: Not being afflicted with harmful or contagious disease; Having sufficient financial capacity to support a family so as to not become a burden to the community and the country. Immigrant Visa A Quota Immigrant Visa is granted to applicants from countries that have diplomatic relations with the Philippines. Foreign nationals who possess technical knowledge, special experience or outstanding ability in certain fields or sectors that can contribute to the country’s economic growth can apply for this visa. – In addition to the above, the Philippines also offers Special Visas, which are visas issued by legislative bodies or presidential proclamations. Special Visas In the Philippines, the most common types of special visas are special immigrant visas and special non-immigrant work visas. Special Immigrant Visas The most common special immigrant visas in the Philippines are the following: Special Investor’s Resident Visa (SIRV) that is granted to foreign investors interested in investing a minimum of USD 75,000 in either new or existing companies in the Philippines (companies should be engaging in certain industries or are publicly-listed); Special Visa for Employment Generation (SVEG) that is granted to foreign individuals or companies who will employ not fewer than 10 local employees; and 3) Special Resident Retiree’s Visa (SRRV) that is granted to those who are 35 years old or older with sufficient funds (as required by the government) to retire in the Philippines. Special Non-Immigrant Work Visas The primary types of special non-immigrant work visas are 47a2 PEZA Visa and Regional Operating Headquarters (ROHQ) Visa. The former is granted to foreign nationals who are employed by companies registered with the Philippine Economic Zone Authority (PEZA) or Board of Investments (BOI) or those engaged in oil drilling activities, whereas the latter is granted to foreign company executives who are assigned to perform duties in the regional operating branch in the Philippines for a maximum of three years. Special Work Permits Alien Employment Permit Before they can obtain work visas in the Philippines, foreign nationals are required to apply for a work permit. All foreign nationals seeking long-term employment in the country are required to obtain an Alien Employment Permit (AEP). An AEP authorizes a foreign national to obtain lawful employment provided that no local manpower is able and willing to perform the job position they want to engage in. Those who intend to come to the Philippines for short-term employment of up to 6 months can apply for a Special Work Permit. Want to get the right Visa in the Philippines? Start by filling out the form below. Read Full Bio Pandu Biasramadhan Senior Consulting Manager at InCorp Indonesia An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.
Home Blog Business Incorporation in The Philippines Philippines Business Incorporation in The Philippines InCorp Editorial Team 14 June 2024 5 minute reading time Table of Contents Business Incorporation Options in the Philippines Setting up a local company Setting up a foreign company Representative Office Regional or Area Headquarters (RHQ) Regional Operating Headquarters (ROHQ) Business Incorporation Options in the Philippines Setting up a local company The most common type of local business entity is a Domestic Corporation (DC). The requirements to establish a DC are quite simple. It requires a minimum of 5 incorporators. Each incorporator is required to be an actual person and must at least have a single share in the company. Moreover, a majority of the incorporators must hold the status of Philippine residents (not necessarily be Philippine citizens, but must reside in the country for a prescribed period and hold a valid visa). Unlike a foreign incorporation, a DC is more flexible in terms of foreign ownership. Its execution is also rather simple and less complicated. With that being said, many foreign investors consider it an excellent choice. There are 3 types of DCs in the Philippines: Domestic Corporation with 100% local equity Domestic Corporation with foreign equity between 0.01% and 40% Foreign-Owned Corporation with foreign equity between 40.01% and 100% All DCs are to be registered with the Securities and Exchange Commission (SEC). Only upon successful registration with the SEC will a corporation be able to start its business operations in the Philippines. Setting up a foreign company To set up a foreign company, foreign entrepreneurs can choose from any of the four legal entity options available, namely: 1) Branch Office; 2) Representative Office; 3) Regional or Area Headquarters (RHQ); and 4) Regional Operating Headquarters (ROHQ). Their individual details can be found below. Branch Office in the Philippines To operate a Branch Office in the Philippines, your paid-up capital can be as little as P5,000. But, it is important to note that many banks in the country require companies to have at least P25,000-50,000 to be able to open a corporate bank account. In general, establishing a Branch Office requires remittance amounting to USD200,000 as capital investment. Foreign entrepreneurs are also required to appoint a Resident Agent in the Philippines who will be responsible for receiving summons and taking care of related legal procedures on behalf of the company. The basic requirements to register a Branch Office in the Philippines include the following: Application for Branch Office Establishment through Form F-103 Name verification slip Authorisation of the Board Resolution (authenticated copy) Financial statements Articles of Incorporation (authenticated copies) Proof of Inward Remittance Registration data sheet Acceptance of appointment of a selected Resident Agent Representative Office Commonly considered as a liaison office of its parent company overseas, a Representative Office can be your first step to enter the Philippine market. The purpose of this legal entity is to market the services or products of its parent company or conduct market research in the Philippines to assess future success in case the parent company decides to expand in the country. Representative offices are not allowed to generate revenue or conduct direct selling in the Philippines. To successfully set up a representative office, it is mandatory to provide proof of initial inward remittance amounting to USD30,000. After which the parent company must remit the same amount every year to cover operating expenses. The basic requirements to register a Representative Office in the Philippines include the following: Form F-104 Name verification slip Registration data sleep Authorisation of the Board Resolution (authenticated copy) Financial statements Affidavit of solvency Articles of Incorporation (authenticated copies) Acceptance of appointment of a selected Resident AgentProof of inward remittance of USD30,000 from any local bank Regional or Area Headquarters (RHQ) Similar to a representative office, a Regional Headquarters (RHQ) is not allowed to engage in commercial activities that generate any profits or income in the Philippines. The purpose, however, is different. An RHQ is established to supervise, coordinate, and act as a liaison to the subsidiaries, affiliates and branch offices of its parent company from anywhere in the world. To successfully set up an RHQ, it is mandatory to provide proof of initial inward remittance amounting to USD50,000. The basic requirements to register an RHQ in the Philippines include the following: Application form Name verification slip Certificates proving the parent company is engaged in international trade with existing subsidiaries, affiliates or branch offices (authenticated copies) Authorisation of the Board of Directors (authenticated copy) Endorsement of the Board of Investment Proof of inward remittance of USD50,000 from any local bank Regional Operating Headquarters (ROHQ) Unlike RHQs, a Regional Operating Headquarters (ROHQ) can be fully operational. In other words, an ROHQ is allowed to service its parent company’s subsidiaries, affiliates and branch offices from anywhere in the world. To successfully set up an ROHQ, it is mandatory to provide proof of initial inward remittance amounting to USD200,000. The basic requirements to register an ROHQ in the Philippines include the following: Application form Name verification slip Certificates proving the parent company is engaged in international trade with a minimum of 3 subsidiaries, affiliates or branch offices (authenticated copies) Authorisation of the Board Resolution (authenticated copy) Endorsement of the Board of Investment Proof of inward remittance of USD200,000 from any local bank Want to set up a company in the Philippines? Start by filling out the form below. Read Full Bio Pandu Biasramadhan Senior Consulting Manager at InCorp Indonesia An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.