October 21, 2013 | Valerie Wong
For many years, doing business in the Philippines as a foreigner was quite a challenge. Previously, the country's laws required that all corporations have at least 60% Filipino ownership, with foreigners being allowed to own only the remaining 40%. While some foreign investors have managed to get around this by enlisting the help of local partners who would play the roles of the Filipino owners, this was always a risky move in the event of a dispute.
However, the laws have been recently loosened up and foreigners are now permitted to own 100% of a corporation in the Philippines. While this is definitely good news for those who want to start their own business in the country, it is important that proper procedures be followed when starting a company to prevent running into problems down the road.
One advantage of doing business in the Philippines is that the vast majority of business transactions are performed in English. This will practically eliminate any language barriers in the process and means that you will not need to have any documents officially translated.
The first step to registering a new business would be to contact the Securities and Exchange Commission (SEC) in order to verify if your chosen name is available. This can now be done for free on the SEC website. Once you have selected a name that is available, you will need to reserve the name. The SEC can reserve a company name for up to 120 days.
After you have your business name accepted by the SEC, you will need to deposit the paid up capital in a bank account. The bank will then issue you a Certificate of Deposit. In the Philippines, you are required to deposit 25% of the corporation's subscribed capital. Some banks will charge a small fee to issue a Certificate of Deposit.
Following this, the company's articles of incorporation must be notarized and filed with the SEC. The new corporation can then receive a Taxpayer Identification Number. Even though it is now possible to register online through the SEC's i-Register service, the required fees will need to be submitted in person. Before the company can be fully registered with the SEC and receive its Taxpayer Identification Number, some documents will need to be submitted. These are: the company name slip, notarized articles of incorporation and treasurer's affidavit, bank certificate confirming deposit of paid-in capital, statement of assets and liabilities, form listing the details of the company's shareholders, officers and directors.
If you are planning to hire local employees at your location in the Philippines, there are some other requirements that you will need to comply with. Your company will need to register with the Social Security System (SSS), which involves filling out various forms and reports, which include a list of your employees, their positions in the company, the date when they started employment and their salary. As an employer, you will also need to register your company and all your employees with PhilHealth, the government run health insurance corporation. Finally, you will need to register with Pag-ibig, which is a Home Development Mutual Fund.
Completing all the requirements usually takes just over one month, assuming that all documents are in order. Servcorp has over 30 years of experience helping entrepreneurs from all over the world register corporations in foreign countries, including the Philippines. Those interested in starting a business in the country can take a look at their business registration services page found here