Setting up a representative office in the Philippines is an ideal method for international companies to build a local presence before commencing full-scale business. This legal structure serves mainly as a communication hub, enabling a head office to handle promotional activities and quality control across the region.
The Nature of the Entity
A representative office in the Philippines is defined as an branch of a overseas entity. Unlike a domestic subsidiary, it is not permitted to derive income from Philippine sources. Rather, all operating expenses must be completely funded by the parent company abroad. Because it is not a revenue-generating unit, it is usually exempt from local income taxes, making it a strategic entry point for foreign firms.
Registration Requirements
To register 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 office's startup operating costs. Moreover, the foreign corporation must appoint a resident agent residing in the Philippines to accept legal summons on the company's account.
Scope of Operations
While the range of activities is limited, it provides valuable advantages:
Data Gathering: Executing market analysis to understand the local demand.
Promotion: Disseminating details about the parent company's products.
Quality Control: Ensuring that Philippine materials meet the global standards.
Client philippines representative office Support: Serving as a bridge between local clients and the main headquarters.
Steps to Incorporate
The process to founding your Philippines representative office includes multiple critical phases:
Name Verification: Reserving the business name with the philippines representative office Securities and Exchange Commission.
Paperwork: Gathering authenticated versions of the By-laws and Board Resolutions from the home country.
Capital Remittance: Remitting philippines representative office the mandatory $30,000 into a local bank account.
Application: Filing the application form and attachments for license issuance.
Local Permits: Securing philippines representative office Barangay clearance and filing with the BIR.
Why Choose a Representative Office?
Choosing a Philippines representative office is a strategic move for businesses planning to test the market before taking on complex tax burdens. It allows seamless administrative support and creates brand awareness in one of the region's fastest-growing markets. Once the market opportunity is validated, the office can philippines representative office later transition into a full corporation for commercial activities.