Setting up a representative office in the Philippines is an ideal way for foreign corporations to create a base before engaging in full-scale business. This business entity serves primarily as a communication hub, enabling a head office to manage client communications and quality control within the archipelago.
What is a Representative Office?
A representative office in the Philippines is defined as an arm of a overseas entity. In contrast to a domestic subsidiary, it does not derive profit from Philippine sources. Rather, all financial requirements must be completely funded by the parent company abroad. Since it is not a profit-making unit, it is generally exempt from corporate income tax, making it a cost-effective entry point for foreign firms.
Key Requirements and Capitalization
To set up a Philippines representative office, the Securities and Exchange Commission requires a minimum capital deposit of thirty thousand US dollars. This fund is meant to pay for the office's initial expenses. Moreover, the parent firm must designate a resident agent who philippines representative office lives in the Philippines to accept court documents on the company's behalf.
What Can You Do?
Although the range of operations is limited, it delivers valuable opportunities:
Market Research: Executing feasibility studies to understand the Philippine demand.
Marketing: Sharing details about the head office's services.
Inspection: Ensuring that Philippine materials meet the corporate specifications.
Communication: Acting as a point of contact between customers and the overseas headquarters.
How to Register
The process to opening your representative office involves several key steps:
Name Verification: Reserving the business name philippines representative office with the Securities and Exchange Commission.
Document Preparation: Preparing legalized copies of the Articles of Incorporation and Board Resolutions from the philippines representative office head office.
Capital Remittance: Remitting the required USD 30,000 into a Philippine bank account.
Application: philippines representative office Submitting the Form F-104 and supporting documents for license issuance.
Bureaucracy: Obtaining Mayor's permits philippines representative office and registering with the BIR.
Why Choose a Representative Office?
Selecting a Philippines representative office is a strategic move for enterprises aiming to test the waters before committing to complex financial obligations. It allows efficient back-office support and establishes visibility in one of the region's fastest-growing markets. Once the business potential is validated, the office can potentially transition into a full corporation for commercial activities.