Setting up a representative office in the Philippines is an excellent method for global businesses to establish a local presence without engaging in full-scale operations. This legal structure serves mainly as a communication hub, enabling a head office to manage client communications and product inspections across the region.
Understanding the Basics
A Philippines representative office is considered an extension of a foreign corporation. Unlike a domestic subsidiary, it does not derive profit from Philippine sources. Rather, all financial requirements must be completely funded by the head office. Because it is not a profit-making entity, it is usually free from local income taxes, making it a cost-effective entry point for foreign firms.
Capital Needed
To incorporate a representative office, the Securities and Exchange Commission mandates a minimum capital deposit of US$30,000. This capital is meant to handle philippines representative office the office's initial expenses. In addition, the foreign corporation must select a resident agent residing in the Philippines to handle legal summons on the company's behalf.
Permitted Activities
While the scope of philippines representative office activities is limited, it offers valuable opportunities:
Market Research: Performing feasibility studies to evaluate the Philippine market landscape.
Advertising: Disseminating information philippines representative office about the parent company's products.
Assurance: Monitoring that locally sourced materials meet the corporate specifications.
Client Support: Acting as a philippines representative office bridge between local clients and the overseas office.
Steps to Incorporate
The path to establishing your Philippines representative office requires several key phases:
Name Verification: Checking the corporate name with the SEC.
Document Preparation: Gathering authenticated versions of the Articles of Incorporation and Board Resolutions from the home country.
Capital Remittance: Transferring the required philippines representative office USD 30,000 into a Philippine corporate account.
Filing: Filing the application form and supporting documents for approval.
Licensing: Getting Barangay clearance and registering with the BIR.
Final Thoughts
Selecting a representative office is a prudent move for enterprises planning to explore the market before taking on complex tax burdens. It permits seamless back-office support and creates brand awareness in one of Southeast Asia's fastest-growing markets. When the market potential is validated, the office can later transition into a branch for commercial activities.