Setting up a representative office in the Philippines is an excellent way for global businesses to create a footprint without engaging in commercial operations. This business entity acts mainly as a communication hub, allowing a head office to manage promotional activities and quality control across the country.
Understanding the Basics
A representative office in the Philippines is defined as an extension of a overseas entity. Unlike a branch office, it does not generate profit locally. Instead, all financial requirements must be fully supported by the head office. Since it does not function as a profit-making entity, it is generally free from corporate income tax, which makes it a cost-effective option for multinationals.
Key Requirements and Capitalization
To set up a Philippines representative office, the SEC requires a initial inward remittance of thirty thousand US dollars. This amount is used to cover the entity's initial expenses. In addition, the parent firm must appoint a resident agent residing in the Philippines to accept legal summons on the company's behalf.
What Can You Do?
While the scope of activities is limited, philippines representative office it provides important opportunities:
Surveys: Conducting feasibility studies to understand the local market philippines representative office landscape.
Promotion: Sharing information about the head office's products.
Assurance: Verifying that locally sourced goods philippines representative office meet the corporate standards.
Client Support: Acting as philippines representative office a point of contact between local clients and the overseas headquarters.
How to Register
The process to founding your Philippines representative office includes several critical steps:
Name Verification: Reserving the business name with the Securities and Exchange Commission.
Document Preparation: Compiling legalized copies of the Articles of Incorporation and financial statements from the head office.
Capital Remittance: Transferring the mandatory USD 30,000 into a local bank account.
Application: Presenting the application form and supporting documents for license issuance.
Licensing: Obtaining Barangay clearance and philippines representative office filing with the BIR.
Final Thoughts
Opting for a Philippines representative office is a prudent decision for enterprises aiming to explore the waters without taking on heavy financial obligations. It allows seamless back-office outsourcing and creates visibility in one of the region's thriving economies. Once the market potential is proven, the office can later conversion into a full corporation for commercial activities.