Setting up a Philippines representative office is an ideal strategy for foreign corporations to establish a footprint without starting direct trading activities. This business entity acts primarily as a liaison hub, permitting a parent company to coordinate client communications and product inspections across the archipelago.
What is a Representative Office?
A Philippines representative office is viewed as an arm of a foreign corporation. In contrast to a domestic subsidiary, it cannot derive revenue locally. Rather, all operating expenses must be completely funded by the head office. Since it is not a revenue-generating entity, it is generally free from corporate income tax, which makes it a budget-friendly option for multinationals.
Capital Needed
To set up a Philippines representative office, the Securities and Exchange Commission stipulates a minimum capital deposit of US$30,000. This fund is meant to handle the office's startup operating costs. Furthermore, the foreign corporation philippines representative office must designate a resident agent who lives in the country to receive court documents on its account.
Permitted Activities
Although the range of activities is restricted, it provides valuable opportunities:
Surveys: Executing feasibility studies to gauge the Philippine market landscape.
Marketing: Sharing information about the head office's products.
Inspection: Verifying that locally sourced goods meet the global standards.
Client Support: Serving as a point of contact between local clients and the main headquarters.
Steps to Incorporate
The path to opening your Philippines representative office requires multiple critical phases:
Company Name: Reserving the corporate name with the Securities and Exchange Commission.
Documentation: Gathering apostilled versions of the Articles of Incorporation and Board Resolutions from the head office.
Bank Deposit: philippines representative office Transferring the required $30,000 into a Philippine corporate account.
SEC Submission: Filing the Form F-104 and attachments for license issuance.
Local Permits: Securing Mayor's permits and filing with the Bureau of Internal Revenue.
Why Choose a Representative Office?
Choosing a representative office is philippines representative office a strategic move for businesses planning to test the market before taking on heavy tax burdens. It allows seamless back-office support and creates visibility in one of the region's thriving economies. Once philippines representative office the market potential is proven, the office can be considered for conversion philippines representative office into a full corporation for commercial operations.