Establishing a Philippines representative office is an effective strategy for international companies to build a base before starting full-scale trading activities. This business entity acts primarily as a support hub, allowing a parent company to manage client communications and product inspections within the country.
What is a Representative Office?
A representative office in the Philippines is defined as an branch of a foreign corporation. In contrast to a branch office, it is not permitted to generate income from Philippine sources. Instead, all costs must be completely funded by the head office. Since it is not a profit-making unit, it is typically exempt from corporate income tax, making it a budget-friendly option for multinationals.
Key Requirements and Capitalization
To incorporate a representative office, the SEC mandates a minimum inward remittance of thirty thousand US dollars. This amount is used to pay for the office's initial expenses. Moreover, the parent firm must select a resident agent who lives in the country to receive legal summons on its behalf.
Scope of Operations
While the range of activities is limited, it delivers significant advantages:
Surveys: Conducting market analysis to gauge the local demand.
Marketing: Sharing details about the parent company's services.
Assurance: Monitoring philippines representative office that locally sourced materials meet the global standards.
Client Support: Serving as a point of contact between local clients and the main headquarters.
How to Register
The process to establishing your representative office philippines representative office requires multiple key phases:
Company Name: Securing the business name with the SEC.
Documentation: Preparing philippines representative office apostilled copies of the Articles of Incorporation and Board Resolutions from the head office.
Bank Deposit: Remitting the required USD philippines representative office 30,000 into a local corporate account.
Filing: Presenting the application form and attachments for approval.
Licensing: Obtaining Mayor's permits and philippines representative office registering with the BIR.
Final Thoughts
Choosing a representative office is a smart move for enterprises looking to explore the market before committing to heavy tax burdens. It permits seamless administrative outsourcing and establishes visibility in one of the region's fastest-growing markets. When the market potential is validated, the entity can later transition into a full corporation for revenue-generating activities.