Starting a Business in Philippines as a Foreigner

Foreign Ownership Rules

✅ 100% Foreign Ownership Allowed

Export enterprises and certain industries:

Export manufacturing (70%+ export)
IT/BPO services (for export)
Most consulting services
Regional headquarters (RHQ)
Certain PEZA-registered businesses
$200,000+ capital investment businesses

⚠️ 40% Maximum Foreign Ownership

Nationalized industries requiring Filipino majority:

Retail trade (under ₱25M capital)
Land ownership companies
Advertising
Domestic market manufacturing
Public utilities
Educational institutions

❌ Fully Restricted to Filipinos

Foreigners cannot participate in:

Mass media (except recording)
Small-scale mining
Private security agencies
Manufacture of firearms
Retail under ₱25M (with exceptions)
Rice & corn industry

Business Structures

Options for Foreigners

1. Domestic Corporation (60/40)

Most common structure. 60% Filipino, 40% foreign ownership. Can own land and engage in nationalized industries.

Minimum 2-15 incorporators (at least majority Filipino)
Minimum capital: None for most businesses
Annual SEC/BIR compliance required

2. 100% Foreign-Owned Corporation

Allowed for export businesses, PEZA-registered, or with $200,000+ paid-up capital.

Must be in allowed industry list
$200,000 minimum (or $100,000 with advanced technology or 50+ employees)
Cannot own land directly

3. Branch Office

Extension of foreign parent company. 100% foreign ownership allowed.

$200,000 minimum inward remittance
Parent company fully liable
Subject to 30% branch profit remittance tax

4. Representative Office

For market research and liaison only. Cannot generate income in Philippines.

$30,000 minimum remittance
No local income allowed
Funded entirely by parent company

Incorporation Process

Reserve Company Name

Submit name reservation request to SEC online. Takes 1-2 days. Name valid for 30 days (renewable).

Prepare Documents

Articles of Incorporation, By-Laws, Treasurer's Affidavit, bank certificate of deposit. Notarized by Philippine notary.

SEC Registration

Submit documents online via SEC Company Registration System (CRS). Processing: 3-7 days. Fees depend on capital.

BIR Registration

Local Business Permits

Barangay Clearance → Mayor's Permit → other clearances (fire, sanitary, etc). Location-dependent.

Post-Registration Compliance

SSS, PhilHealth, Pag-IBIG registration for employees. DOLE registration if hiring.

Costs & Timeline

Item	Typical Cost
SEC Name Reservation	₱100-500
SEC Registration (₱1M capital)	₱5,000-15,000
Notarization	₱2,000-5,000
BIR Registration	₱500-1,000
Mayor's Permit (varies by LGU)	₱5,000-50,000
Barangay Clearance	₱500-2,000
Professional fees (lawyer/accountant)	₱30,000-100,000

Total timeline: 4-8 weeks if properly handled. Can be expedited with higher fees.

🚫 Common Mistakes to Avoid

Using dummy Filipino shareholders - Illegal and grounds for closure
Ignoring the negative list - Operating in restricted sectors leads to penalties
Working without AEP - Foreigners need work permits even for own company
Skipping LGU permits - Operating without permits can shut you down
Underreporting capital - To avoid fees, but limits what you can do

💡 Tips for Foreign Entrepreneurs

PEZA registration - Provides tax holidays and 100% ownership for exporters
$200K threshold - If you have capital, this unlocks many restrictions
Find trustworthy Filipino partners - Essential for 60/40 structures
Get proper legal advice - Laws are complex and change frequently
Consider start small with services - Consulting/freelance before incorporating

⚠️ Important Warnings

You need an AEP to work in your own company (unless SIRV)
Annual compliance is mandatory - SEC, BIR, LGU renewals
60/40 partners can betray you - Legal control rests with majority
Some visas don't allow business - Tourist visa holders cannot operate businesses

💼 Starting a Business