Opening a representative office in the Philippines is an effective method for international companies to build a local presence before commencing full-scale business. This setup serves primarily as a support hub, enabling a parent company to handle promotional activities and quality control across the country.
What is a Representative Office?
A Philippines representative office is viewed as an arm of a overseas entity. In contrast to a branch office, it does not generate profit locally. Instead, all financial requirements must be fully supported 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 SEC requires a initial inward remittance of thirty thousand US dollars. This amount is meant to cover the entity's initial expenses. In addition, the foreign corporation must select a resident agent residing in the Philippines to accept legal summons on the company's behalf.
What Can You philippines representative office Do?
While the scope of operations is limited, it delivers significant advantages:
Market Research: Performing market analysis to understand the Philippine market landscape.
Marketing: Providing information about the head office's products.
Inspection: Verifying that locally sourced materials meet the global standards.
Client Support: Serving as a point of philippines representative office contact between customers and the main headquarters.
Steps to Incorporate
The path to opening your representative office involves several essential phases:
Name philippines representative office Verification: Securing the business name with the SEC.
Paperwork: Preparing authenticated copies of philippines representative office the By-laws and financial statements from philippines representative office the home country.
Funding: Remitting the mandatory $30,000 into a local corporate account.
Application: Submitting the application form and supporting documents for license issuance.
Licensing: Obtaining Barangay clearance and filing with the BIR.
Why Choose a Representative Office?
Opting for a Philippines representative office is a prudent decision for businesses aiming to explore the waters before taking on heavy tax burdens. It allows seamless back-office support 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.