Opening a representative office in the Philippines is an excellent strategy for global businesses to establish a base before engaging in full-scale trading activities. This legal structure serves primarily as a communication hub, permitting a parent company to manage client communications and product inspections across the archipelago.
What is a Representative Office?
A Philippines representative office is defined as an arm of a foreign corporation. Unlike a domestic subsidiary, it does not derive profit from Philippine sources. Instead, all costs must be fully subsidized by the head office. Since it does not function as a profit-making entity, it is typically free from corporate income tax, making it a budget-friendly entry point for foreign firms.
Key Requirements and Capitalization
To incorporate a Philippines representative office, the Securities and Exchange Commission mandates a minimum inward remittance of US$30,000. This fund is meant to cover the entity's initial expenses. Furthermore, the foreign corporation must select a resident agent who lives in the country to receive court documents on the company's behalf.
Scope of Operations
While the range of activities is limited, it offers significant opportunities:
Surveys: Conducting market analysis to understand the philippines representative office Philippine market landscape.
Advertising: Disseminating information about the head office's services.
Inspection: Verifying that locally sourced materials meet the corporate standards.
Communication: Acting as a bridge between local philippines representative office clients and the overseas office.
The Registration Process
The process to founding your Philippines representative office requires multiple essential phases:
Company Name: Reserving the business name with the Securities philippines representative office and Exchange Commission.
Document Preparation: Preparing philippines representative office apostilled versions of the By-laws and financial statements from the head office.
Capital Remittance: Remitting the mandatory $30,000 into a Philippine corporate account.
SEC Submission: Filing the Form F-104 and attachments for license issuance.
Local Permits: Obtaining Barangay clearance and registering with the Bureau of Internal Revenue.
Benefits of This Structure
Choosing a representative office is a strategic move for businesses aiming to explore the waters without taking on heavy financial obligations. It permits efficient administrative support and creates visibility in one of the region's thriving markets. When the business opportunity is validated, the office can later conversion into a full philippines representative office corporation for commercial operations.