Opening a representative office in the Philippines is an ideal method for international companies to build a local presence before commencing full-scale business. This setup serves mainly 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 foreign corporation. In contrast to a branch office, it cannot derive income from Philippine sources. Instead, all operating expenses must be completely funded by the parent company abroad. Because it is not a revenue-generating unit, it is typically exempt from local income taxes, making it a strategic entry point for foreign firms.
Registration Requirements
To register a representative office, the Securities and Exchange Commission mandates a minimum capital deposit of US$30,000. This capital is intended to pay for the office's startup expenses. Furthermore, the parent philippines representative office firm must designate a local representative who lives in the country to receive court documents on its account.
Permitted philippines representative office Activities
While the range of activities is philippines representative office restricted, it provides valuable opportunities:
Surveys: Executing feasibility studies to gauge the local market philippines representative office landscape.
Advertising: Sharing details about the head office's products.
Assurance: Ensuring that locally sourced materials meet the corporate standards.
Communication: Acting as a bridge between customers and the overseas headquarters.
How to Register
The journey to establishing your representative office involves several key steps:
Name Verification: Securing the business name with the SEC.
Paperwork: Preparing authenticated copies of the By-laws and financial statements from the home country.
Funding: Remitting the mandatory $30,000 into a local bank account.
Application: Presenting the application form and supporting documents for license issuance.
Licensing: Getting Barangay clearance and registering with the BIR.
Final Thoughts
Opting for a Philippines representative office is a prudent decision for enterprises aiming to explore the waters without taking on heavy financial philippines representative office obligations. It permits seamless back-office outsourcing and establishes brand awareness in one of the region's thriving markets. Once the market potential is proven, the entity can be considered for conversion into a full corporation for commercial operations.