Setting up a representative office in the Philippines is an excellent method for foreign corporations to create a base before engaging in direct operations. This setup acts primarily as a liaison hub, enabling a parent company to manage market research and quality control within the archipelago.
The Nature of the Entity
A representative office in the Philippines is viewed as an extension of a foreign corporation. Unlike a branch office, it cannot generate income locally. Instead, all costs must be fully funded by the head office. Because it is not a profit-making unit, it is generally exempt from corporate income tax, which makes it a cost-effective option for foreign firms.
Capital Needed
To incorporate a representative office, the SEC mandates a initial inward remittance of US$30,000. This amount is intended to cover the entity's initial operating costs. In addition, the parent firm must select a local representative who lives in the Philippines to receive court documents on the company's account.
What Can You Do?
While the range of operations is restricted, it provides significant benefits:
Market Research: Conducting market analysis to evaluate the local market landscape.
Promotion: Providing details about the parent company's services.
Assurance: Monitoring that locally sourced goods meet the global standards.
Customer Liaison: Serving as a bridge between local clients and the main office.
The Registration Process
The path to founding your Philippines representative office involves multiple essential steps:
Company Name: Securing the corporate name with the Securities and Exchange Commission.
Paperwork: Compiling authenticated versions of the Articles philippines representative office of Incorporation and financial philippines representative office statements from the head office.
Capital Remittance: Remitting the required USD 30,000 into a Philippine bank account.
Application: Filing the Form F-104 and philippines representative office supporting documents for approval.
Bureaucracy: Obtaining Mayor's permits and registering with the BIR.
Benefits philippines representative office of This Structure
Opting for a representative office is a smart decision for businesses philippines representative office planning to explore the market before committing to heavy tax burdens. It permits seamless administrative outsourcing and creates visibility in one of Southeast Asia's thriving economies. When the market opportunity is proven, the office can later transition into a full corporation for revenue-generating activities.