Foreign citizens who want to open a company in the Philippines have several options in terms of the structures they can choose, according to the Commercial Code here. While most of them are used to the limited liability company, it should be noted that this business form does not exist here. However, the Philippines corporation is the closest structure to the limited liability company in other countries.
Our Philippines company registration specialists can offer more information on the types of companies available for foreign investors interested in doing business in this country.
Separately, we can also provide details on immigration. Investors who wish to move to the Philippines for business purposes should know that a permanent resident visa is only granted based on a reciprocity principle meaning that it is granted to citizens of those countries that have signed an agreement with the Philippines allowing for immigration privileges. Our team can give you more details based on your nationality.
|Minimum share capital when you set up a LLC in the Philippines||
Generally USD $200,000 when the foreign ownership percentage is more than 40%
Minimum number of shareholders
|Number of directors
|Mandatory residency requirements||No
|Local director required in the Philippines (Yes/No)||No|
|Time frame for the incorporation (approx.)||
14 business days
|Corporate tax rate in the Philippines||
20% for companies with a net taxable income below PHP 5 million and assets below PHP 100 million
25% for corporations above this amount
|Dividend tax rate||No tax for dividend payments between two Philippines corporations
10% withholding tax for dividend payments by a resident corporation to a resident individual
|VAT Rate in the Philippines||12% standard rate and a 0% reduced rate or exemption|
|Number of double taxation treaties (approx. )||40|
|Annual meeting required||Not generally applicable|
|Accounting and filing requirements||Annual filing 4 months after the end of the taxable year. Annual financial statements as per the IFRS, audited by an independent certified public accountant|
|Foreign-ownership allowed for those who set up a LLC the Philippines||Yes|
|Tax exemptions or incentives||Fiscal and non-fiscal incentives such as income tax holidays, simplified customs procedures for imports/exports. Subject to conditions|
|Additional licenses when you set up a LLC in the Philippines||Depending on the industry in which the LLC activates|
Characteristics of the corporation in the Philippines
JJust like the limited liability company, the Philippines corporation offers limited responsibility to the founders of the business. The concept of limited liability which amount to the amount a shareholder has contributed with to the capital of company. Also, the corporation makes a clear distinction between the assets of the company and those of the shareholders.
The requirements to open a limited liability corporation in the Philippines are:
- a minimum number of 5 shareholders and a maximum number of 15;
- a minimum share capital of 5,000 PHP is required in the case of foreign investors;
- the company must register its name with the Securities and Exchange Commission (SEC);
- the company must obtain a Barangay clearance in order to be registered with the SEC.
It should be noted that a Philippines corporation can be fully foreign-owned or partially foreign-owned. In the latter case, the company is deemed a Filipino company. If a limited liability company is 40% Filipino-owned and 60% foreign-owned, it will be considered a foreign-owned domestic corporation.
Our immigration lawyers in Philippines can give you details about residency.
Our company formation consultants in Philippines can explain the features of the limited liability company.
Compliance with the annual tax and filing requirements is easier with the assistance of an accountant in Philippines. Working with our local team allows businesses to rest assured that they remain fully compliant with the reporting and tax payment requirements. At the same times, our team can provide businesses with valuable analysis and forecasting, as part of a larger and adequate financial strategy.
Registration steps of a limited liability company in the Philippines
Those interested in starting a business in Philippines under the form of a limited liability company must:
- making a reservation for the company name with Securities and Exchange Commission in the Philippines ;
- deposit the share capital with the chosen bank and obtain a bank statement which shows the deposit;
- have the Articles of Association drafted and notarized and then filed with the SEC;
- obtain the Certificate of Registration of the corporation from the Trade Register;
- register the company with the tax authorities, social security authorities and with the Home Development Mutual Fund;
- obtain the special licenses related to starting its activities, if the case requires.
Why register a limited liability company in the Philippines?
Most foreign investors who open companies in the Philippines choose the corporation because:
- it is the most popular type of company which resemble the limited liability company in most countries;
- it has a fast incorporation procedure and minimum requirements in terms of shareholding structure;
- the liability of the shareholders is limited to the amount they invested in the company;
- it is suitable for small and medium-sized businesses, and can benefit from several tax advantages from dedicated to these types of companies;
- it can be used for various purposes – from trading to investment holding, but also as subsidiaries of foreign companies;
- the Philippines is one of the most developed economies in Southeast Asia and has very attractive legislation on foreign direct investments; our immigration lawyers in Philippines can give you details about the options available for residency.
For assistance in drafting the incorporation documents of a Philippines limited liability company you can rely on our local company formation agents. Please contact us for assistance with the Philippines company formation process.
You can also reach out to us if you have questions about immigration to Philippines.