Foreign companies seeking to do business in the Philippines have several choices in terms of business structures which can they can use. Among these, the preferred ones are the subsidiary company and the branch office. The choice will usually depend on the activities the parent company wants to undertake in the Philippines.
Our company formation agents in the Philippines can explain the main differences between the subsidiary and branch office. We can help the representatives of foreign companies interested in setting up subsidiary companies in the Philippines.
The video below shows the registration process for a subsidiary in the Philippines:
Even if the subsidiary is an extension of the parent company operating in the Philippines, from a legal point of view it will be considered an independent domestic company. Also, registering a subsidiary in the Philippines will mean that the parent company can also carry out other commercial activities than its regular ones on the Filipino market. It should be noted that the subsidiary in the Philippines will be considered a tax resident here.
Our Philippines company formation consultants can offer more information on the characteristics of subsidiaries.
Under the Corporation Code, the subsidiary company will undergo the same registration procedure and will comply with the same requirements as local companies. Under the same law, a subsidiary in the Philippines can be characterized by:
If you need more information on the features of subsidiary companies, our Philippines company registration specialists are at your disposal for clarifications.
As mentioned above, the Filipino subsidiary will be treated as a domestic company which means a foreign company can use the business forms provided by the Company Act. The most employed business forms for subsidiary companies in the Philippines are:
Depending on the choice of the parent company will influence the share capital to be deposited upon the incorporation of the Filipino subsidiary. The minimum share capital to consider upon the registration of a foreign-owned subsidiary in the Philippines is usually 200,000 USD, however, this can differ according to the industry in which the company will activate in.
Another aspect related to setting up a fully foreign-owned company as a subsidiary is the restriction on completing activities in certain industries. However, a foreign company can use a domestic corporation for such purposes.
Our consultants can offer detailed information on how the chosen business form for your subsidiary in the Philippines will impact your activities here. You can rely on us for starting a business in the Philippines, no matter the type of structure you decide on.
Establishing a subsidiary implies the same steps as starting a business in the Philippines by a natural person, the only difference being the fact that the shareholder in a subsidiary in another company. The foreign company will be required to appoint a board of directors made of Filipino residents. For this purpose, employment or residence permits for the directors can be obtained.
The steps for opening a subsidiary in the Philippines are the same as for any other type of company and will imply filing certain documents with the Securities and Exchange Commission and obtaining the necessary licenses to be allowed to operate.
The following documents are required when creating a subsidiary in the Philippines:
The Securities and Exchange Commission can also request other information from the parent company.
Two of the most important steps in opening a subsidiary in the Philippines are related to the registration for taxation and obtaining the necessary licenses to start the operations. From a taxation point of view, the subsidiary must obtain the tax identification number (TIN) from the Securities and Exchange Commission and based on it, the Bureau of Internal Revenue will register the company.
One must pay attention to the fact that the representative of the company will need to pay certain fees and taxes for the release of the accounting books, invoices, and receipts.
The subsidiary must also register as an employer with the following authorities:
As for the licenses it must obtain in 2024, a Philippines subsidiary must consider the authorities in the industry it will activate. Among the general licenses required to do business in the Philippines, a subsidiary must consider the fire permit, the Barangay clearance, and the occupancy permit.
The taxation of subsidiaries in the Philippines will occur under the same laws applied to local companies. The following taxes need to be considered by those setting up such companies in the Philippines:
One of the greatest advantages of opening a subsidiary in the Philippines is that it can benefit from the double taxation agreements signed with other states and which provide for substantial tax deductions.
Foreign investments in the Philippines are on the rise, as indicated by statistical data released in February 2024 concerning the fourth quarter of 2023, revealing the following:
For assistance in registering a subsidiary in 2024 in this country, please feel free to contact our company registration experts in the Philippines.