Market entry into Philippines

Market overview

Foreign businesses may enter the Philippines through direct cross-border supply, a Philippine-incorporated subsidiary, a licensed branch or representative office, or arrangements with importers, distributors, agents, licensees, and local partners. The appropriate pathway depends on constitutional and statutory foreign-ownership restrictions, the proposed activity, capital requirements, tax exposure, staffing, imports, premises, investment incentives, and national and local approvals.

Typical entry routes

• Direct export or cross-border supply from New Zealand
• Philippine-incorporated subsidiary or domestic corporation
• Branch office of a foreign corporation licensed to do business in the Philippines
• Representative office for qualifying non-income-generating activities
• Regional or area headquarters or operating-headquarters structure where legally available and appropriate
• Importer, distributor, agent, franchise, licensing, or commercial partnership
• Joint venture with a Philippine investor or commercial partner
• Investment project registered with the Board of Investments or another investment-promotion agency where eligible
• E-commerce or remote service delivery, subject to applicable Philippine requirements

Key regulatory issues

• The proposed activity should be checked against constitutional restrictions, applicable legislation, and the current foreign-investment negative list
• Foreign-equity limits, minimum-capital requirements, nationality conditions, or local-participation rules may apply to particular activities
• SEC registration or licensing does not replace sector approvals, tax registration, local permits, or authority to employ foreign nationals
• A representative office should not conduct revenue-generating activities in the Philippines
• Investment incentives require separate registration and continuing compliance and are not obtained automatically through incorporation
• National, provincial, city, municipal, barangay, premises, zoning, fire-safety, environmental, and sector requirements may apply concurrently
• Products may require import clearance, standards certification, registration, testing, labelling, health, food, agriculture, telecommunications, or other authority approval
• Employment, immigration, consumer, competition, privacy, data, advertising, intellectual-property, and environmental requirements may apply
• The operating model should be confirmed before capital, contracts, staffing, imports, premises, or distribution arrangements are committed

Registrations and filings

• Name verification and incorporation of a Philippine company through the Securities and Exchange Commission's electronic registration systems
• SEC licence for a foreign corporation establishing a branch, representative office, or other permitted foreign-company presence
• Appointment of a resident agent and maintenance of the required Philippine office and corporate records where applicable
• Taxpayer registration, books of accounts, invoicing arrangements, and electronic filing access with the Bureau of Internal Revenue
• Barangay clearance, mayor's or business permit, premises, zoning, fire-safety, and local-government registrations where applicable
• Board of Investments or other investment-promotion-agency registration where incentives are sought
• Employer registrations with the applicable social-security, health-insurance, housing-fund, and labour authorities
• Employment permits, visas, immigration registrations, and related approvals where foreign personnel will work in the Philippines
• Sector, professional, environmental, product, construction, telecommunications, health, food, or operational licences where applicable
• Bureau of Customs importer accreditation and Client Profile Registration System activation where goods will be imported
• Annual SEC, beneficial-ownership, tax, employment, customs, licence, and local-government filings

Customs and trade

• Confirm the Philippine importer of record and responsibility for customs clearance
• Obtain and maintain Bureau of Customs importer accreditation and the required customs-system access
• Appoint an accredited customs broker or establish an authorised declaration process where appropriate
• Classify goods under the applicable Philippine customs tariff
• Assess customs value, origin, customs duty, value-added tax, excise tax, and available trade-agreement treatment
• Identify prohibited, restricted, regulated, licensed, inspected, or permit-dependent goods before shipment
• Obtain required import permits, product registrations, sanitary, phytosanitary, standards, technical, health, or sector approvals
• Prepare goods declarations, invoices, packing lists, transport documents, freight and insurance records, origin evidence, permits, licences, and product certificates
• Coordinate lodgement, assessment, inspection, tax payment, release, delivery, and recordkeeping with customs and logistics providers
• Maintain importer accreditation, annual reportorial compliance, and current customs registration information

Tax considerations

• Assess whether the proposed activities create Philippine-source income or a taxable permanent establishment
• Review the tax consequences of the selected subsidiary, branch, representative-office, contractual, and distribution model
• Determine applicable corporate-income-tax, minimum-corporate-income-tax, value-added-tax, percentage-tax, and annual filing obligations
• Identify withholding-tax obligations relating to services, interest, royalties, rent, dividends, employment, and payments to non-residents
• Assess branch-profit-remittance, dividend, treaty, and profit-repatriation considerations
• Review payroll, employee-income-tax, social-security, health-insurance, housing-fund, and employment-related obligations
• Consider transfer-pricing, related-party, financing, management-fee, royalty, documentation, and reporting requirements
• Assess whether an approved investment qualifies for tax or customs incentives and the conditions attached to those incentives
• Establish compliant accounting, invoicing, filing, payment, reconciliation, documentation, and recordkeeping processes

Common pitfalls

• Selecting an entity before confirming foreign-ownership restrictions and minimum-capital requirements
• Assuming SEC registration completes tax, local-government, employment, customs, and sector requirements
• Using a representative office for sales, contracting, invoicing, or other revenue-generating activities
• Treating investment incentives as automatic following company registration
• Beginning operations before obtaining barangay, city or municipal, premises, fire-safety, and sector permits
• Hiring foreign personnel before confirming employment-permit, visa, immigration, and professional requirements
• Shipping goods before confirming importer accreditation, permits, classification, valuation, labelling, and product approvals
• Using contracts that do not allocate importer, customs, tax, regulatory, warranty, and recall responsibilities
• Overlooking archipelagic logistics, regional implementation, local-government differences, and supply-chain continuity
• Allowing SEC, tax, customs, banking, employment, beneficial-ownership, and licensing records to become inconsistent