Establishing a representative office in the Philippines is an effective method for international companies to build a local presence before commencing full-scale business. This setup serves primarily 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 does not earn income from Philippine sources. Instead, all operating expenses must be completely subsidized by the parent company abroad. Because it does not function as a profit-making 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 stipulates a minimum capital deposit of US$30,000. This fund is intended to handle the office's startup operating costs. Moreover, the foreign corporation must select a resident agent residing in the Philippines to handle legal summons on its account.
What Can You Do?
Although the scope of operations is limited, it philippines representative office offers significant advantages:
Data Gathering: Conducting market analysis to understand the Philippine demand.
Marketing: Providing information about the parent company's services.
Quality philippines representative office Control: Monitoring that locally sourced goods meet the global standards.
Client Support: Serving philippines representative office as a point of contact between customers and the main headquarters.
Steps to Incorporate
The philippines representative office path to opening your representative office requires several essential phases:
Name Verification: Securing the business name with the SEC.
Paperwork: Compiling legalized copies of the By-laws and financial statements from the home country.
Capital Remittance: Remitting the mandatory $30,000 into a local bank account.
Application: Submitting the application form and supporting documents for license issuance.
Licensing: Obtaining Barangay clearance and filing 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 obligations. It allows seamless back-office outsourcing and creates visibility in one of the region's fastest-growing economies. Once the market potential is validated, the office philippines representative office can later conversion into a full corporation for revenue-generating activities.