Opening a Philippines representative office is an excellent way for global businesses to create a footprint without engaging in commercial operations. This legal structure serves primarily as a support hub, allowing a head office to manage promotional activities and quality control across the region.
What is a Representative Office?
A representative office in the Philippines is considered an arm of a foreign corporation. In contrast to a branch office, it does not earn income locally. Rather, all financial requirements must be fully subsidized by the parent company abroad. Since it does not function as a profit-making unit, it is typically free from local income taxes, making it a cost-effective option for multinationals.
Registration Requirements
To incorporate a representative office, the Securities and Exchange Commission requires a minimum capital deposit of US$30,000. This capital is used to handle the entity's startup operating costs. Furthermore, the parent firm must select a local representative who lives in the Philippines to accept court documents on the company's account.
What Can You Do?
Although the range of operations is limited, it offers important opportunities:
Market Research: Conducting market analysis to evaluate the Philippine demand.
Promotion: Sharing details about the parent company's products.
Inspection: Monitoring that Philippine goods meet the corporate standards.
Client Support: Serving as a bridge between customers and philippines representative office the main office.
Steps to Incorporate
The journey to opening your Philippines representative office involves multiple key phases:
Name Verification: Checking the business name with the SEC.
Paperwork: Compiling apostilled copies of the By-laws philippines representative office and Board Resolutions from the home country.
Capital Remittance: Transferring the mandatory USD 30,000 into a Philippine bank account.
Filing: Filing the philippines representative office application form and attachments for license issuance.
Bureaucracy: Securing Barangay clearance and registering with the Bureau of Internal Revenue.
Why Choose a Representative Office?
Selecting a representative office is a prudent move for enterprises planning to explore the market without philippines representative office committing to heavy financial obligations. It allows seamless administrative outsourcing and creates visibility in one of Southeast Asia's fastest-growing economies. Once the business potential is philippines representative office validated, the office can potentially conversion into a branch for commercial activities.