Company Incorporation Step by Step: Philippines
By Celestine Loh, Date published: 2020-08-06
This article covers the main points on registering a company in the Philippines. Read on for details on Philippines’s requirements, procedures, and the estimated timeline to register a company.
What are the Minimum Setup Requirements to Register a Company in the Philippines?
The Philippines does not distinguish the type of business structure as Limited Liability and Private Limited. They have a Domestic Corporation which is similar to a Limited Liability.
The requirements for a Domestic Corporation are:
- 2 to 15 initial directors or incorporators, majority must be residing in the Philippines
- Must consist of at least 4 officeholders – President, Corporate Secretary, Treasurer and Compliance Officer
*The Corporate Secretary must be a citizen of the Philippines while the Treasurer must be a resident of the Philippines.
A Domestic Corporation can have foreign equity and it is sectioned into 3 categories, namely:
- 0% Foreign Equity (100% Filipino owned)
- <40% Foreign Equity
- >40.01% Foreign Equity
The minimum capital requirement is also dependent on the level of foreign equity within a Domestic Corporation.
- 0% Foreign Equity → PHP 5,000/ USD 100
- <40% Foreign Equity → PHP 5,000/ USD 100
- >40.01% Foreign Equity → USD 200,00
*Companies that employ at least 50 Filipino employees must have a minimum capital of USD 100,000.
- Articles of Incorporation
- Written Rules/ By-Laws
- Treasurer’s Affidavit (written form of approval)
- Proof of Address for Place of Business
- 2 Valid IDs of Shareholders
- Tax Identification Number (TIN) of a local shareholder
- Official passport copies of foreign shareholders
The entire period for incorporation of a company in the Philippines is roughly 2-3 months because of the required documents and application forms that need to be submitted and approved. Therefore, it is important to prepare well in advance and have all needed documents and information on standby.
Step 1: Register your Business Name
Once your business structure has been decided on, the first official step is to register your Business Name and ensure it gets approved.
The Business Name must be registered with the Security and Exchange Commission (SEC) and more information regarding the requirements can be found here.
Once the business name is approved, the SEC will issue back a name verification slip and a Registration Certificate.
Step 2: Prepare and submit required documents
After the business name is approved, the company must be registered with the Local Government Units (LGUs). The following documents must be obtained through this process:
- Barangay Clearance from the Barangay Hall
- A Business Permit from the Business Permit and Licensing Office
- The Mayor’s Permit from the Mayor’s Office
Step 3: Tax Registration
The company owner must apply for a Taxpayer Identification Number (TIN) after getting the business name approval from the SEC.
The TIN is important as an identification for the registering of company accounts and official receipts.
Step 4: Application for other services
The company must also register all existing employees with the Philippines social security system (SSS), health insurance (PhilHealth) and Home Development Fund (HDMF or Pag-Ibig Fund).
The required services to be registered with depends on the type of business. In general, this process can take up to 14 working days.
All companies must be in compliance with the Philippine Financial Reporting Standards (PFRS)/ Philippine Accounting Standards (PAS).
All accounts must be filed for each tax year (1st January – 31st December), although a different fiscal year may be used if needed. Companies need to publish an annual financial report and submit it to the Securities and Exchange Commission (SEC).
Corporate Tax Requirements
Under the revised Corporate Tax Scheme, from 2020 onwards, the original 30% will be slowly reduced to 20% in the coming decade.
Annual General Meeting
The Corporation Code of the Philippines requires an Annual General Meeting to be held on a fixed date as stated by the company’s by-laws or any date in April of each year.
This article does not constitute legal advice.
The opinions expressed in the column above represent the author’s own.