Metro Manila · Starting A Business In The Philippines: A Guide For Foreigners

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If you'd rather work for yourself than for others, there is always the option to set up a company and start your own business. Making use of your experience and skills and offering them in a foreign Megacity might be an opportunity for many Megacitizens to start a new chapter in life.

Apart from the regular bureaucratic nightmare, you are likely to face in every Megacity, setting up a company in the Philippines will be difficult if you are not a Filipino citizen. Foreigners cannot own a company in the Philippines, meaning the majority has to be owned by Philippine nationals. There are, however, ways to go about it such as having a company in another country and only setting up a branch in the Philippines. Your first step should always be to find a good Philippine lawyer and discuss your options thoroughly.

When investing or setting up a business in the Philippines, the national chambers of commerce can be of big help. They provide advocacy, information about the local market, and most importantly, networking opportunities to bring together companies and clients, suppliers and distributors, employers and employees.

Here are the links to the national and international chambers of commerce in the Philippines:

Starting a business in the Philippines as a foreign national is often described as a complicated process but one thing that makes this process more difficult is the lack of information one can find online. But we at Megacities will try our very best to shed light on some pertinent questions regarding starting a business here in the Philippines. However, we highly recommend consulting a lawyer before anything else.

Are there restrictions on owning a business in the Philippines if you are a foreign national?

Yes. The Philippines has restrictions in terms of the percentage of equity that foreigners can own in a Philippine corporation but while this fact is considered as common knowledge for expats in the country, the details are rarely discussed.

A foreigner, according to experts, cannot own a business in the country on his or her own without shelling out a big amount of money. You’d be looking at around USD 200,000 to start a corporation on your own.

If you have Filipino friends or colleagues to start a corporation with, you can own up to 40% of it. The minimum capital to start one is 5,000 pesos.

Experts say however that the best and the safest way to own a business in the country is to be married to a Filipino who holds ownership of either a proprietorship or own 60% of your corporation.

There is also a foreign investment negative list that foreign nationals should take a look at.

No foreign equity is allowed in mass media except recording based on Art. XVI, Sec. 11 of the Constitution; Presidential Memorandum dated 05 May 1994.

Foreigners should not be involved in retail trade enterprise with a paid-up capital of less than USD 2,500,000 based on Republic Act 8762.

Foreign nationals are also not allowed to join or form cooperatives, get involved in small scale mining, owning cockpits, manufacture, repair, or distribute nuclear, chemical, biological, and radiological weapons, firecrackers, and pyrotechnic devices.

If you are planning to put up a private radio communications network, you can only own up to 20% equity. For those planning to put up a private recruitment agency for local or overseas employment, you would only be able to own 25% of the company.

For more information about investing in the country, take a look at this government document

What are the steps in starting a business in the Philippines?

The procedure of starting a business in the country is deemed complicated for the uninitiated. This means having to file for a number of documents and going to a notary, the barangay, and the like. If you are starting a corporation, there is a need to verify the availability of the company name with the Securities and Exchange Commission (SEC). You can later obtain the reservation certificate at the SEC office. You would then need to open a corporate bank account and deposit the minimum capital. Some bank managers are very meticulous and often ask for the articles of incorporation first before you and other incorporators are allowed to open a bank account. This is why it is best to have this prepared by your lawyer along with the treasurer’s affidavit before you go to your bank of choice.

When done, you would need to register the company name with SEC. You would get a pre-registered Taxpayer Identification Number for your company when you get your SEC certificate. Although government documents and information online say that this TIN is pre-registered, it only means it was reserved for your company. Your company’s TIN would need to be officially registered by you or any of your partners in another office – the Bureau of Internal Revenue (BIR). The BIR would then give you the COR or the Certificate of Registration.

Before the company starts operation, you would need to obtain a barangay clearance from the barangay where the business is located. They’d need to see your SEC papers. After this, you’d pay the barangay a fee and then you can go ahead and apply for a business permit from the Local Government Unit i.e. the municipal or city office.

The process indicated above may have some steps missing so be sure to get a checklist from the government agencies you will be dealing with. We say that there may be some steps missing because sometimes, government agencies would require more documents from you especially because of the status of your nationality. It is interesting to note that some agencies would have you running around for more supporting documents depending on the industry your corporation belongs to. But don’t worry, all of these can be accomplished if you have lots of patience.

To make this process easier, it is best to hire an office that specializes in processing corporate papers that need to be submitted to the SEC. They will know what to do. If you do not know where to go, there are some offices near SEC that offer such services. 

For more information on the process, you can take a look at this article

If you need a workplace to start your business, check out O2 Space Solutions. The company in Makati City provides workstations by the day, serviced offices for short term lease, function rooms, and more. Many Chambers of Commerce also offer virtual office as well as office-in-office solutions for the early stages of your new business.

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O2 Space provides shared working spaces for start-ups, freelancers, and entrepreneurs.