Company Formation and Business Startup Practices in the Philippines
Editor's note: This article covers a field in which the site's operating company has business interests. It is compiled from publicly available and primary sources.
A practical reference that brings together, in one place, everything you need when setting up a company or starting a business in the Philippines — choosing a business form, foreign-ownership restrictions, registration procedures, permits and licenses, tax and audit obligations, employment of foreigners, and exit/liquidation. As of 2026, the three points most commonly gotten wrong are: the 13th Foreign Investment Negative List (EO 113), issued in April 2026, which changed the substance of the rules; SEC registration became fully mandatory online (SEC ZERO) starting April 2025; and the employment condition for the minimum-paid-in-capital exemption is "15 employees," not "50 employees."
1. Decide first: your business form
| Form | Legal personality | Income-generating activity | 100% foreign ownership | Minimum capital (approx.) | Primary use |
|---|---|---|---|---|---|
| Representative Office | None (an extension of head office) | Not allowed (cannot earn income in the Philippines) | N/A | Inward remittance from head office of US$30,000 or more (JETRO, as of November 2025) | Market research, PR, quality control, liaison |
| Branch Office | None (an extension of head office) | Allowed | Head office is a foreign corporation = treated as 100% foreign-owned | Domestic-market type: US$200,000 (US$100,000 under exemption conditions); export-type: no minimum-capital requirement | For taking orders as one entity with head office |
| Domestic Stock Corporation | Has legal personality | Allowed | Depends on industry | No statutory minimum capital (abolished under the Revised Corporation Code, RCC); but domestic-market entities more than 40% foreign-owned need US$200,000, etc. | Most common form; the mainstream choice for Japanese companies |
| One Person Corporation (OPC) | Has legal personality | Allowed | Depends on industry (limited to industries where 100% foreign ownership is allowed) | No statutory minimum authorized capital | Formed by a single individual. A corporate entity cannot be the shareholder |
| Regional Headquarters (RHQ) / Regional Operating Headquarters (ROHQ) | None | RHQ = not allowed; ROHQ = for affiliated companies only | N/A | 注 The amount is sensitive to regulatory changes and could not be confirmed for this article | Regional coordination functions |
| Sole Proprietorship | None | Allowed | Limited to industries allowing 100% foreign ownership | Domestic-market business: US$200,000 (for a foreign national) (JETRO, November 2025) | Small scale. Registered with DTI |
Because a branch or representative office is "an extension of head office," the Philippine branch's liabilities are the head office's liabilities, and head-office assets can become subject to creditor claims (JETRO, "Detailed Foreign Company Registration Procedures and Required Documents," updated November 1, 2025). If liability shielding matters to you, use a domestic corporation instead.
注 A representative office may neither "solicit orders" nor "execute sales contracts." Even if promotional activity leads to a deal, the negotiation and execution must be carried out by head office outside the Philippines. It may, however, enter into contracts relating to running the office itself, such as an office lease or employment contracts (same JETRO source).
Key points on the One Person Corporation (OPC)
Based on SEC Memorandum Circular No. 7 (2019), "Guidelines on the Establishment of a One Person Corporation."
| Item | Details |
|---|---|
| Who may form one | Only a natural person (Filipino or foreign national), a trust, or an estate |
| Who may not | Corporations (including foreign corporations) are not allowed. Banks, quasi-banks, non-bank financial institutions, pre-need companies, trust companies, insurance companies, public companies, listed companies, and non-chartered GOCCs are also excluded. Formation for the purpose of practicing a profession is likewise generally not allowed |
| Articles of Incorporation / By-Laws | By-Laws do not need to be filed |
| Company name | "OPC" must be affixed at the end or below the company name |
| Authorized capital | No statutory minimum (unless a special law provides otherwise) |
| Officers | The sole shareholder is the sole director and president. A treasurer, corporate secretary, etc. must be appointed within 15 days of incorporation, and notified to the SEC within 5 days |
| Concurrent roles | The sole shareholder cannot also serve as corporate secretary, but may serve concurrently as treasurer |
| Bond (if the sole shareholder also serves as treasurer) | Authorized capital ₱1–1,000,000 → ₱1,000,000 bond; ₱1,000,000–2,000,000 → ₱2,000,000; ₱2,000,000–3,000,000 → ₱3,000,000; ₱3,000,000–4,000,000 → ₱4,000,000; ₱4,000,000–5,000,000 → ₱5,000,000; above ₱5,000,000 → bond equal to the authorized capital. Renewed every 2 years |
| Nominee/alternate nominee | A Nominee and an Alternate Nominee must be named in the Articles of Incorporation, with both parties' written consent attached (to keep the business running in case of death or incapacity) |
| Reporting | Audited financial statements within 120 days after fiscal year-end. If total assets and total liabilities are each under ₱600,000, a CPA certificate may be filed instead |
注 A Japanese parent company cannot be the shareholder of an OPC. Setting up a "100%-owned subsidiary of a Japanese corporation" as an OPC is not possible. You need to decide instead between forming a regular stock corporation wholly owned by an individual shareholder, or forming the OPC in an individual's own name.
2. The framework of foreign-investment restrictions (Foreign Investments Act)
The legal basis is Republic Act No. 7042 (the Foreign Investments Act of 1991, "FIA"), as amended by RA 8179 (1996) and RA 11647 (2022).
(Confirmed against the amended text on 2026-08-26) How RA 11647's sections map onto RA 7042 (RA 11647 was approved on 2022-03-02; as of August 2026, no Republic Act amending RA 11647 itself has been confirmed):
| Section of RA 11647 | Section of RA 7042 amended/created |
|---|---|
| Sections 1 / 2 / 3 | Section 2 (Declaration of Policy) / Section 3 (Definitions) / Section 4 |
| Sections 4 and 5 | Newly created Sections 4-A and 4-B (establishing the cross-agency Inter-Agency Investment Promotion Coordination Committee) |
| Sections 6 / 7 | Sections 5 / 6 |
| Section 8 | Section 8 (minimum paid-in capital of US$200,000/US$100,000, at least 15 direct Filipino employees, UTP/SDP obligations) |
| Sections 9, 10, 11 | Newly created Sections 16, 17, 18 |
注 When citing the minimum paid-in capital rule, write it as "RA 7042 Section 8 (as amended by RA 11647 Section 8)." This is the one section where the amending law's section number happens to coincide with the section number of the law it amends — but Sections 4-A and 4-B were newly created by "RA 11647 Sections 4 and 5," and the two must not be conflated. (Source: RA 11647 full text as published on LawPhil, https://lawphil.net/statutes/repacts/ra2022/ra_11647_2022.html, retrieved 2026-08-26)
2-1. The US$200,000 minimum paid-in capital rule and its exemption conditions
| Category | Required paid-in capital | Conditions |
|---|---|---|
| Domestic-market entity, more than 40% foreign-owned (general rule) | US$200,000 or more | — |
| Same, under the exemption | US$100,000 or more | Any one of: ① uses advanced technology certified by the Department of Science and Technology (DOST); ② is certified as a "startup / startup enabler" under the Innovative Startup Act (RA 11337); ③ employs at least 15 Filipinos directly (with Filipinos making up the majority of the workforce and never fewer than 15) |
| Export-oriented enterprise | Exempt from the minimum paid-in capital requirement | Manufacturing, processing, or services (including tourism) that export 60% or more of sales/output. For trading companies, exporting 60% or more of goods sourced domestically |
These three conditions are spelled out verbatim in item 7 of List B of the 13th Foreign Investment Negative List (EO 113, 2026).
注注 "At least 50 employees" is the old standard. RA 8179 (1996) originally read "employ at least fifty (50) direct employees," but RA 11647 (2022) relaxed this to 15 employees and added the startup-certification route. Articles in both Japanese and English that still say "50 employees" remain widely in circulation. As one concrete example, even JETRO's company-formation-procedures PDF (updated November 1, 2025) correctly states in its body text "15 or more (previously 50)," yet the required-documents list in the very same document still carries the old wording, "domestic-market enterprises that do not directly employ at least 50 people." The old and new figures coexist within a single document, so always check the number against the statute or the EO text itself.
注 RA 7042's original text set the figure at US$500,000. An explainer that quotes the 1991 law's original wording as-is is wrong — RA 8179 lowered it to US$200,000, and List C was eliminated at the same time.
2-2. Capital requirements under corporation law (a separate matter)
Under the Revised Corporation Code (RA 11232, 2019), the old requirement to "subscribe 25% of authorized capital and pay in 25% of the subscribed amount" was abolished, and stock corporations no longer have a statutory minimum paid-up capital (RCC Section 12 / JETRO, November 2025). 注 Watch out for older explanations that still assume the "25%/25% rule." Incorporators must number between 1 and 15 (RCC Section 10).
3. The 13th Foreign Investment Negative List (EO 113, 2026)
- Signed: April 13, 2026, by President Ferdinand R. Marcos Jr. (Malacañan Palace; countersigned by Acting Executive Secretary Ralph G. Recto)
- Legal basis: RA 7042 Section 8. The recommending agency is the "Department of Economy, Planning, and Development (DEPDev)" — the former NEDA. The EO text itself uses this new name
- Effectivity: The EO text (Section 5) provides only that it takes effect "15 days after publication in the Official Gazette or a newspaper of general circulation." Some law-firm commentary gives an effectivity date of May 2, 2026 (Global Law Experts, June 2026). 注 Since the Official Gazette publication date could not be confirmed from a primary source, it is safer to understand this as "took effect in early May 2026"
- Revision frequency: List A is revised whenever the underlying laws change; List B no more than once every 2 years
List A (restrictions under the Constitution or specific statutes)
| Foreign-ownership cap | Industry (from EO 113's schedule) |
|---|---|
| 0% | ① mass media (except recording) and internet businesses ② the corporate practice of Architecture ③ cooperatives ④ private security agencies (RA 11917) ⑤ small-scale mining ⑥ utilization of marine resources in archipelagic waters, territorial seas, and the EEZ, and small-scale utilization of resources in rivers, lakes, etc. ⑦ ownership and operation of cockpits ⑧ manufacture of nuclear weapons, etc. ⑨ biological, chemical, and radiological weapons, and anti-personnel mines ⑩ manufacture and retail sale of firecrackers and pyrotechnics |
| Up to 25% | ⑪ private recruitment (both local and overseas) ⑫ contracts for the construction of defense-related structures |
| Up to 30% | ⑬ advertising |
| Up to 40% | ⑭ retail businesses with paid-in capital under ₱25 million (RA 11595 Section 2) ⑮ exploration, development, and utilization of natural resources (technical/financial assistance agreements with the President; 100% is allowed for solar, wind, hydro, and ocean/tidal renewable energy — DOJ Opinion No. 21 [2022], DOE Circular DC2022-11-0034) ⑯ ownership of private land ⑰ operation of Public Utilities ⑱ educational institutions (with some exceptions) ⑲ production, milling, processing, and trading of rice and corn, excluding retail (100% entry allowed on condition of divesting 60% to Filipinos within 30 years) ⑳ government procurement (goods) ㉑ government procurement (infrastructure; up to 75% if there is insufficient domestic technical capacity) ㉒ government procurement (consulting) ㉓ operation of commercial deep-sea fishing vessels ㉔ ownership of condominium units (RA 4726) |
| Up to 100% | ㉕ operation and management of telecommunications. 100% if the foreign investor's home country grants reciprocal treatment to Filipinos; otherwise up to 50% (RA 11659 Section 25 and its IRR) |
List B (national security, public health, and protection of small/medium enterprises — all capped at 40%)
① manufacture, repair, storage, and distribution of firearms, gunpowder, dynamite, and explosive ingredients requiring PNP clearance (the PNP Chief may grant individual permits to non-Filipinos) ② development, manufacture, maintenance, and operation of military materiel (RA 12024, the "Self-Reliant Defense Posture Revitalization Act") ③ distribution and manufacture of dangerous drugs ④ saunas, steam baths, massage clinics, etc. ⑤ gambling in general (excluding investment agreements with PAGCOR) ⑥ micro and small domestic-market enterprises with paid-in capital under US$200,000 ⑦ micro and small domestic-market enterprises with paid-in capital under US$100,000 that meet the exemption conditions above (advanced technology / startup certification / at least 15 Filipino employees)
Main changes from the 12th list (EO 175, June 27, 2022)
"Practice of professions" was dropped from the list, leaving only the corporate practice of "Architecture" in the 0% column (Lexology, May 2026; BusinessMirror, April 16, 2026). The basis for private security agencies was updated to RA 11917, and the items for military materiel (RA 12024) and government procurement (RA 12009 / RA 11981, the Tatak Pinoy Act) have been reorganized around the newer laws.
注 The standard Japanese-language sources have not caught up yet. JETRO's "Restrictions on Foreign Investment" page (updated November 1, 2025) still states that "the 12th Negative List (revised June 2022) is the current version." As of August 2026 the 13th list is the current one, so always check the update date on any Japanese-language source.
4. Heavy regulation by industry
4-1. Retail (RA 11595, the 2021 Retail Trade Liberalization Act amendment)
| Item | Value |
|---|---|
| Minimum paid-in capital for a foreign retailer | ₱25 million or more |
| For multiple stores | minimum investment of ₱10 million per store |
| Scope of "investment" | Total tangible and intangible assets, including buildings, leasehold rights, fixtures, equipment, and inventory (allocated across stores) |
| Reciprocity | The investor's home country must not bar Filipino retailers from entering |
| Review | DTI, SEC, and NEDA review the minimum paid-in capital every 3 years and report to Congress |
注 "US$2.5 million" is the old standard. That was the level under the law prior to RA 11595, and English-language articles still quoting it keep appearing (for example, even the 2025 U.S. State Department Investment Climate Statement mixes in the old figure). ₱25 million plus ₱10 million per store is the current rule (RA 11595 Section 2; the same figures also appear in EO 113 footnote 7). There is a provision for a review every 3 years, but as of August 2026 no primary source confirms that the amount has actually been revised (unconfirmed).
4-2. Public Service Act Amendment (RA 11659, 2022)
The definition of "Public Utility" was narrowed to six sectors: ① power distribution ② power transmission ③ petroleum and petroleum-product pipeline transport ④ water pipeline distribution and sewerage ⑤ seaports ⑥ public utility vehicles (PUV). These six remain subject to the 60% Filipino-ownership rule.
Telecommunications, railways, aviation, expressways, and similar sectors were removed from the "Public Utility" category, making 100% foreign ownership possible (Transport Network Companies — i.e., app-based ride-hailing — also do not count as PUVs). However: - for critical infrastructure, foreign ownership is capped at 50% absent reciprocity - foreign state-owned enterprises (SOEs) may not hold capital in public utilities or critical infrastructure; sovereign wealth funds are capped at a combined 30%
4-3. Land
Ownership of private land is capped at 40% (Constitution, Article XII, Section 7). Individual foreign nationals may not, as a rule, own land at all. Condominium units are capped at 40% (RA 4726). In practice, long-term leases are the customary workaround, but the term and conditions require checking the relevant statute (not confirmed in this article). 注 Under the so-called Anti-Dummy Law (Commonwealth Act No. 108), evading these restrictions by using a Filipino nominee carries criminal penalties. If you are considering a nominee arrangement, always consult a local lawyer.
5. SEC registration in practice
5-1. Full online conversion starting in 2025
- eSPARC (Electronic Simplified Processing of Application for Registration of Company): the application system that replaced the old CRS starting April 19, 2021
- OneSEC (One Day Submission and E-Registration of Companies)
- SEC ZERO (SEC Zuper Easy Registration Online): a fully paperless method in which the system auto-generates the Articles of Incorporation, By-Laws, and certificates
- SEC Memorandum Circular No. 3, s. 2025 (issued April 4, 2025) made the use of SEC ZERO mandatory for corporate registrations processed through eSPARC/OneSEC (JETRO, updated November 1, 2025; ACCRALAW, September 15, 2025; PwC Philippines, 2025)
- Applies to corporations generally, including domestic corporations, foreign corporations, and OPCs. Financing companies, lending companies, etc. continue under the regular process for now (ACCRALAW, September 2025)
- The biggest practical change is that notarization, courier delivery, and over-the-counter filing are no longer required
5-2. Required documents (by entity type)
| Domestic Corporation (SEC Form F-100) | Branch (SEC Form F-103) | Representative Office |
|---|---|---|
| Name verification slip | Name verification slip | Registration cover sheet (auto-generated) |
| Articles of Incorporation | Head-office board resolution (establishing the branch, naming a Resident Agent). Notarized in the home country + apostilled | Signed, notarized application (auto-generated) |
| By-Laws | Head office's most recent audited financial statements (English translation + notarized + apostilled) | Parent company board resolution (apostilled) |
| Certificate of inward remittance (issued by treasurer) | Head office's Articles of Incorporation | Certified/apostilled copy of the Articles of Incorporation |
| Registration Data Sheet | Certificate of inward remittance (equivalent to US$200,000 or US$100,000) | Financial statements (certified/apostilled) |
| Treasurer's affidavit | For branches other than stock corporations, the Resident Agent's affidavit | Certificate of compliance with financial ratios |
| — | Registration Data Sheet (RDS96-2) | Resident Agent's acceptance of appointment |
The Resident Agent must be either a Philippine resident individual or a corporation lawfully doing business locally. For an individual, the requirement is "good moral character and sound financial standing." Written acceptance of the appointment must be filed with the SEC.
For a branch, the SEC examines ratios computed from the submitted financial statements: solvency ratio (total assets/total liabilities) of at least 1:1, current ratio of at least 1:1, and debt-to-equity of no more than 3:1. If these are not met, additional conditions are imposed, such as depositing ₱1 million worth of securities with the SEC.
注 A TIN (Taxpayer Identification Number) or passport number must be indicated on every registration document (SEC Memorandum Circular No. 1 [2013]). Filings without it are not accepted.
5-3. Approximate costs
| Item | Amount |
|---|---|
| SEC registration fee, domestic corporation | 0.1% of authorized capital, plus 20% of that fee. Plus a legal research fee of 1% of the registration fee, and a ₱210 By-Laws filing fee |
| SEC registration fee, branch/representative office | 0.1% of the initial inward remittance, or ₱1,000, whichever is higher. Plus a 1% legal research fee |
| Documentary stamp tax (on share issuance) | ₱1 per ₱200. Due on the 5th day of the month following the month shares are issued |
| DTI registration fee, sole proprietorship | Barangay ₱200 / City ₱500 / Regional ₱1,000 / National ₱2,000 |
| Dissolution filing fee | Domestic corporation ₱510 / Branch, etc. ₱1,010 |
(Source: JETRO, "Detailed Foreign Company Registration Procedures and Required Documents," updated November 1, 2025; JETRO, "Company Liquidation Procedures," updated November 1, 2024)
5-4. Branch-only additional obligation: the Security Deposit
- Within 60 days of the SEC certificate of registration being issued, securities with a market value of ₱500,000 or more must be deposited with the SEC
- If total gross income exceeds ₱5 million, an additional deposit equal to 2% of the excess must be made within 6 months after the fiscal year-end
- Every year, 0.1% of the deposit amount (minimum ₱5,000, maximum ₱50,000) must be paid to the SEC as a "monitoring fee"
- Deductions from gross income (such as direct costs arising from foreign suppliers or foreign affiliates) were clarified by SEC Memorandum Circular No. 2 (2012). Claiming a deduction requires filing audited income statements that itemize the deducted items
6. Post-registration permits and licenses (in this order)
| # | Procedure | Where to apply | Main required documents |
|---|---|---|---|
| 1 | Barangay Clearance | The barangay where the business is located | SEC Certificate of Registration, copy of the lease agreement |
| 2 | Business Permit (Mayor's Permit) | City/Municipality | Barangay Clearance, lease agreement, application form, SEC Certificate of Registration, Articles/By-Laws, application fee and local business tax. Usually includes an inspection by an officer. Renewed annually |
| 3 | Community Tax Certificate | City/Municipality | Renewed annually |
| 4 | BIR: obtaining a TIN | Relevant Revenue District Office (RDO) | SEC Certificate of Registration. Recently, sometimes issued simultaneously with SEC registration |
| 5 | BIR: taxpayer registration (BIR Form 1903) | Same as above | Business Permit, lease agreement, SEC Certificate of Registration, books of account → a Certificate of Registration (BIR Form 2303) is issued |
| 6 | Registration of foreign investment with the central bank (BSP) (optional) | BSP | Registering allows foreign exchange to be sourced from an authorized agent bank when remitting dividends or repatriating investment. Without registration, this is not possible through an authorized agent bank |
| 7 | SSS / PhilHealth / Pag-IBIG | Each agency | Register upon hiring an employee, and make monthly contributions |
Social insurance contributions (as of August 2026)
| Scheme | Details | Confidence |
|---|---|---|
| PhilHealth | Contribution rate 5.00%, salary floor ₱10,000, ceiling ₱100,000, monthly premium ₱500–5,000. Split evenly between employer and employee | Confirmed against PhilHealth's official contribution table (based on Circular 2019-0009). 注 The table, however, only covers "2024–2025," so the rate applicable for 2026 needs to be checked. In 2023, a presidential directive halted a scheduled increase, keeping the rate at 4% |
| SSS | Contribution rate 15% (employee 5% / employer 10%). Monthly Salary Credit (MSC) floor ₱5,000, ceiling ₱35,000. At the ceiling: employee ₱1,750 / employer ₱3,500 = ₱5,250 total. The portion of MSC above the cap includes the MPF (WISP, the mandatory provident fund) | (Added 2026-08-25 through cross-checking; source: RA 11199 / topic file "Minimum Wage and Labor," §8-1). 15% is the final step reached in 2025; there is no further increase scheduled for 2026. Confirm against SSS's official "Contribution Table" as the final word |
| Pag-IBIG (HDMF) | 2% each from employer and employee (1% for employees earning ₱1,500 or less per month). Maximum Fund Salary (MFS) ceiling ₱10,000 = ₱200 each, ₱400 total | (Added 2026-08-25 through cross-checking; source: RA 9679 / HDMF Circular 460 / topic file "Minimum Wage and Labor," §8-1). Due on the 10th of the following month |
| EC (Employees' Compensation) | A flat ₱10 or ₱30 per month, paid by the employer only | Labor Code. (Added 2026-08-25 through cross-checking) |
For reference: the general non-agricultural minimum daily wage in the National Capital Region (NCR) is ₱755 (Wage Order No. NCR-27; issued June 23, 2026; published in The Philippine Star on July 9; took effect July 25, 2026. Agriculture, small retail/service establishments (15 or fewer employees), and small-scale manufacturing (10 or fewer regular employees) get ₱718. A second tranche of +₱25 on January 20, 2027 raises these to ₱780/₱743).
注注 (Corrected 2026-08-25 through cross-checking; source: NWPC's official NCR page, nwpc.dole.gov.ph/ncr/) The previous draft's figures of "₱695 (NCR-26, effective from July 18, 2025) / ₱658" were already outdated as of the July 25, 2026 update. This happened because it simply carried over JETRO's November 1, 2025 wording. However, ₱755 was not yet legally settled as of August 25, 2026. On July 30, 2026, Branch 152 of the Pasig Regional Trial Court issued a TRO, and on August 13 a preliminary injunction (with a ₱10 billion bond), suspending the first +₱60 tranche. Labor groups have appealed to the Supreme Court, and Labor Secretary Trentino has also filed a motion for reconsideration. The NWPC's official page carries no note about the injunction, so looking only at the official site's figures would not reveal that an injunction exists. In practice: the conservative approach is "pay at ₱755, budget at ₱755." If you keep paying ₱695 instead, you need to reserve for the retroactive difference back to July 25 in case the injunction is lifted. See the topic file "Minimum Wage and Labor" §2 for details.
7. ARTA (the Anti-Red-Tape Act) and processing deadlines
Legal basis: Republic Act No. 11032 (2018), the Ease of Doing Business and Efficient Government Service Delivery Act.
| Category | Maximum processing time |
|---|---|
| Simple transactions | 3 working days |
| Complex transactions | 7 working days |
| Highly technical transactions, or those involving public safety/health | 20 working days |
- Automatic approval: if all required documents are complete, the prescribed fee has been paid, and the agency fails to act within the deadline, the application is deemed approved
- Zero Contact Policy: no contact between applicant and staff other than at preliminary evaluation. Once digitalization is complete, all transactions are to run through the system
- Citizen's Charter: agencies must post required documents, procedures, the officer in charge, maximum processing days, fees, and a complaints desk
- LGUs: a single, unified business application form and the establishment of a BOSS (Business One Stop Shop)
- Penalties: a first offense draws 6 months' suspension; a second draws dismissal plus permanent disqualification from public office, along with 1 to 6 years' imprisonment and a fine
Developments in 2025–2026
- ARTA's head is Ernesto V. Perez (Director General, also referred to as "Secretary" at cabinet rank; confirmed in multiple official communications from September 2025 to May 2026). 注 Posts under the name of a previous head, Jeremiah Belgica, still circulate on social media and turn up mixed into search results — take care
- ARTA is strongly pushing LGUs to migrate business-permit processing online (E-BOSS). LGUs without an E-BOSS can use the DICT-developed EBPLS (Electronic Business Permitting and Licensing System) (ARTA official communications, January and April 2026). 注 Some reporting cites a "November 1, 2026 deadline" (PIA, June 3, 2026), but since the underlying article could not be retrieved, the deadline date is unconfirmed
How to treat "World Rank #X"
注 The World Bank's Doing Business rankings were discontinued after the 2020 edition (due to a data-manipulation scandal). Articles still citing "the Philippines ranks #X in the world for ease of starting a business" are quoting a discontinued index.
Its successor is B-READY (Business Ready). In the 2025 edition, the Philippines ranked 53rd out of 101 countries (Philstar, January 24, 2026). Its three pillars broke down as: regulatory framework 73.86 (26th), public services 57.82 (51st), operational efficiency 51.45 (80th). The country coverage went from 50 countries in the 2024 edition to 101 in 2025, with 160+ planned for 2026 — so do not simply compare rankings year over year.
8. Economic zones and investment incentives (PEZA/BOI/SBMA)
| Agency | Role | 2025 performance | Current head |
|---|---|---|---|
| PEZA (Philippine Economic Zone Authority) | Centered on export-oriented enterprises inside economic zones. Has the largest number of Japanese-affiliated registrants | Approved ₱260.89 billion in investments (full-year 2025, +21.91%, 314 projects, projected direct employment of 78,741 — see topic file "IT-BPM Industry" §8(4)). Targeting ₱300 billion in 2026. January–July 2026: ₱151.901 billion (+66.99%) 注(2026-08-25, flagged in cross-checking) The source date is in doubt. A previous draft cited this as "PEZA press release, December 24, 2025" — but a release dated December 24, 2025 cannot possibly contain the full-year confirmed 2025 figure (the year had not yet closed). This is likely either a year mislabeled in transcription, or the release in question actually reported a provisional January–November 2025 figure. Do not cite the date at all until the original PEZA release confirms the date and the period it covers = unconfirmed |
Director General Tereso Panga |
| BOI (Board of Investments, under DTI) | Available outside economic zones too. Covers projects aligned with the Strategic Investment Priority Plan (SIPP) | Approved ₱1.56 trillion (GMA News, January 5, 2026). Down from 2024's ₱1.62 trillion, which had been the highest level in 57 years | Chair = DTI Secretary Cristina Roque |
| SBMA (Subic Bay Metropolitan Authority) | Subic Freeport | — | 注Reporting on who heads it as of 2026 is inconsistent = unconfirmed |
| CDC (Clark Development Corporation) / CEZA (Cagayan Economic Zone Authority) | Each administers its own zone | — | — |
Since the CREATE Act took effect (April 11, 2021), the body that actually grants incentives has been the FIRB (Fiscal Incentives Review Board); investment promotion agencies (IPAs) such as PEZA grant incentives only under delegated authority from the FIRB (JETRO, updated November 1, 2025).
CREATE MORE (RA 12066): key points
注注 (2026-08-25, flagged in cross-checking) The primary sources disagree on the enactment date. Both are retained here. - November 8, 2024 = the approval line at the end of the RA's text ("Approved: NOV 08 2024" — confirmed directly against the Office of the President's certified copy on LawPhil). This article adopts this date. - November 11, 2024 = the Department of Finance (DOF)'s official CREATE MORE page states "Signed into law on November 11, 2024." Topic file "IT-BPM Industry" §8(3) adopted this date. This is likely a gap between the actual signing date and the date of a public announcement or signing ceremony, but it cannot be settled definitively. Always cite the source when giving this date.
| Item | Details |
|---|---|
| Corporate tax rate under the Enhanced Deduction Regime (EDR) | 20% (in place of the standard 25%) |
| VAT | Domestic purchases directly attributable to a registered activity are subject to 0% VAT; imports are exempt from duties |
| RBE Local Tax | During the ITH/EDR period, LGUs may levy an "RBE Local Tax" of up to 2% of gross income, which replaces the usual local taxes and fees |
| Incentive period | For IPA-approved projects: ITH 4–7 years + SCIT/EDR 10 years (14–17 years total). For FIRB-approved projects: ITH 4–7 years + SCIT/EDR 20 years (24–27 years total) |
| Extension | An extension of up to 5–10 years is available if direct employment of 10,000 people is maintained |
| New provision | Adds "Tier 3 activities" (R&D, AI, data centers) |
Export enterprises can elect the 5% SCIT (Special Corporate Income Tax), but IPA-approved domestic-market enterprises (DMEs) can only use the EDR — SCIT is not an option for them (PwC Worldwide Tax Summaries, 2025–2026 edition). To qualify for VAT and duty exemption, at least 70% of annual production/output must be export sales (same source).
9. Accounting, audit, and the tax-filing calendar
Tax rates (as of August 2026)
| Item | Rate | Source |
|---|---|---|
| Corporate income tax (RCIT, domestic corporation) | 25% | PwC Worldwide Tax Summaries |
| Same, small corporations | 20% (total assets ₱100 million or less and taxable income ₱5 million or less) | Same |
| Minimum Corporate Income Tax (MCIT) | 2% of gross income (1% from July 2020–June 2023). Applies starting the taxable year that is the 4th year counted from the year following the start of business | Same |
| Resident foreign corporation (branch) | Taxed the same way as a domestic corporation, but only on Philippine-source income | Same |
| RHQ | A regional headquarters that earns no Philippine income is tax-exempt | Same |
| Japan–Philippines Tax Treaty (current, in effect since 1980, partially amended 2008) | Interest 10%; dividends 10–15%; royalties 10–15%. The Philippines has tax treaties with 44 countries (as of November 2025) | JETRO |
| New tax treaty (signed May 28, 2026; not yet in effect) | Dividends 5%/10%/15%, interest exempt/10%, royalties a flat 10%. Introduces an arbitration mechanism and a Principal Purpose Test (PPT). 注Signature ≠ effectivity. It takes effect 30 days after the exchange of diplomatic notes, following each country's domestic procedures (Diet approval in Japan). As of August 2026, it is not yet in effect — the current treaty still governs in practice | (Added 2026-08-25 through cross-checking; source: topic file "Finance, Tax, and Stock Market," §5-2). A previous draft carried only the current treaty's rates, and the significant fact that a new treaty was signed in May 2026 had been left out entirely (stale information carried forward) |
Filing and submission deadlines
| Filing | Submitted to | Deadline |
|---|---|---|
| Annual corporate income tax return | BIR | The 15th day of the 4th month after fiscal year-end |
| Quarterly corporate income tax return | BIR | For Q1–Q3, within 60 days of each quarter-end |
| VAT return | BIR | Quarterly (the monthly BIR Form 2550M has been discontinued) |
| Audited Financial Statements (AFS) | BIR | As a rule, within 120 days of fiscal year-end |
| AFS (for SEC) | SEC (eFAST) | For a December 31 fiscal year-end, submission is scheduled between early May and early July depending on the last digit of the SEC registration/license number (SEC Memorandum Circular No. 1, March 3, 2025). For a non-December 31 year-end, within 120 days of fiscal year-end. Listed/public companies: within 105 days |
| Annual report (GIS) | SEC (eFAST) | For a stock corporation, within 30 days of the actual date of the annual stockholders' meeting; for a foreign corporation, within 30 days of the anniversary of its SEC license issuance (SEC Memorandum Circular No. 2, January 27, 2024) |
eFAST (formerly OST) is the only submission channel. Over-the-counter, mail, or courier submissions through SENS facilities are no longer accepted (SEC Memorandum Circular No. 1, March 3, 2025).
Audit
| Standard | Details |
|---|---|
| BIR | An independent CPA's annual audit is required if total sales/revenue etc. exceed ₱3 million |
| SEC | Applies to any corporation with total assets or total liabilities of ₱600,000 or more. For a foreign corporation branch, assigned capital or assets of ₱1 million or more |
(Source: PwC Worldwide Tax Summaries, Philippines: Tax administration)
Impact of the Ease of Paying Taxes Act (RA 11976, approved January 5, 2024)
- Classifies taxpayers into four categories: Micro (gross sales under ₱3 million) / Small (₱3 million–under ₱20 million) / Medium (₱20 million–under ₱1 billion) / Large (₱1 billion or more)
- Abolished the ₱500 annual registration fee
- Filing and payment, electronic or manual, can be done through authorized agent banks, RDOs, or accredited software ("filing anywhere")
- VAT-registered taxpayers must now issue a "VAT Invoice" rather than an "Official Receipt (OR)" (JETRO, updated November 1, 2025). 注 Continuing to operate under the old OR practice can create problems when claiming input tax credits
10. Employment of foreign nationals (AEP and the 9(g) visa)
10-1. AEP (Alien Employment Permit)
Legal basis: DOLE Department Order No. 248, Series of 2025 (published January 25, 2025; took effect February 9, 2025, 15 days after publication). Supplemented by DO 248-A, s. 2025 (issued June 9, 2025).
注 (2026-08-25, flagged in cross-checking) The issuance date differs across sources. This article gives "published January 25, 2025"; the topic file "Minimum Wage and Labor," §14-2, gives "issued January 21, 2025." It is likely that the two are picking up the issuance date and the publication date separately, but the official DOLE Official Gazette publication date could not be confirmed. When citing a date, specify whether it is "issuance" or "publication."
| Item | Details |
|---|---|
| Who needs one | Foreign nationals working 6 months or longer (issued by the Department of Labor and Employment, DOLE). Under 6 months is handled through the Bureau of Immigration's SWP (Special Work Permit) |
| Labor Market Test (LMT) | Mandatory since 2025. A job vacancy naming the foreign worker must be posted through three channels: a newspaper of general circulation, PhilJobNet, and a Public Employment Service Office (PESO). Application must be filed more than 15 days after the posting, and within 15 days of the employment contract being signed or the appointment letter being issued (JETRO, November 1, 2025). Some sources describe the posting as running for a minimum of 15 calendar days with a 45-day validity period (Triple i Consulting, May 2025) |
| Skills transfer | An AEP application for a non-managerial technical worker requires submitting an Understudy Training Program (UTP)/Skills Development Program covering 2 Filipino understudies |
| Exemptions | Diplomats, international-organization staff, intra-corporate transferees, etc. Exempt persons obtain a Certificate of Exemption (Vialto Partners, February 2025) |
| Processing time | New applications issued within 3 days, renewals within 24 hours (JETRO). In practice, once the labor market test is included, some sources put a new application at 3–5 weeks (Triple i Consulting). 注(2026-08-25, flagged in cross-checking) The topic file "Minimum Wage and Labor," §14-2, gives a private practitioner's rule of thumb of "AEP 6–10 weeks + 9(g) visa 4–8 weeks = 3–5 months total." "3–5 weeks" (AEP alone) and "3–5 months" (AEP plus the visa, end to end) measure different things — do not conflate them |
| Penalties | A violating employer or foreign national may be barred from applying for an AEP for 5 to 10 years |
| Reporting changes | A change in employment status must be reported within 10 calendar days |
注注 Sources disagree on the AEP fee. JETRO (updated November 1, 2025) gives "₱9,000 for the first year, ₱4,000 per year thereafter and for renewals," while Vialto Partners (February 3, 2025) reports that DO 248-25 "lowered the fee from ₱10,000 to ₱6,000." Confirm the current fee schedule at your local DOLE office before applying.
10-2. Visas
| Type | Details |
|---|---|
| 9(g) visa (pre-arranged employment visa) | For foreign nationals with an employment contract already in place. Limited to positions such as executives and highly skilled technicians that cannot be filled by a Filipino. Normally valid 2 years (renewable). An accompanying spouse or unmarried child under 21, or one who joins within 6 months of entry, may also obtain a 9(g) |
| How to obtain it | Two routes: pre-arrival (at a Philippine post abroad) or post-arrival. If obtained pre-arrival, travel must occur within 90 days, and the visa is implemented and registered with the Bureau of Immigration after arrival |
| 9(a) visa | Temporary visitor's visa. Valid 59 days, extendable up to 6 months |
| 9(d) visa | For treaty traders/investors. Available only to Japanese, U.S., and German nationals |
(Source: JETRO, "Foreign Employment Restrictions and Residence Permits," updated November 1, 2025)
11. Exit (liquidation/closure) in practice
Source: JETRO, "Detailed Company Liquidation Procedures and Required Documents for Foreign Companies in the Philippines" (updated November 1, 2024. 注This is a year older than the registration-side source, so SEC fees and forms should be re-verified)
The procedure has a fixed order
- DOLE (the Department of Labor and Employment) first. After the decision to liquidate, notify both affected employees and DOLE. Notice must be given by 30 days before the closure date
- Local Government Unit (LGU): closure application, the original of the current Business Permit, audited financial statements for the past 3 years, board resolution
- BIR (Tax Clearance): BIR Form 1905, notarized application, original BIR Form 2303, board resolution, year-end inventory list, originals of unused invoices/receipts and an inventory list of them, audited financial statements and various tax returns for the past 3 years, original books of account, Articles of Incorporation, SEC Certificate of Registration, barangay/LGU withdrawal certificate
- Social security agencies (SSS: R-8/R-3/R-5/R-1A; PhilHealth: ER-3; HDMF) — can run in parallel with steps 2 and 3
- Investment promotion agencies such as PEZA (if registered): certificates from DOLE/NLRC/NCMB, SSS clearance, the zone administrator's clearance for liabilities and waste, original PEZA Certificate of Registration, etc. Approval is granted by the PEZA Board, which meets every other month
- SEC (last): The application cannot be filed until the BIR Tax Clearance has been issued
Filing with the SEC
| Category | Filing fee | Key points |
|---|---|---|
| Domestic corporation, voluntary dissolution (no effect on creditors) | ₱510 | Verified dissolution application, board resolution, proof of publication, latest GIS, final-year AFS, affidavits of the president and treasurer (that creditors are not prejudiced/no objection was raised after publication), BIR Tax Clearance, corporate secretary's certificate of no pending litigation |
| Domestic corporation, shortening the corporate term | ₱510 | Requires the affirmative vote of a majority of directors plus at least two-thirds of shareholders, including non-voting shareholders. Additional documents apply if less than a year remains before the shortened term |
| Branch/representative office/ROHQ/RHQ | ₱1,010 | Head-office board resolution to close (a resolution executed outside the Philippines must be authenticated by a Philippine embassy abroad), final-year AFS, creditor consent affidavit or "no creditors" affidavit, BIR Tax Clearance, proof of publication once a week for 3 consecutive weeks |
注 BIR, LGU, SSS, PhilHealth, and HDMF will all press for payment of any arrears, surcharges, and penalties during the closure process. In practice, exit costs balloon not from "liquidation expenses" as such, but from settling backlogged past obligations. 注 After dissolution and lapse of the registration certificate, re-registering requires going through a specific process — including a board resolution certifying that the registration is as a new company — before it can proceed (SEC Memorandum Circular No. 17, 2013). A new SEC registration number and TIN are issued.
12. Summary: things people get wrong without knowing it
| # | Common misconception | Correct understanding (as of August 2026) |
|---|---|---|
| 1 | 注 The exemption from the US$200,000 minimum paid-in capital requires "50 employees" | RA 11647 (2022) relaxed this to 15 employees; startup certification is also an alternate route |
| 2 | 注 The 12th Negative List is still current | The 13th (EO 113, signed April 13, 2026) is current. JETRO's page, updated November 2025, still shows the 12th |
| 3 | 注 Foreign retailers need US$2.5 million | RA 11595 changed this to ₱25 million paid-in capital + ₱10 million per store |
| 4 | 注 You need to "subscribe 25% of authorized capital and pay in 25%" | Abolished under RA 11232 (2019). There is no statutory minimum capital (except under special laws) |
| 5 | 注 "The corporate practice of any profession is 0% foreign-owned across the board" | Under the 13th list, only the corporate practice of architecture remains in the 0% column. The blanket "practice of professions" entry was removed |
| 6 | 注 Telecom/rail/aviation are 60/40 | RA 11659 narrowed "public utility" to 6 sectors; telecom, rail, aviation, and expressways can now be 100% foreign-owned (watch the 50% reciprocity rule for critical infrastructure) |
| 7 | 注 Setting up an OPC in the name of a Japanese parent company | A corporation cannot be an OPC shareholder (SEC MC 7-2019) |
| 8 | 注 You can just bring paper documents to the SEC | SEC ZERO (MC 3-2025) makes everything fully online. AFS and GIS can only be filed through eFAST |
| 9 | 注 VAT-registered taxpayers issue an OR | RA 11976 (the EOPT Act) requires issuing a VAT Invoice |
| 10 | 注 You pay BIR a ₱500 annual registration fee | Abolished by the EOPT Act |
| 11 | 注 "World rank #X for ease of doing business" (Doing Business) | Doing Business was discontinued after the 2020 edition. The current index is B-READY, where the Philippines ranked 53rd of 101 in the 2025 edition |
| 12 | 注 Exiting the Philippines is done once you notify the SEC | The order is 30-day notice to DOLE → LGU → BIR Tax Clearance → SEC. The SEC will not accept the filing until BIR clearance has been obtained |
13. Sources and confidence levels for the figures
- Confirmed (verified against primary sources): EO 113's signing date, text, and every item in Lists A/B (the Office of the President's certified copy on LawPhil); the text of RA 7042/8179/11595/11647/11659/11976/12066/11032/11232 (LawPhil); the SEC MC 7-2019 OPC guidelines; the PhilHealth contribution table (the corporation's own PDF)
- Published figures from government/official bodies: PEZA's approved investment of ₱260.89 billion (PEZA press release, December 24, 2025); NCR minimum wage of ₱755 (Wage Order NCR-27, effective July 25, 2026, per NWPC's official site — though the first tranche was suspended by the August 13, 2026 preliminary injunction)
- Reporting and practitioner summaries (secondary information): BOI's approved amount of ₱1.56 trillion (GMA News, January 5, 2026); B-READY rank of 53rd (Philstar, January 24, 2026); EO 113's effectivity date of May 2, 2026; operational details of SEC ZERO; practical AEP processing times
- Unconfirmed (could not be verified for this article): EO 113's Official Gazette publication date; PhilHealth's applicable rate for 2026; the minimum capital for RHQs/ROHQs; SBMA's current head; ARTA's E-BOSS migration deadline; the outcome of the 3-yearly review of the ₱25 million retail threshold; the exact issuance date of DO 248 (January 21 vs. January 25)
- Items resolved through cross-checking on 2026-08-25: SSS's rate and MSC ceiling (15%/₱35,000) and Pag-IBIG's rate and ceiling (2% each/MFS ₱10,000) — filled in from the topic file "Minimum Wage and Labor," §8-1. The NCR minimum wage — confirmed as NCR-27, ₱755, effective July 25, 2026 against NWPC's official NCR page, replacing the previous draft's ₱695
This article is meant to give an overview of the system; consult a local lawyer or accountant for judgment calls on specific cases. In particular, whether an activity falls under the Negative List, and the calculation of foreign-ownership percentages (the control test, including indirect holdings), are both matters where the conclusion can turn on how the statutory text is read.
日本語の詳細版: 分野「投資制度・経済特区・許認可」「会社設立と起業の実務」（本サイト日本語版）。