COUNTRY PROFILE
Name: Republic of the Philippines
Capital: Manila
Currency: Peso (PHP)
Exchange Rate: €1 = PHP 58.96 (2019)
Climate: Tropical Marine
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DOWNLOAD PDFGeography: 7, 641 Islands- Three Major Islands of Luzon, Visayas, & Mindanao
Population: 108,885,096 (2019 est.)
Ave. Population Growth: 1.6%
Ave. Age of Population: 23.4 years
Size of Labor Force: 72.9 Million (as of Oct 2019)
Religions: Roman Catholic (83%); Protestants (9%); Muslim (5%); Others (3%)
Type of Government: Unitary Form, Democratic Presidential System, Bicameral
Administrative Divisions: 17 Regions; 81 Provinces; 145 Cities; 1, 489 Municipalities, and 42, 028 Barangays
Economy: Real GDP Growth 5.9% (2019); GDP per capita USD 3,104.26 (2018), GNP 105.124 USD Billion (2019)
| 2014 | 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|---|
| Real GDP Growth | 6.1 | 6.1 | 6.9 | 6.7 | 6.2 |
| PPP for Private Consumption | 19.6 | 19.7 | 19.7 | 19.9 | 20.4 |
| Inflation Rate | 3.6 | 0.7 | 1.3 | 2.9 | 5.2 |
| Unemployment Rate | 6.8 | 6.3 | 5.5 | 5.7 | 5.3 |
Source: Philippine Statistics Authority
EU and the Philippines
Trade in goods between the EU and the Philippines equaled € 15.6 billion in 2018 while bilateral trade in services between the two partners reached € 4.8 billion in 2017. EU is the largest foreign investor in the Philippines, having reached €13.7 billion as EU foreign direct investment stock in the same year
The EU is the Philippines’ fourth largest trading partner, accounting for almost 10% of the country’s total trade in 2018 (after China, Japan and the US).
EU exports to the Philippines are dominated by machinery, transport equipment, chemicals, food products, and electronic components, while the Philippines' main exports to the EU are office and telecommunication equipment, machinery, food products, and optical and photographic instruments.
Baltic Trade with the Philippines
The Baltic countries of Estonia, Latvia, and Lithuania total trade with the Philippines reached € 12.348 million in 2014. Total exports amounted to € 4.242 million with Lithuania’s sugar commodity contributing 85.27% or € 3.617 million. Total imports was € 8.106 million primarily driven by Lithuania.
Commodities traded were mostly sugar and sugar confectionery; machinery, nuclear reactors, boilers; organic chemicals; electrical and electronic equipment; and lac gums, resins, vegetable saps and extracts.
Country 2014 Exports (In Euro) 2014 Imports (In Euro)
Estonia
Total: € 2.524 Mn Exports: € 0.445 Mn
Imports: € 2.079 Mn
Miscellaneous edible preparations (0.339 Mn)
Organic chemicals (0.080 Mn)
Electrical, electronic equipment (0.014 Mn)
Tanning, dyeing extracts, tannings, pigments, etc. (0.006 Mn)
Optical, photo, technical, medical etc. apparatus (0.002 Mn)
Electrical, electronic equipment (0.658 Mn)
Lac, gums, resins, vegetables saps, and extracts (0.510 Mn)
Miscellaneous chemical products (0.433 Mn)
Footwear, gaiters and the like, parts thereof (0.178 Mn)
Toys, games, sports requisites (0.074 Mn)
Latvia
Total: € 1.138Mn Exports: € 0.180 Mn
Imports: € 0.958 Mn
Machinery, nuclear reactors, boilers, etc. (0.065 Mn)
Beverages, spirits, and vinegar (0.042 Mn)
Vegetable textile fibers, paper yam, woven fabric (0.034 Mn)
Optical, photo, technical, medical, etc. apparatus (0.021 Mn)
Articles of iron or steel (0.016 Mn)
Lac, gums, resins, vegetable saps and extracts (0.339 Mn)
Optical, photo, technical, medical, etc. apparatus (0.0175 Mn)
Electrical, electronic equipment (0.087 Mn)
Vegetable, fruit, nut, etc. food preparations (0.086 Mn)
Clocks and watches and parts thereof (0.068 Mn)
Lithuania
Total:€ 8.686 Mn Exports: € 3.617 Mn
Imports: € 5.069 Mn
Sugars and sugar confectionery (3.617 Mn)
Fertilizers (0.211 Mn)
Optical, photo, technical, medical, etc. apparatus (0.179 Mn)
Dairy products, eggs, honey, edible animal products (0.071 Mn)
Cereal, flour, starch, milk preparations, and products (0.056 Mn)
Rubber and articles thereof (3.004 Mn)
Machinery, nuclear reactors, boilers, etc. (0.773 Mn)
Lac, gums, resins, vegetable saps, and extracts (0.301 Mn)
Electrical, electronic equipment (0.217 Mn)
Optical photo, technical, medical, etc. apparatus (0.147 Mn)
The Philippine government has several executive departments, agencies, and attached offices that regulate activities on specific sectors and industries within the country. Regulations are issued in compliance to statutory laws and/or executive orders, administrative orders, and memorandum circulars.
Department Level
Department of Trade and Industry (DTI)
www.dti.gov.ph
The lead government body that is responsible for trade and industry policies, promotion services, technical advisory services, consumer protection, and business regulation services.
Agency Level
Board of Investments (BOI)
www.boi.gov.ph
Attached agency of DTI that is responsible for investment promotion. It assists Filipino and foreign investors to venture and prosper in desirable areas of economic activities.
Bureau of Customs (BOC)
www.customs.gov.ph
Attached agency of the Department of Finance (DOF) responsible for revenue collection and assessment, enforcement of customs and trade laws for trade facilitation.
Bureau of Internal Revenue (BIR)
www.bir.gov.ph
Attached agency of DOF mandated by law to assess and collect all national internal revenue taxes, fees and charges, and to enforce all forfeitures, penalties, and fines.
Bureau of Immigration (BI)
www.immigration.gov.ph
Attached agency of the Department of Justice (DOJ) that monitors compliance of all foreigners with existing Philippine laws. Chief repository of all immigration records.
Food and Drug Administration (FDA)
www.fda.gov.ph
Attached agency of the Department of Health (DOH) mandated to ensure the safety, efficacy, and quality of health products, which include food, devices, and all consumer goods.
Philippine Economic Zone Authority (PEZA)
www.peza.gov.ph
Attached agency of DTI intended to provide globally competitive and ecological business environment to investors through effective management of special economic zones.
Securities and Exchange Commission (SEC)
www.sec.gov.ph
A national government agency charged with the supervision over the corporate sector, capital market participants, securities and investment instruments market, and the investing public.
Independent Coordinating Office
Office of the Investment Ombudsman (IO)
www.ombudsman.gov.ph
A special office created under the Office of the Ombudsman through Ombudsman Office Order 327 on June 1, 2014 to assist investors and act on grievances involving delays committed by investment agencies on licenses and permits, among others.
Government Investment Incentives
Republic Act 7042 as amended by Republic Act 8179 otherwise referred to as the “Foreign Investment Act of 1991” provides guidelines under which non-Philippine nationals including former Filipino citizens may invest and do business in the Philippines with a required paid-in capital of at least USD 200, 000. Investments classified as strategic industries may avail of incentives given by Investment Promotion Agencies (IPAs). Strategic industries are characterized by the following:
- Crucial to the accelerated industrialization of the country;
- Require massive capital investments to achieve economies of scale for efficient operations;
- Require highly specialized or advanced technologies;
- Strong backward and forward linkages with most industries existing in the country; and
- Generate substantial foreign exchange savings through import substitution and collateral foreign exchange earnings through export of part of the output that will result with the establishment, expansion, or development of the industry.
Aside from BOI and PEZA, the two major investment promotion agencies of the Philippines, there are 21 Agro-Industrial Economic Zones, 216 IT Parks and Centers, 68 Manufacturing Economic Zones, 2 Medical Tourism Zones, and 19 Tourism Economic Zones that offer various incentives.
As of May 31, 2015. For the complete list of special economic zones, please visit http://www.peza.gov.ph/index.php/economic-zones/list-of-economic-zones
Investment Priorities Plan (IPP) 2014-2016
Pursuant to the Omnibus Investment Code of 1987 and the thrust of the Philippine government to attract investments to spur economic growth, the Investment Priorities Plan 2014-2016 is adopted containing the list of preferred investment areas eligible for incentives when registered with the Board of Investments.
Pursuant to the Omnibus Investment Code of 1987 and the thrust of the Philippine government to attract investments to spur economic growth, the Investment Priorities Plan 2014-2016 is adopted containing the list of preferred investment areas eligible for incentives when registered with the Board of Investments.
Fiscal Incentives
- Income Tax Holiday
- Exemption from taxes & duties on imported spare parts.
- Exemption from wharfage dues & export tax, duty, impost, & fees.
- Reduction of the rates of duty on capital equipment, spare parts, & accessories.
- Tax exemption on breeding stocks & genetic materials.
- Tax credits.
- Additional deductions from taxable income.
I. List of Preferred Activities
Non-Fiscal Incentives
- Employment of foreign nationals.
- Simplification of customs procedures.
- Importation of consigned equipment.
- Privilege to operate a bonded manufacturing/trading warehouse.
a. Motor vehicles (excluding motorcycles, e-bikes and golfcarts) and motor vehicle parts and components:
- Body panel stamping
- Engines, transmissions, and transaxle
- Large injection moulded parts
- Bumpers; instrument panel; door trims; center console; grill; wheel house finisher; lamps; shock absorber; wiper motor/blade; engine mounts; electric power steering; combination meter; instrument cluster; chassis & sub-frame; interior finishing; switches; seat mechanism; retractable seat belts; window regulator; constant velocity joints/ transmission; aluminum radiators; plastic fuel tanks; fuel pumps; brake system and components; evaporators and condensers; relays; flame laminated automotive fabric; door & rear view mirrors; automotive glass; engine parts & assembly; and transmission parts & assembly
- Controller assembly, motor, and battery (other than lead acid) for electric vehicle
b. Shipbuilding including parts and components
c. Aerospace parts and components
d. Chemicals
- Oleo-chemicals
- Petrochemicals and derivatives
- Chlor-Alkali Plants
e. Virgin paper pulp f. Copper wires and copper wire rods g. Basic iron and steel products, steel grinding balls, long steel products (billets and reinforcing steel bars), and at hot/cold-rolled products
f. Tool and Die
- Simple, Compound and Progressive Dies for metal stamping or metal forging
- Molds for die casting, for plastic injection or blow molding, glass blow molding, forging, encapsulation molds
- Jigs and fixtures for metal cutting and metal forging
a. Commercial production
- Simple, Compound and Progressive Dies for metal stamping or metal forging
- Molds for die casting, for plastic injection or blow molding, glass blow molding, forging, encapsulation molds
- Jigs and fixtures for metal cutting and metal forging
b. Commercial processing
- Extraction of higher value substances from agricultural and forest-based raw materials through bioprocessing;
- Conversion of agricultural and fishery products, their by-products and wastes, to a form ready for further processing or final consumption.
c. Production of animal and aqua feeds excluding those for game animals, fowls and other species for pet/leisure purposes
d. Production of fertilizers and pesticides
e. Modernization of sugar mills
f. Mechanized agriculture support services, e.g. harvesting, plowing, and spraying/dusting
g. Agriculture support infrastructures, e.g. facilities for drying, cold chain storage, blast freezing, bulk handling and storage; packing houses, trading centers, ice plants in Less Developed Areas, AAA slaughterhouses, AAA dressing plants
a. Integrated Circuit Design
b. CreativeIndustries/Knowledge-Based Services:
- Animation
- Software development
- Game development
- Health Information Management Systems
c. Ship repair
d. Charging stations for e-vehicles
e. Maintenance, Repair and Overhaul (MRO) of aircraft f
f. Industrial waste treatment
a. Exploration and development of energy resources (including energy crops or upstream biofuels)
b. Power generation plants
c. Ancillary services
a. Airports and seaports (includes RO-RO ports) for cargo and passenger
b. Air, land and water transport (Limited to brand new ships, aircrafts, seaplanes, RO-RO, buses, boats, mass rail- limited to capital equipment incentive only)
c. LNG Storage and Regasification Facility
d. Bulk water treatment and supply
II. Export Activities
- Production and manufacture of export products
- Service Exports
- Activities in support of exporters
III. Special Laws
- Industrial Tree Plantation (P.D. 705)
- Mining (R.A. 7942) (limited to capital equipment incentive)
- Publication or Printing of Books/Textbooks (R.A. 8047)
- Refining, Storage, Marketing and Distribution of Petroleum Products (R.A. 8479)
- Rehabilitation, Self-Development and Self-Reliance of Persons with Disability (R.A. 7277)
- Renewable Energy (R.A. 9513)
- Tourism (R.A. 9593)
IV. ARMM List
The ARMM List covers priority activities that have been identified by the Regional Board of Investments of the ARMM (RBOI-ARMM)in accordance with E.O. No. 458. The RBOI- ARMM may also register and administer incentives to activities in this IPP for project locating in the ARMM.
1. Export Trader and Service Exporters
2. Support Activities for Exporters
This covers the production of processed foods (production of “Halal” meat and foods), vegetable oils, food crops, integrated coconut processing and plantation, activated carbon, production of beverage crops and plantation, seaweeds production and processing, fruit processing, aquaculture (fish production and processing), young/ sweet corn production, potato and sweet potato plantation/processing, cut flower production/processing, abaca plantation/ processing, oil palm plantation/processing/ refining and germinated oil palm seeds, feeds production, sugarcane plantation/ processing and refineries, quality seeds and seedlings of fruit trees and other planting materials propagated asexually or by tissue culture, pearl culture/processing, production of livestock and poultry that includes processing, crocodile farming and processing, sericulture, feeds production and production of plantation crops and other pharmaceuticals, medical herbs/ essential oil plants, biomass, rubber, carrageenan, mangosteen and moringa.
This covers the production of pharmaceuticals such as antibiotics and medical devices, textile and textile products, inorganic and organic fertilizers using solid waste materials, exploration and development of natural gas and mineral resources which includes small scale as defined under P. D. 1899 (but to exclude river beds in operations and processing of minerals such as beneficiation and other metallurgical methods) and cement production of at least 1.0 million MTPY capacity (clinker based).
This covers processing of rubber products to be integrated with plantation and leather products.
This covers public utilities with developmental route of the Five provinces and one city from ARMM and other adjacent cities and provinces such as common carriers, electric transmission/ distribution, electric motor vehicles and its parts and components, water supply facilities/waterways and sewerage systems, buses/cargo trucks, other specialized mass transport systems, power generation like hydro power, geothermal and natural gas, and telecommunications with international gateways.
This covers the following activities: common centers to include testing and quality control laboratories, training and demonstration centers, tool shops and similar facilities, metal casting, metal working, furniture, ceramics and food processing, petrochemical complex and industrial gases.
This covers engineering products, electronics and telecommunication products, fabrication of construction materials and hydro power plants.
This covers shipping of cargoes (air, sea and land) and forwarders.
This covers enterprises located or have their base of operation in the BIMP – EAGA, namely, Brunei; Sabah and Sarawak in Malaysia; Malusu, Sulawesi, Kalimantan and Iringaya in Indonesia; and Mindanao and Palawan in the Philippines, who shall invest and engage in economic activity in the ARMM including SMEs.
This covers the establishment of tourism estate subject to guidelines developed jointly by RBOI- ARMM and the Department of Tourism – ARMM, tourist accommodation facilities, tourist transport facilities and development of retirement villages which shall include health and medical facilities including amenities required by the Philippine Retirement Authority (PRA) and subject to the guidelines to be approved by RBOI-ARMM in consultation with the PRA, the Department of Health (DOH), the Regional Planning and Development Office (RPDO) and other concerned agencies.
The ARMM has the lowest indication in the country regarding health and education as reflected in the Human Development Index. For this purpose, there is a need for incentives to be given to investors in the health and educational sectors such as putting – up of private hospitals, medical clinics, wellness centers, primary education, secondary education, tertiary education (colleges, universities and vocational - technical schools) and ancillary services including any and all health and education - related investments.
The MTPDP 2004 – 2010 provided that ARMM shall be the production and processing center for the Halal industry. ARMM being the only Muslim region in the country, has a comparative advantage in the Halal industry. Any Halal related business enterprises shall be covered. Halal refers to the permissible products and services under Islamic Law.
Activities Eligible for PEZA Registration and Incentives
- manufacturing, assembly or processing activity resulting in the exportation of at least 70% of production. (“Manufacturing / Processing” shall mean the process by which raw materials or semi-finished materials are converted into a new product through a change in their physical, mechanical or electro-magnetic characteristics and/or chemical properties. “Assembly” shall mean the process by which semi-finished parts or materials are put together or combined to form a distinct product without substantially changing its physical or mechanical characteristics or electro-magnetic and/or chemical properties.) Eligible firms shall qualify for registration as “Economic Zone Export Manufacturing Enterprise.”
IT service activities, of which 70% of total revenues is derived from clients abroad. (“IT Service Activities” are activities which involve the use of any IT software and/or system for value addition). Among the IT Service activities eligible for incentives are: IT-enabled services such as business process outsourcing, call centers, data encoding, transcribing and processing, etc.; software development and application, including programming and adaptation of system softwares and middlewares; for business, media, e-commerce, education, entertainment, etc.; content development for multi-media or internet purposes; and others. Eligible firms shall qualify for registration as “IT Enterprise.”
– establishment and operation within PEZA Tourism Special Economic Zones of sports and recreation centers, accommodation, convention, and cultural facilities and their special interest attraction activities / establishments, with foreign tourists as primary clientele. Eligible firms shall qualify for registration as “Tourism Economic Zone Locator Enterprise.”
– medical health services, endorsed by the Department of Health, with foreign patients as primary clientele. Eligible firms shall qualify for registration as “Medical Tourism Enterprise” in a Medical Tourism Special Economic Zone Park or Center.
– processing and or manufacturing of agricultural products resulting in the exportation of its production. (“Processing” shall mean the conversion of any agricultural and marine products from its raw state into intermediate or final product, which undergo physical and/or chemical change through mechanical and/or chemical process.) Eligible firms shall qualify for registration as “Agro-Industrial Economic Zone Export Enterprise.”
– specialized manufacturing of agricultural crops and eventual commercial processing which shall result in the production of clean energy such as bio-fuels and the like. Eligible firms shall qualify for registration as “Agro-Industrial Economic Zone Enterprise.”
- (a) operation of a warehouse facility for the storage, deposit, safekeeping of goods for PEZA-registered Economic Zone Export Manufacturing Enterprises, and or (b) importation or local sourcing of raw materials, semi-finished goods for resale to - or for packing / covering (including marking / labeling) cutting or altering to customers’ specification, mounting and/ or packaging into kits or marketable lots for subsequent sale to - PEZA-registered Export Manufacturing Enterprises for use in their export manufacturing activities, or for direct export, or for consignment to PEZA-registered Export Manufacturing Enterprises and eventual export. Eligible firms shall qualify for registration as “Economic Zone Logistics Services Enterprise.”
8.a. Manufacturing Economic Zone Development / Operation
- development, operation and maintenance of an economic zone for export manufacturing enterprises, inclusive of the required infrastructure, facilities and utilities such as light and power system, water supply and distribution system, sewerage and drainage system, pollution control devices, communication facilities, paved road network, administration building. Eligible firms shall qualify for registration as “Manufacturing Economic Zone Developer / Operator.”
8.b. IT Park Development / Operation
– development, operation and maintenance of an area as a complex capable of providing infrastructures and other support facilities required by IT Enterprises, as well as amenities required by professionals and workers involved in IT Enterprise, or easy access to such amenities. Eligible firms shall qualify for registration as “IT Park Developer / Operator.”
8.c. Tourism Economic Zone Development / Operation
– development, operation and maintenance of an integrated resort complex, with prescribed carrying capacities of tourist facilities and activities, such as but not limited to, sports and recreation centers, accommodations, convention and cultural facilities, food and beverage outlets, commercial establishments and other special interest and attraction activities / establishments, and provided with roads, water supply facilities, power distribution facilities, drainage and sewage systems and other necessary infrastructure and public utilities. Eligible firms shall qualify for registration as “Tourism Economic Zone Developer / Operator.”
8.d. Medical Tourism Economic Zone Development / Operation
– development, operation and maintenance of a Medical Tourism Park or Medical Tourism Center which are planned and designed in accordance with the standards of the Department of Health and the Department of Tourism to have support facilities and services required for health and wellness, and provided with required infrastructure facilities and utilities. Eligible firms shall qualify for registration as “Medical Tourism Economic Zone Developer / Operator.”
8.e. Agro-Industrial Economic Zone Development / Operation
– development operation and maintenance of an agro-industrial economic zone planned and designed to have support facilities and services required for processing and agro-based manufacturing facilities, and provided with the required infrastructure facilities and utilities. Eligible firms shall qualify for registration as “Agro-Industrial Economic Zone Developer / Operator.”
8.f. Retirement Economic Zone Development /Operation
–development operation and maintenance of a Retirement Economic Zone Park or Center, planned and designed in accordance with the accreditation standards of the Philippine Retirement Authority, and provided with the required infrastructure facilities and utilities. Eligible firms shall qualify for registration as “Retirement Economic Zone Developer / Operator.”
9.a. Facilities for Manufacturing Enterprises
- construction as owner /operator of factory buildings inside a PEZA Special Economic Zone for lease to PEZA-registered Export Manufacturing Enterprises. Eligible firms shall qualify for registration as “Economic Zone Facilities Enterprise.”
9.b. Facilities for IT Enterprises
– construction as owner/operator of buildings and other facilities inside IT Parks which are leased to PEZA-registered IT Enterprises. Eligible firms shall qualify for registration as “IT Park Facilities Enterprise.”
9.c. Retirement Facilities
– establishment, operation and management of retirement facilities and other related activities, with foreign retirees as primary clientele, duly endorsed by the Philippine Retirement Authority, and located in a Retirement Economic Zone. Eligible firms shall qualify for registration as “Retirement Economic Zone Facilities Enterprise.”
– establishment, operation and maintenance of light and power systems, water supply and distribution systems inside Special Economic Zones. Eligible firms shall qualify for registration as “Economic Zone Utilities Enterprise.”
PEZA Incentives
Depending on the type of enterprise and business activity, an enterprise operating within an economic zone is entitled to incentives granted to PEZA-registered enterprises under relevant laws. These incentives generally include the following:
- Income tax holiday of four years for a non-pioneer project and six years for a pioneer project, or three years for an expansion project
- 5% special tax on gross income and exemption from all national and local taxes upon expiry of the income tax holiday
- Tax and duty free importation of raw materials, capital equipment, machinery and spare parts
- Tax credit on import substitution
- Exemption from wharfage dues and export tax, impost or fees
- Value-added tax (VAT) zero-rating of local purchases of goods and services
- Tax credits for exporters using local materials as inputs as provided by the Export Development Act of 1994
- Additional deduction for incremental labor and training expenses
- Simplified import-export procedures
- Employment of non-resident foreign nationals in supervisory, technical or advisory positions.
Tenth Foreign Investment Negative List (FINL)
In compliance to the Foreign Investment Act, Executive Order 184 otherwise referred to as 10th FINL was issued on May 29, 2015. In general, foreigners can invest up to 100% equity in corporations, partnerships and other entities in the Philippines, except in areas included in the Foreign Investments Negative List (FINL). The FINL lists investment areas and activities reserved to Filipino nationals where foreign investments are prohibited or limited to a certain percentage.
| List A: Foreign Ownership is Limited by Mandate of the Constitution and Specific Laws | List B: Foreign Ownership is Limited for Reasons of Security, Defense, Risk to Health & Morals & Protection of Small & Medium Scale Enterprises | |
|---|---|---|
| No Foreign Equity
1. Mass media except recording |
Up to 20% Foreign Equity 12. Private radio communications networkUp to 25% Foreign Equity 13. Private recruitment, whether for local or overseas employment 14. Contracts for the construction & repair of locally-funded public works except: a. Infrastructure / development projects covered in RA 7718; b. Projects which are foreign funded or assisted and required to undergo international competitive bidding 15. Contracts for the construction of defense- related structuresUp to 50% Foreign Equity 16. AdvertisingUp to 40% Foreign Equity 17. Exploration, development, & utilization of natural resources 18. Ownership of private lands 19. Operation of public utilities 20. Educational institutions other than those established by religious groups and mission boards 21. Culture, production, milling, processing, trading except retailing of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof. 22. Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or municipal corporation 23. Facility operator of an infrastructure or a development facility requiring a public utility franchise 24. Operation of deep sea commercial fishing vessels 25. Adjustment companies 26. Ownership of condominium units |
Up to 40% Foreign Equity Up to 40% Foreign Equity |
OPTIONS FOR ENTRY
| DOMESTIC CORPORATION | SUBSIDIARY | BRANCH | REPRESENTATIVE OFFICE |
|---|---|---|---|
| • A stock or non-stock corporation organized under Philippine laws | • Deemed a domestic corporation even if majority of its capital stock is foreign-owned. | • Corporations organized and registered under the laws of any foreign country | • Corporation organized under the laws of any foreign country • Undertakes activities such as but not limited to information dissemination & promotion of the company’s products as well as quality control of products |
• Has its own identity | • Has a legal and juridical personality separate and distinct from its parent company • Liability or exposure of parent company is limited to its investment in, or subscription to, the capital stock of the subsidiary |
• Mere extension of the legal and juridical personality of the foreign head office and carries out the business and activities of the head office | • Deals directly with the clients of the parent company but does not derive income from the host country | • Has no subscription from the mother company | • Shares/stocks are held by the mother company abroad • Assets and properties of parent company are not directly exposed to potential liabilities of the subsidiary |
• Does not exist independently of the head office • Assets and properties of the foreign head office may be exposed to the liabilities of the branch |
• Fully subsidized by its head office | • Minimum of P 5,000 paid up capital | • At least US $200,000 (if not for export) • Can be reduced to US $100,000 if 1.) activity involves advanced technology 2.) employ at least 50 direct employees • P5,000 minimum paid up capital if for export |
• At least US $200,000 (if not for export) • Can be reduced to US $100,000 if 1.) activity involves advanced technology 2.) employ at least 50 direct employees • P5,000 minimum paid up capital if for export |
Requires to inwardly remit US $30,000.00 (one time remittance) for its operating expenses | • 100% Filipino-owned OR • With foreign equity participation of 40% more or less |
• At least 51% owned by parent company | • 100% wholly-owned by the parent company | • 100% wholly-owned by the parent company |
| Regional Headquarters (RHQ) | Regional Operating Headquarters (ROHQ) |
|---|---|
| • Any business entity formed, organized and existing under the laws of any foreign country that is engaged in international trade | • Any business entity formed, organized and existing under the laws of any foreign country that is engaged in international trade |
| • Principally serves as a supervision, communications and coordination center for its subsidiaries, branches or affiliates in the APAC and other foreign markets | • Performs qualifying services to its affiliates, subsidiaries or branches in the Philippines, in the APAC and in other foreign markets |
| • Does not earn or derive • income in the Philippines |
• Derives income from undertaking the following qualifying services - General administration & planning; - Business planning & Coordination; - Sourcing/procurement of raw materials and components; - Corporate finance advisory services; - Marketing control & sales promotion; - Training & personnel management; - Logistics services; - Research &development services, product development; - Technical support & maintenance; - Data processing &communication; - Business development |
| • Minimum remittance of US $50,000 annually | • Minimum inward remittance of US $200,000 (one-time only) |
INCENTIVES
| For RHQ | For ROHQ |
|---|---|
| No income tax since it does not derive income | Subject to preferential income tax rate of 10% on taxable income |
| Exempt from 12% VAT (sale or lease of goods and property and the rendition of services to regional or area headquarters) | Subject to 12% VAT |
| INCENTIVES FOR BOTH RHQ AND ROHQ |
|---|
| Exemption from all kinds of local taxes, fees or charges imposed by the LGU except for real property tax on land improvements and equipment |
| Tax and duty-free importation of training materials and equipment |
| Tax and duty-free importation of training materials and equipment |
| Multiple Entry Visa for expatriates valid for three years including spouse and unmarried children below 21 years old |
| Exemption from securing ACR / ECC /AEP |
| Travel tax exemption for personnel of RHQ / ROHQ |
| Withholding tax of 15% on compensation income (Only foreign expatriates or Filipino personnel of equivalent position with an annual income not lower than P975,000 ) |
| Privilege to import brand new motor vehicles subject to tax and duty |
Source: Board of Investments
