Opening a representative office in the Philippines is an effective method for international companies to build a base before commencing full-scale business. This legal structure serves mainly as a communication hub, allowing a head office to manage promotional activities and quality control across the country.
What is a Representative Office?
A Philippines representative office is viewed as an arm of a overseas entity. In contrast to a branch office, it does not earn profit from Philippine sources. Instead, all financial requirements must be fully supported by the head office. Since it does not function as a profit-making entity, it is generally free from corporate income tax, which makes it a budget-friendly option for multinationals.
Key Requirements and Capitalization
To set up a Philippines representative office, the SEC requires a initial inward remittance of thirty thousand US dollars. This amount is used to cover the entity's initial expenses. In addition, the parent firm must appoint a local representative who lives in the philippines representative office Philippines to accept official notices on the company's behalf.
Scope of Operations
While the range of activities is limited, it delivers philippines representative office valuable opportunities:
Surveys: Executing feasibility studies to gauge the local market landscape.
Advertising: Sharing details philippines representative office about the head office's products.
Assurance: Ensuring that locally sourced materials meet the corporate philippines representative office specifications.
Communication: Acting as a bridge between customers and the overseas office.
The Registration Process
The process to founding your Philippines representative office includes multiple critical steps:
Company Name: Checking the corporate name with the Securities and Exchange Commission.
Documentation: Gathering apostilled versions of the Articles of Incorporation and Board Resolutions from the head office.
Bank Deposit: Transferring the required USD 30,000 into a Philippine bank account.
Filing: Presenting the Form F-104 and supporting documents for approval.
Bureaucracy: Getting Barangay clearance and registering with the BIR.
Final Thoughts
Opting for a Philippines representative office is a prudent decision for enterprises aiming to explore the waters before taking on heavy financial obligations. It allows seamless back-office outsourcing and creates visibility in one of the philippines representative office region's thriving economies. Once the market potential is proven, the office can later conversion into a full corporation for revenue-generating activities.