Establishing a Philippines representative office is an excellent method for foreign corporations to create a local presence without starting direct trading activities. This legal structure serves primarily as a support hub, permitting a head office to coordinate market research and product inspections within the country.
What is a Representative Office?
A Philippines representative office is considered an branch of a foreign corporation. In contrast to a domestic subsidiary, it is not permitted to earn income from Philippine sources. Instead, all operating expenses must be completely subsidized by the head office. Since it is not a profit-making entity, it is typically free from corporate income tax, making it a cost-effective option for multinationals.
Registration Requirements
To incorporate a Philippines representative office, the Securities and Exchange Commission mandates a minimum inward remittance of US$30,000. This capital is intended to pay for the office's startup operating costs. Furthermore, the parent firm must select a local representative residing in the Philippines to handle court documents on the company's behalf.
Scope of Operations
While the range of operations is limited, it offers valuable opportunities:
Surveys: Executing feasibility studies to gauge philippines representative office the Philippine market landscape.
Advertising: Sharing information about the parent company's products.
Inspection: Ensuring that locally sourced materials meet the corporate standards.
Customer Liaison: Acting as a point of contact between local clients and the philippines representative office overseas headquarters.
The Registration Process
The process to opening your Philippines representative office includes multiple critical steps:
Name Verification: Checking the business philippines representative office name with the Securities and Exchange philippines representative office Commission.
Document Preparation: Compiling legalized copies of the Articles of Incorporation and financial statements from the head office.
Funding: Remitting the mandatory USD 30,000 into a local bank account.
SEC Submission: Submitting the Form F-104 and attachments for license issuance.
Bureaucracy: Obtaining Mayor's permits and filing with the BIR.
Why Choose a Representative Office?
Choosing a Philippines representative office is a prudent move for enterprises planning to test the waters without committing to heavy financial obligations. It allows seamless administrative support and establishes brand awareness in one of the region's thriving economies. Once the business potential philippines representative office is proven, the entity can be considered for conversion into a full corporation for revenue-generating operations.