Expanding into the Philippines is an attractive move for many foreign companies thanks to its English-proficient tech-savvy workforce and growing economy. However, to legally expand a foreign company into the Philippines as an extension of its parent company, you must register a Representative Office or a Branch Office. Below, we explain the differences between representative and branch offices, help you decide which to choose, and outline the registration process.
When Do You Need to Establish an Office
Establishing a Representative Office or Branch Office in the Philippines is one way for foreign companies to legally operate under the Foreign Investments Act of 1991 (Republic Act No. 7042, as amended). Specifically, a foreign corporation needs to register a Representative Office or Branch Office if it intends to operate directly in the country as an extension of its parent company. A third option for foreign companies to directly expand is a Regional Headquarters (RHQ), a specialized setup that manages regional operations, supports multiple subsidiaries, permits more foreign staff under BOI approval, and is exempt from Philippine income tax on foreign-sourced funds.
However, setting up a representative office, branch office, or RHQ is not the only option for foreign investors. A foreign company may instead form a domestic corporation, which can be up to 100% foreign-owned if the business activity is not restricted under the Foreign Investment Negative List. Alternatively, a company can generally be 40% foreign-owned if it is in an industry on the list.
If you want to operate as a direct extension of your parent company (and not choose the more specialized RHQ), you will generally need a representative or branch office.
Representative Office vs. Branch Office
If you are directly expanding into the country, you must choose between these two types. The main difference is whether the entity can generate income locally.
- Representative Office
- Cannot earn income in the Philippines.
- Functions are limited to promoting the parent company, providing customer support, or conducting quality control.
- The foreign parent company must fully fund expenses.
- Requires an annual inward remittance of at least USD 30,000.
- Branch Office
- Can engage in income-generating activities in the Philippines.
- Considered an extension of the foreign parent company.
- Taxed as a non-resident foreign corporation on locally earned income.
- Must remit at least USD 200,000 in paid-up capital (lower if it qualifies as a small or medium-sized enterprise).
A Representative Office is best for market research and support functions, while a Branch Office suits companies ready to do business and earn revenue locally. Some businesses opt to register a representative office due to its lower entry cost, allowing them to test the Philippine market’s reception before transitioning to a branch office for full operations.
Who Can Register a Representative or Branch Office
Foreign corporations that are legally established in their home country can apply for registration with the Philippine Securities and Exchange Commission (SEC). The parent company must show proof of good standing, including documents such as:
- Articles of Incorporation and By-Laws
- Board Resolution authorizing the establishment of the office
- Latest audited financial statements
Both types of offices must also appoint a resident agent in the Philippines who can receive summons or legal notices on behalf of the company.
Office Registration Requirements
We have outlined the required documentation for registering a Representative or Branch Office below:
- Application Form
- Form F-103 – for Branch Office
- Form F-104 – for Representative Office
- Form F-108 – for Non-stock corporations
- Name verification slip
- Authenticated copy of the Board Resolution authorizing the establishment of branch/representative office in the Philippines; designating the resident agent to whom summons and other legal processes may be served to the foreign corporation; and stipulating that in the absence of such agent or upon cessation of its operation in the Philippines, any summons or legal processes may be served to SEC as if the same is made upon the corporation at its home office
- Financial Statements as of a date not exceeding one year immediately before the application, certified by an independent Certified Public Accountant of the home country and authenticated before the Philippine Consulate/Embassy
- Authenticated copies of the Articles of Incorporation with an English translation if in a foreign language other than English
- Proof of Inward Remittance such as bank certificate (US$200,000.00 for Branch Office) (US$30,000.00 for Representative Office)
- Registration Data Sheet
- Resident Agent’s acceptance of appointment (if applicable)
- Affidavit executed by the Resident Agent stating that the applicant is solvent and in sound financial condition (for Representative office and non-stock corporations)
Step-by-Step Process for Registration with the SEC
The general process for both types of offices is as follows:
- Designate a Resident Agent – Choose a Philippine resident or corporation to represent your company when receiving legal documents and notices.
- Prepare the Required Documents—Collect and authenticate corporate documents from the parent company. Depending on the home country, these may need notarization or an apostille.
- Reserve a Company Name – File a name reservation with the SEC to secure the use of your business name in the Philippines.
- Submit Application to the SEC – File the required forms, documents, and proof of inward remittance or capitalization.
- Pay Fees and Obtain the SEC Certificate of Registration – Once approved, the SEC will issue a license to transact business in the Philippines.
- Register with Other Agencies – After SEC registration, the office must also secure registration with the Bureau of Internal Revenue (BIR), Social Security System (SSS), PhilHealth, and Pag-IBIG Fund.
- Secure Local Permits – Apply for a local business permit and barangay clearance where the office will operate.
Remember that after registering your office with the SEC, you must also complete registration with other government agencies, such as the BIR and the relevant LGUs. Once your business registration is complete, your office can begin operating.
Final Thoughts
Setting up a Representative Office or Branch Office in the Philippines is legally required for companies directly expanding into the country (rather than forming a domestic corporation). The choice between the two depends on your objectives:
- A Representative Office is ideal for non-revenue-generating functions like support or promotion.
- A Branch Office is necessary for companies ready to earn income locally.
We can assist you with your office registration and setup, streamlining the application process and avoiding unnecessary delays.
Are You Registering A Representative or Branch Office in the Philippines?
Expanding your business into the Philippines can be challenging due to its many requirements and regulations. Missing a document or failing to comply can result in costly fines or even the suspension of your operations.
That’s where Triple i Consulting comes in. Our team of experienced lawyers and accountants provides comprehensive support for your business registration, so you don’t have to stress over the paperwork. We’ll handle the permits and renewals so you can focus on what matters—running your business and achieving financial success.
Contact us today to schedule an initial consultation with one of our experts:
- Fill out the form below
- Call us at: +63 (02) 8540-9623
- Send an email to: info@tripleiconsulting.com
