How to Start an E-Commerce Business in the Philippines

October 30, 2025

The Philippines has rapidly become one of the world’s fastest-growing e-commerce markets, fueled by surging internet penetration, a burgeoning middle class, and rising purchasing power. For local entrepreneurs and foreign investors alike, the country now presents outstanding opportunities for innovation and growth in digital commerce. However, building a sustainable e-commerce business in the Philippines requires careful attention to legal, regulatory, and operational fundamentals, following the latest requirements introduced by new laws such as the Internet Transactions Act of 2023.

Why the Philippines Is a Hotspot for E-Commerce

The Philippine e-commerce sector is booming, now ranking as the second-fastest-growing in the world. This strong growth is driven by several factors:

An expanding, tech-literate population eager to shop online.
Widespread adoption of smartphones and digital payment solutions.
Aggressive government investment in digital infrastructure and regulatory modernization.
A competitive logistics sector supporting deliveries nationwide.

For businesses, these trends mean a widening customer base and unprecedented prospects for digital expansion, alongside rising regulatory standards to protect both buyers and sellers.

Step 1: Choose the Right Legal Entity for Your E-Commerce Business

Your first major decision is the structure of your business. The Philippine legal system offers a variety of business entities suited for e-commerce:

Sole Proprietorship:
Ideal for single-owner, smaller operations. It’s the simplest setup, but it carries unlimited liability, meaning your personal assets could be at risk in case of debts or lawsuits.

One-Person Corporation (OPC):
A relatively new option in Philippine law, the OPC combines ease of setup with the protection of limited liability. It’s ideal if you want complete control but less personal risk.

Partnership:
Best for businesses with two or more owners. Profits, responsibilities, and liabilities are shared. Note that partners are jointly and severally liable.

Domestic Corporation:
Recommended for larger ventures, corporations provide liability protection, potential tax incentives, and the capacity for external investment. When planning a major expansion, a corporation is often the preferred route.

When in doubt, seeking professional advice on entity selection is wise, especially for foreign investors. 100% foreign ownership is permitted in most sectors, but comes with minimum capital requirements and additional regulatory steps.

Step 2: Register Your Business and Secure Essential Permits

All e-commerce businesses in the Philippines must be properly registered; it’s both a legal mandate and a path to long-term trust.

DTI (Department of Trade and Industry) Registration:
For sole proprietors, register your Business Name at the DTI. For partnerships and corporations, registration is done at the SEC (Securities and Exchange Commission).

Barangay Clearance:
Obtain this permit from the local barangay where your business is located. It’s a prerequisite for the next steps.

Mayor’s Permit:
Issued by the local government unit (LGU), this permit, also known as a municipal or city business permit, is vital for legal operations within your area.

BIR (Bureau of Internal Revenue) Registration:
Register for a Tax Identification Number (TIN), secure your Certificate of Registration, and be prepared to comply with tax obligations, including Value-Added Tax (VAT) where applicable.

FDA License to Operate (LTO) and Product Registration:
If you deal in regulated goods, like food, cosmetics, or pharmaceuticals, you’ll need proper licenses from the Food and Drug Administration. The process includes both business and product-level registration.

DOLE Registration and Other Sectoral Licenses:
Register with the Department of Labor and Employment if you have employees, and obtain import licenses if you plan to bring in foreign goods.

Completing these steps ensures you’re both compliant and well-positioned to build credibility with payment processors, delivery partners, marketplaces, and customers.

Step 3: Open a Corporate Bank Account

Separating business finances from personal ones is critical. Most banks will require:

Proof of registration (DTI/SEC)
SEC Articles of Incorporation and By-Laws (where applicable)
Notarized board resolution authorizing the account
Valid IDs for signatories
BIR TIN

The approval process typically takes 5 to 10 working days. Having a dedicated business account is essential when receiving payouts from major e-commerce platforms or integrating with digital payment providers.

Step 4: Build Your Digital Presence and Register on E-Commerce Marketplaces

You can choose to build your e-commerce business in several ways:

Launch your own branded website using platforms like Shopify or WooCommerce.
Register as a merchant on established marketplaces such as Shopee, Lazada, or Zalora. These platforms come with a built-in customer base and established logistics.
Sell via social channels like Facebook Marketplace or TikTok Shop.

Each approach has its own onboarding requirements, service fees, and documentation standards. Marketplaces may also require proof of business registration, tax compliance, and banking credentials.

Step 5: Logistics, Delivery, and Payment Solutions

Efficient delivery is essential in Philippine e-commerce.

You can fulfill orders directly or leverage third-party logistics providers such as J&T Express, LBC Express, or Ninja Van.
Marketplaces often provide integrated logistics, but having relationships with reliable couriers gives you more control and flexibility.

For payments, consider integrating multiple digital options (credit/debit card, e-wallets, bank transfer), as customers show a strong preference for convenience and choice.

Step 6: Understand and Fulfill Tax Obligations

All e-commerce businesses are liable for taxation in the Philippines:

Income Tax: Corporations are generally taxed at 25% (20% for micro and small businesses with annual net taxable income under PHP 5 million).
VAT: Required if gross receipts meet or exceed PHP 3 million annually (12% on taxable sales). If you’re below the threshold, you may opt for non-VAT registration but must monitor your revenues closely.
Withholding Taxes: Online platforms may be required to withhold 1% on gross revenue remitted to sellers, above specific thresholds.
Payroll Contributions: If you have employees, you’re obliged to remit SSS, PhilHealth, and Pag-IBIG contributions.

Staying compliant ensures your business can operate without disruption or penalty.

Recent Regulatory Developments: Internet Transactions Act of 2023

In 2023, the Philippine government dramatically raised e-commerce standards with the Internet Transactions Act and supporting directives:

Registration is mandatory for all online sellers with the DTI, BIR, and relevant agencies.
All operators, including foreign-owned sellers targeting local consumers, must comply with Philippine business laws.
New complaint-handling, data privacy, and product quality rules are enforced.
The introduction of the E-Commerce Philippine Trustmark makes compliance visible and fosters consumer trust. Faulty sellers face takedown orders and blacklist penalties.

This regulatory landscape ensures protection for buyers and demands professionalization of online sellers, and compliance is now non-negotiable.

Frequently Asked Questions About E-Commerce in the Philippines

Do I need to register a business if I only sell online?
Yes. The law requires every e-commerce operator to register with the DTI (for sole proprietorships) or the SEC (for partnerships/corporations), and with the BIR for taxation.

Can foreigners set up e-commerce businesses here?
Yes, but subject to foreign investment restrictions. 100% foreign ownership is allowed in most sectors via corporations or OPCs, with a minimum paid-in capital requirement (often $200,000 USD).

Do I need a physical store?
No. Online-only businesses are fully legal; a physical office is needed only for registration and compliance purposes, not for customer operations.

What about regulated goods?
Products like food, supplements, cosmetics, and medical devices require FDA approval before sale, online or otherwise.

Why Professional Support Matters

Given tightening regulations, expert help can make all the difference:

Consultants guide you through business formation, permitting, and platform onboarding.
They advise on tax, labor, and product registration compliance.
Reliable support helps you avoid costly mistakes, penalties, and interruptions to your business.

Final Insights

The e-commerce boom in the Philippines rewards those who blend agility with full legal compliance.

Choose the right structure for protection and scalability.
Secure all licenses and open a dedicated bank account.
Stay current on tax and regulatory requirements.
Focus on customer experience, fulfillment, and transparent marketing.

With the new regulatory landscape, only legitimate, reliable, and professional sellers will thrive. Start right, and scale confidently in one of the world’s most exciting online markets.

Is Assistance Available?

Yes. For help setting up your e-commerce business, securing permits, or ongoing compliance, consult our team to ensure every step is fast, legal, and future-proof: