Business RegistrationIncorporationLegal BlogHow to set up a Chinese company in the Philippines?

February 14, 2018

Philippines– ranking 29th this year on “China Going Global Investment Index 2017” is becoming more attractive in terms of investments and destination to Chinese firms. As per the Economist Intelligence Unit (EIC), Manila’s spot rocketed from 2013 and 2015, being at the 39th position next to Thailand.

Drawing on 57 indicators spread across “opportunity” and “risk” pillars, the Philippines stand as a magnet ground in the energy, consumer goods and telecommunications sectors. Financial services are relatively well being at having decent returns on assets and having reasonable low financial risks.

Philippine President Rodrigo Duterte visited Beijing last May for the second time to attend and promote the China-sponsored “One Belt, One Road” initiative.

With a tax treaty agreement in place since 1978 and revised in 1998, here are the 3 business structures that a Chinese or foreign companies should consider when registering their business in the Philippines.

1. Subsidiary

The corporate form of business organization is complex and requires a great deal of paperwork, but it is more permanent than the two other forms of business organization. Investors in a corporation may lose their entire investment, but their personal assets are not at risk. This is because the corporation is an entity separate and apart from its owners, called stockholders or shareholders. Likewise, corporations have a strong legal personality having a separate and distinct personality from the members composing it, unaffected by the death, resignation, insolvency of any of its stockholders or members.
2. Branch Office

A branch office is a foreign corporation that carries out business activities of the head office in China and derives income from the host country.

It is a perfect company structure for chinese companies wishing to transact in the Philippines but not wanting to register a domestic corporation. Since no new organization is being created 100% ownership of the branch office belongs to the foreign entity in China.

3. Representative Office

A representative office is a foreign corporation that deals directly with clients of the parent company in China as it undertakes activities such as:

– Information dissemination
– Acts as a communication center and
– promote company products as well as quality control of products for export.

If you are looking to invest in the Philippines and to set up a company, do not hesitate to contact one of our business consultants to have a market overview and a detailed legal and tax analysis.

With over 100 companies registered in the Philippines in 2017, we advise some of the most influential businesses and institutions in the country. Contact us and speak to one of our business consultants specializing in company formation.

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