Types of Foreign Entities in the Philippines

The Philippine government allows companies which are registered in other countries to obtain a license to do business in the Philippines. However, while these entities are allowed to transact in the Philippines, they are not technically Filipino companies – allowing them to retain 100% foreign ownership. There are three structures for foreign-owned companies: branch office, representative office, and regional headquarters (RHQ) or regional operating headquareters ROHQ).

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Branch Office

A branch office operating in the Philippines is similar to a domestic corporation, except it operates entirely on foreign laws. It is organized and existing under foreign laws, and carries out business activities of the head office but derives income from the Philippines.

The parent company is required to send an inward remittance of US$200,000.00, which may be reduced if:

• Activity involves advanced technology; or
• Company employs at least 50 direct employees; or
• Target is export markets.

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Representative Office

A representative office is foreign-owned corporation which conducts business in the Philippines, but does not derive income from the country and is fully subsidized by its head office. It deals directly with clients of the parent company as it undertakes such activities as information dissemination, acts as a communication center, and promotes company products, as well as quality control of products for export. A representative office must be registered with SEC, and is required to have a minimum inward remittance in the amount of US$30,000.00 to cover its operating expenses.

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Regional Headquarters (RHQ)/Regional Operating Headquarters (ROHQ)

Under RA 8756, any multinational company may establish an RHQ or ROHQ in the Philippines, as long as they are existing under laws other than the Philippines, with branches, affiliates and subsidiaries in the Asia Pacific Region and other foreign markets.

Regional headquarters are suitable only for businesses that plan to utilize the Philippines as a manufacturing or services hub in a much larger operation.

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Regional Headquarters (RHQ)

A regional headquaters (RHQ) undertakes activities that shall be limited to acting as supervisory, communication and coordinating center for its subsidiaries, affiliates and branches in the Asia-Pacific region, acting as an administrative branch of its multinational parent company engaged in international trade. An RHQ does not derive income from sources within the Philippines and does not participate, in any manner, in the management of any subsidiary or branch office it might have in the Philippines, and requires a capital of US$50,000.00 annually to cover operating expenses.

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Regional Operating Headquarters (ROHQ)

A regional operating headquarters (ROHQ) is a foreign-owned company that can derive income from sources within the Philippines, and requires a one-time remittance capital of US$200,000.00. It performs the following qualifying services to its affiliates, subsidiaries, and branches in the Philippines:

• General administration and planning
• Business planning and coordination
• Sourcing/procurement of raw materials components
• Corporate finance advisory services
• Marketing Control and sales promotion
• Training and personnel management
• Logistic services
• Research and development services and product development
• Technical support and communication
• Business development

Triple i Consulting listens to the needs of each clients and assists in determining which oranizational structure will be best to be established. Our tried and tested processes will ensure that your company will be registered to do business in the Philippines within the quickest timeframe possible.