Minimum Paid Up Capital Guide for Foreign-Owned Corporations in the Philippines

January 28, 2026

Navigating the financial prerequisites for establishing a business in the Philippines requires a precise understanding of the legal framework governing foreign equity, particularly the nuances of minimum paid-up capital requirements. For international investors and multinational corporations, these capital requirements are not merely administrative figures but are pivotal determinants that influence corporate structure, tax liabilities, and the scope of permissible business activities. The Philippine regulatory environment, primarily overseen by the Securities and Exchange Commission (SEC), imposes distinct capitalization thresholds to balance inflows of foreign direct investment with the protection of local small and medium-sized enterprises. This guide provides an in-depth analysis of capitalization rules for various corporate vehicles, helping foreign investors make informed decisions when entering the dynamic Philippine market.

Distinguishing Authorized, Subscribed, and Paid-Up Capital

Before examining specific monetary thresholds, it is essential to clarify the legal terminology used by the SEC, as these terms often confuse foreign stakeholders. The “paid-up capital” is the actual liquidity injected into the company, which differs significantly from authorized or subscribed capital.

Authorized Capital Stock: This represents the maximum amount of share capital that the corporation is legally allowed to issue to shareholders as stipulated in its Articles of Incorporation. It is not the amount of money the company currently holds but rather the ceiling for potential capitalization. Increasing this amount later requires amending the Articles of Incorporation, a process that involves further regulatory filings.
Subscribed Capital: The portion of authorized capital stock that investors have committed to purchase. Under the Revised Corporation Code, at least 25% of the authorized capital stock must be subscribed at the time of incorporation. This commitment creates a receivable for the corporation, legally binding the shareholder to pay for these shares.
Paid-Up Capital: This is the primary keyword and the most critical metric for registration. It is the portion of the subscribed capital that shareholders have actually paid to the corporation. Philippine law mandates that at least 25% of the subscribed capital be paid up. However, for foreign-owned corporations, the minimum paid-up capital in the Philippines is often set at a fixed absolute amount (e.g., US$200,000) rather than a percentage, depending on the business activity.
Treasurer’s Affidavit: To prove the existence of paid-up capital, the elected Treasurer must execute an affidavit certifying that the required payments have been made. For foreign investors, this is frequently corroborated by a Bank Certificate of Deposit or a Proof of Inward Remittance, which ensures that foreign currency has legally entered the Philippine banking system.

Capital Mandates for Domestic Market Enterprises under the FIA

The Foreign Investments Act (FIA) serves as the primary legislation governing the entry of foreign equity into the Philippines. It distinguishes between enterprises that serve the local market and those that cater to global markets, applying vastly different capital standards to each to protect smaller local players from massive foreign competition.

The US$200,000 Threshold: A Domestic Market Enterprise (DME)—defined as a firm that produces goods for sale or renders services exclusively to the Philippine market—and that has more than 40% foreign equity, is generally required to have a minimum paid-up capital in the Philippines of US$200,000. This high barrier to entry is designed to ensure that only foreign companies with significant financial stability and commitment enter the domestic sphere.
Reduction for Advanced Technology: The law provides a pathway to reduce this requirement. The paid-up capital can be lowered to US$100,000 if the company involves advanced technology. The Department of Science and Technology (DOST) must certify that the technology introduced is indeed advanced, novel, and beneficial to the country’s modernization.
Reduction for Employment Generation: Alternatively, the US$200,000 requirement can be reduced to US$100,000 if the company employs at least 15 direct employees. These employees must be Filipino citizens, and this employment level must be maintained to retain the lower capital privilege. This provision aligns with the government’s goal of fostering local job creation through foreign direct investment.
Startup Enablers: Recent amendments to the FIA also extend the US$100,000 reduced capital requirement to enterprises endorsed as “startup enablers” by the Department of Trade and Industry (DTI) or the Department of Information and Communications Technology (DICT). This aims to bolster the Philippine startup ecosystem by inviting foreign venture capital and incubators.

Financial Entry Barriers for Retail Trade and Export-Oriented Firms

The industry in which a corporation operates dictates its capital floor. While domestic market enterprises face high hurdles, the government incentivizes export-oriented firms and has recently liberalized the retail sector to encourage competition and lower prices for Filipino consumers.

Export Market Enterprises: Companies that export at least 60% of their output (goods or services) are classified as Export Market Enterprises. Because these firms do not compete directly with local businesses for the domestic market, they are not subject to the US$200,000 rule. Instead, they are subject to a much lower minimum paid-up capital requirement—often as low as PHP 5,000 under the Revised Corporation Code —although practical banking and operational considerations usually necessitate a higher starting amount, typically around PHP 25,000 to PHP 100,000.
Retail Trade Liberalization Act (RTLA) Amendments: Historically, foreign retailers faced a prohibitive capital requirement of US$2.5 million. The passage of Republic Act No. 11595 significantly lowered this barrier. The new minimum paid-up capital for foreign retailers is now PHP 25 million (approximately US$450,000). This drastic reduction opens the door for mid-sized international retail brands to enter the Philippines.
Per-Store Capital Requirement: In addition to the enterprise-level capital, foreign retailers must maintain a minimum investment per store. The law mandates a minimum investment of PHP 10 million per branch or store. This ensures that while the entry barrier is lower, the foreign retailer is still investing in high-quality infrastructure and operations for each location.
Reciprocity Requirements: It is important to note that for foreign retailers to avail of these entry privileges, their country of origin must also allow the entry of Filipino retailers. This reciprocity clause ensures fair trade practices between the Philippines and the investor’s home nation.

Funding Standards for Branch Offices and Regional Headquarters

Foreign corporations often choose to establish a presence in the Philippines without incorporating a separate domestic subsidiary. In these cases, they may opt for a Branch Office, Representative Office, or Regional Headquarters. These entities are legally extensions of the parent company, and their capital requirements reflect their limited or specific scope of operations.

Branch Office Capitalization: A Branch Office is an extension of a foreign corporation that carries out the business activities of its head office and derives income from the Philippines. Consequently, it is treated similarly to a Domestic Market Enterprise. The minimum paid-up capital for a Branch Office is US$200,000, which must be remitted to the Philippines. Like a subsidiary, this can be reduced to US$100,000 if the branch employs 15 Filipinos or utilizes advanced technology.
Representative Office: A Representative Office is strictly prohibited from deriving income in the Philippines. Its function is limited to information dissemination, promoting the parent company’s products, and quality control. Because it does not generate revenue or compete with local firms, the capital requirement is significantly lower. The parent company must remit US$30,000 initially to cover operating expenses.
Regional Operating Headquarters (ROHQ): An ROHQ may derive income by performing qualifying services (such as planning, administration, and finance) for its affiliates, subsidiaries, and branches in the Asia-Pacific region and other foreign markets. The required capital, in the form of an assigned capital or inward remittance, is US$200,000.
Regional Headquarters (RHQ): Distinct from an ROHQ, an RHQ serves as a supervisory, communications, and coordinating center for the parent company’s subsidiaries in the region. It cannot derive income from the Philippines. The required inward remittance for an RHQ is US$50,000 annually to support its operations.

The Critical Role of Professional Guidance in Capital Structuring

Determining the exact capitalization for a foreign business is rarely straightforward. The interplay between percentage of foreign ownership, the specific nature of the business activities (e.g., retail vs. wholesale, export vs. domestic), and the intricacies of the Negative List creates a complex compliance landscape where errors can lead to costly delays or registration denials.

Complications in Industry Classification: One of the most common pitfalls is misclassification. A company may intend to be an export enterprise to take advantage of the lower capital requirements. However, it may fail to prove that 60% of its revenue comes from exports during a tax audit, leading to retroactive penalties. Similarly, businesses often blur the line between “consultancy” (which may be 100% foreign-owned) and “practice of profession” (which is restricted to Filipinos), impacting the required capital and structure.
Strategic Capital Allocation: Beyond the legal minimum paid-up capital, investors must consider operational runway. Placing only the statutory minimum in the bank may satisfy the SEC. However, if that amount is insufficient for the first six months of operations, the company may face immediate liquidity issues. Professional advice helps in calculating a capitalization amount that satisfies both legal mandates and practical business needs.
Triple i Consulting’s Expertise: This is where a seasoned firm’s assistance becomes indispensable. Triple i Consulting specializes in navigating these exact complexities. We provide end-to-end support, from determining the optimal corporate vehicle to calculating the precise capital requirements based on your specific business model. Our team ensures that your capitalization structure is not only compliant with current laws but also optimized for tax efficiency and future expansion. Given the SEC’s strict scrutiny of foreign equity, having Triple i Consulting guide your registration process mitigates risks and expedites the issuance of your License to Operate.
Navigating the Negative List: The Foreign Investment Negative List (FINL) outlines areas of investment reserved for Filipinos. Navigating this list requires expert interpretation. For instance, while retail is now open with a PHP 25 million capital requirement, land ownership remains restricted. Triple i Consulting helps structure these investments—often through long-term leasehold rights or corporate structuring-to ensure the foreign investor’s interests are protected without violating constitutional restrictions.

Documentation and Remittance Procedures for SEC Compliance

Once the appropriate capital amount is determined, the logistical challenge of transferring funds and proving their existence to the SEC begins. The documentation process is rigorous, and the SEC requires specific formats and authentication for all submitted financial documents.

Opening a Treasurer-in-Trust Account (TITF): Before a corporation is fully registered, it cannot legally hold a bank account in its own name. Therefore, the proposed Treasurer must open a “Treasurer-in-Trust for [Name of Corporation]” account. The subscribed capital must be deposited here. For foreign investors, this often involves international wire transfers, which must be carefully documented to prove the source of funds.
Certificate of Inward Remittance: For the minimum paid-up capital in the Philippines to be recognized for foreign investors, the local receiving bank must issue a Certificate of Inward Remittance. This document certifies that foreign currency was converted to Philippine Pesos for the specific purpose of equity investment. This certificate is a mandatory attachment for SEC registration for foreign-owned entities.
Bank Certificate of Deposit: In addition to the remittance proof, a notarized Bank Certificate of Deposit is required. This document confirms that the funds are actually in the bank account and are “hold-out” or earmarked for the corporation’s registration. It prevents the practice of “capital flight,” in which funds are deposited only for show and then immediately withdrawn.
SEC Form F-100 and Articles of Incorporation: The capital details must be accurately reflected in the Articles of Incorporation and the specific SEC application forms (such as Form F-100 for branch offices). Any discrepancy between the remitted amount, the bank certificate, and the figures stated in the Articles will result in the automatic rejection of the application. Accuracy in these documents is non-negotiable.

Final Thoughts

Establishing a business presence in the Philippines offers immense potential, but it is predicated on strict adherence to financial regulations. The minimum paid-up capital in the Philippines is more than just a barrier to entry; it is a policy tool used by the government to curate the quality of foreign investments and define the competitive landscape. Whether you are establishing a high-tech Domestic Market Enterprise, a massive retail operation, or a cost-efficient export hub, understanding the specific capital requirements for your chosen entity is the first step toward commercial success. By aligning your financial planning with the legal mandates of the Foreign Investments Act and the SEC, you ensure a stable foundation for your Philippine operations.

Is Assistance Available?

Yes, Triple i Consulting can help. Our team of experts is ready to manage the entire business registration process, ensuring your capital structure is compliant and your business is set up for long-term success. Contact us today to schedule an initial consultation with one of our experts: