Setting up a Philippines representative office is an effective way for global businesses to create a footprint before engaging in direct trading activities. This setup acts primarily as a support hub, permitting a head office to manage market research and product inspections across the country.
What is a Representative Office?
A Philippines representative office is considered an arm of a foreign corporation. In contrast to a branch office, it is not permitted to earn profit locally. Rather, all costs must be completely subsidized by the head office. Since it is not a revenue-generating unit, it is usually exempt from local income taxes, which makes it a cost-effective option for multinationals.
Capital Needed
To register a representative office, the Securities and Exchange Commission stipulates a minimum capital deposit of US$30,000. This capital is used to handle the entity's initial operating costs. Furthermore, the foreign corporation must select a resident agent residing in the philippines representative office Philippines to accept legal summons on the company's behalf.
Scope of Operations
While the range of activities is restricted, it provides valuable opportunities:
Surveys: Executing feasibility studies philippines representative office to gauge the Philippine market landscape.
Marketing: Sharing information about the head office's products.
Inspection: Verifying that locally sourced materials meet the global specifications.
Client Support: Acting as a point of contact between customers and the main headquarters.
Steps to Incorporate
The path to opening your representative office requires several essential phases:
Name Verification: Reserving the business name with the Securities and Exchange Commission.
Documentation: Compiling authenticated copies of the By-laws and financial statements from the head office.
Funding: Remitting the required USD 30,000 into a Philippine bank account.
SEC Submission: Submitting the Form F-104 and philippines representative office attachments for license issuance.
Local Permits: Securing Mayor's permits and filing with the BIR.
Why Choose a Representative Office?
Choosing a representative office is a strategic move for businesses planning to explore the market before taking on heavy tax burdens. It philippines representative office allows seamless back-office support and creates visibility in one of the region's thriving economies. Once the market potential is proven, the entity can be considered for conversion into a full corporation philippines representative office for commercial operations.