Opening a representative office in the Philippines is an excellent way for global businesses to create a local presence before commencing commercial operations. This setup serves primarily as a communication hub, permitting a parent company to coordinate promotional activities and product inspections within the region.
What is a Representative Office?
A representative office in the Philippines is considered an arm of a overseas entity. Unlike a branch office, it cannot earn revenue from Philippine sources. Instead, all financial requirements must be fully supported by the head office. Since it is not a revenue-generating entity, it is usually exempt from local income taxes, making it a budget-friendly option for foreign firms.
Capital Needed
To incorporate a representative office, the Securities and Exchange Commission requires a minimum inward remittance of US$30,000. This fund is intended to handle the office's initial operating costs. Furthermore, the parent firm must designate a local representative residing in the country to handle official notices on its account.
Permitted Activities
Although the range of activities is restricted, it offers philippines representative office valuable opportunities:
Data Gathering: Conducting market analysis to gauge the local demand.
Advertising: Providing information about the parent company's products.
Inspection: Monitoring that Philippine materials meet the global standards.
Client Support: Acting as a point of contact between local clients and the main office.
How to Register
The process to establishing your Philippines representative office requires several critical steps:
Company Name: Securing the corporate philippines representative office name with the Securities and Exchange Commission.
Documentation: Gathering apostilled versions of the By-laws and Board Resolutions from the head office.
Funding: Transferring the required USD 30,000 philippines representative office into a local bank account.
Filing: Filing the Form F-104 and supporting documents for license issuance.
Licensing: Securing Barangay clearance and philippines representative office filing with the Bureau of philippines representative office Internal Revenue.
Why Choose a Representative Office?
Selecting a Philippines representative office is a smart decision for businesses planning to test the market before taking on heavy tax burdens. It allows efficient administrative outsourcing and establishes visibility in one of Southeast Asia's fastest-growing economies. Once the market potential is proven, the office can be considered for transition into a full corporation for revenue-generating operations.