Starting a Business in the Philippines as a Foreigner

The Philippines has a growing population and is increasingly positioning itself as a place to attract foreign companies and investment.

In this article, we’ll discuss the process of getting your business started in the Philippines. Moreover, you’ll read about how the Wise Business account could be a great way to save money when sending or receiving USD, GBP, EUR into PHP.

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Table of contents

Guide for expats starting a business in the Philippines 1. Find out about your desired industry 2. Get your finances in order 3. Choose and register a business name in the Philippines 4. Prepare Legal documents to Run a Business in Philippines 5. Choose an office address 6. Open a bank account and pay the minimum deposit 7. Apply and Secure the Needed Clearance and Business Permits 8. Send in your Application to Print Receipts and Invoices Best Business to Start in the Philippines as a Foreigner Do I need a visa to start a business in the Philippines as a foreigner? Business Laws and Regulations for Philippines Use Wise for your International Business

Guide for expats starting a business in the Philippines

It can be tough to get your ducks in a line when starting a business in another country. Let's take a look at the steps to get your business launched in the Philippines.

1. Find out about your desired industry

It is important to identify which businesses are not open to foreigners, hence the need to consult with the Philippine government agencies responsible for registering businesses in the Philippines to ask questions.

It’s key to understand that the Philippine government limits foreign ownership in certain critical industries, such as defense, industries that risk health and morals, and in certain sectors where the protection of small and medium businesses is essential.

2. Get your finances in order

It is expected that you could end up paying 100,000 to 1,000,000 PHP (1,700 to 18,000 USD) just to get your business started.⁹ Some of these expenditures will be on simple registrations. These registrations include filing fees for the Bureau of Internal Revenue, Securities and Exchange Commission, and Local Government Unit, among others. These numbers can vary widely, hence the price listed above. As a result, it’s important that you get your finances in order prior to getting the process started.

3. Choose and register a business name in the Philippines

Registration of business names are done in different departments in the Philippines, and it is based on the type of business you want to register.

How to register a business in the Philippines by company type:

• For Sole Proprietorships, you would have to visit the Department of Trade and Industry (DTI)

• For a Corporation or Partnership company, you would have to visit the Securities and Exchange Commission

• For a Cooperative business, you would have to visit the Cooperative Development Authority

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4. Prepare Legal documents to Run a Business in Philippines

SEC registration - for registering as a partnership or corporation

DTI registration - for registering your business trade name (BTR)

Mayor’s business permit – secure the license to operate in the city or municipality and payment of your local business taxes.

BIR registration – Tax Identification Number (TIN for business), official receipts and invoices, register your books of accounts, and pay your national internal revenue taxes (Income tax, VAT or Percentage Tax, Withholding Taxes, etc.).

Barangay clearance - A document proving that you are of good moral character and resident of the specific village or town.

Social Security System(SSS), Philippine Health Insurance Company (PhilHealth), and Pag-Ibig Fund (Home Development Mutual Fund) registration - register yourself or the company as an employer and remit your employees’ contribution together with your employer’s share.

Usually, the BIR and the City/Municipality Office requires the certificates of registration with the SEC or DTI before a business can be registered with them. Thus, you need to register through those offices to start commencing your business.²

5. Choose an office address

Registration of proposed business names are done in different departments of states in the Philippines, and it is based on the type of business you want to register.

6. Open a bank account and pay the minimum deposit

Part of the requirements for how to register a business in the Philippines is that the business owner must open a bank account.

Here is a short list of the requirements and documents you might need:⁸

1. Valid IDs of the business owner/s and partners
2. Certificate of Registration from BIR and DTI
3. Business banking application form
4. Proof of business billing (utilities billing such as electricity, water, internet, etc)
5. Specimen signatures
6. Business tax identification number (TIN)
7. Initial deposit

Corporations and partnerships may require additional information when opening their business bank in the Philippines. Here are a few items you might need:⁸

1. Certificate of Registration with the Philippine SEC
2. Articles of Incorporation
3. General Information Sheet
4. Corporate by-laws
5. Partners’ Resolution or Board Resolution for bank account opening

Moving money across borders? Transfer your money into PHP at the mid-market rate.

7. Apply and Secure the Needed Clearance and Business Permits

As a new business entity in the Philippines, you are expected to secure all permits, licenses, tax requirements and clearances needed to start your business operations. You can also check with the local region where your business is located to find out additional requirements needed aside from what was mentioned above.

If you have been able to successfully complete all the requirements, you can now open your doors and start welcoming customers to your business.

8. Send in your Application to Print Receipts and Invoices

All persons who are engaged in business shall secure from the BIR an Authority to Print receipts or sales or commercial invoice before a printer can print the same.

The BIR lists the requirements and where to submit them on their website.¹⁰ Let’s go over them here.

Please be aware that this information can change and that you should reference the BIR website for the most up-to-date information.

Checklist of Document Requirements¹⁰	Relevant Office/Party¹⁰
BIR Form No. 1906 (2 originals) It’s also possible for the taxpayer to find an accredited printer that will print both receipts and invoices for you.	RDO - Client support section area or LTD Find the downloadable document at the BIR website The list of accredited printers is located on the BIR website and RDO - Client support section area.
Final and clear sample of own principal and supplementary receipt invoices (1 original)	New Business Registrant Counter/Taxpayer-applicant
Last issued Authority to Print (ATP) (1 photocopy); or Printer’s Certificate of Delivery (PCD); (1 photocopy); or Any booklet from the last issued ATP for subsequent application. (Booklet need to be presented)	Taxpayer
Loose Leaf Receipts/Invoices¹⁰	Relevant Office/Party¹⁰
BIR Form No. 1906 (2 originals) You should also indicate the selected Accredited Printer	RDO - Client Support Section Area or LTD Downloadable at BIR website
Loose Leaf Official Receipts or Sales Invoices Permit (1 photocopy)	BIR Client Support Section
Final and clear sample of OWN principal receipts/invoices	New Business Registrant Counter/Taxpayer Applicant
Last issued Authority to Print (ATP). (1 photocopy). Instead of the first option, you can provide the Printer’s Certificate of Delivery (1 photocopy). Finally, according to the BIR, you can also provide “any copy of printed loose-leaf receipts/invoices from the last issued ATP for subsequent application.”¹⁰	Taxpayer
Additional Documents	Relevant Office/Party
Necessary items when applying through an appointed representative: Special Powers of Attorney (SPA) provided by the applicant (1 original) Any government-issued ID for the taxpayer or representative	Taxpayer-applicant being represented Applicants appointed representative
For corporations and applications for non-individuals: Board resolution describing the purpose and name of the appointed representative (1 original) or Secretary’s certificate A government-issued ID for one signer and one appointed representative (1 photocopy)	Board of directors Individuals incorporating the company

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Best Business to Start in the Philippines as a Foreigner

Keep in mind all the reasons why it’s good to do business in the Philippines, let us now analyze the top 7 best industry you can venture on;

• Travel and Tourism. The Philippines takes pride in its scenic beauty and lavish tourist destination, there is a huge demand for services, packages, offers, facilities, accommodations, trips, transport, food and beverage and other travel related services.

• Agriculture. The Philippines being a tropical country holds a massive agrarian land mass extending to 9.7 million hectares of fertile soil suitable for different crops like, coconut, rice, mango, sugarcane, corn, coffee, banana, pineapple, and cacao. The country also produces poultry and livestock which support the basic needs of the region, so it’s a good industry to venture on.

• Manufacturing. Given the country’s low labor cost, the Philippines is a good place to venture on manufacturing, covering the creation of products that include food and beverage, petroleum, transport, and industrial equipment, textile and others.

• IT, BPO, and Business Services. The development in the Information Technology sector leads to fast-paced and rapid expansion in Business Process Outsourcing, from the last decade, BPO’s emerged as the top contributors to the Filipino economy.

• Real Estate. Real estate is still considered to be a flourishing industry, even when it has already achieved so much in the last few years. As the population keeps increasing, there will always be a demand for property space and offices. It is a fairly sustainable market with attractive potential for high returns, as investors can access a whole market for homeseekers and travelers.

• Retail. Amidst the currency inflation rate, overall spending and consumption among consumers are still high, thanks to the country’s high employment rate. Online shopping and delivery has been a driver of this rise, more Filipinos utilize mobile technology to fulfill their shopping needs.

• Healthcare. This industry seems to be picking up steam as the country’s health expenditure grew significantly for the past few years. This is a good indication that people prioritize a healthy lifestyle and a good industry to be looked on.

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Do I need a visa to start a business in the Philippines as a foreigner?

For most foreign nationalities, it’s easy to stay in the Philippines with a visa on arrival for a few months, however, if you want to stay for 3-6 months or longer you will need a business visa. It allows you to negotiate terms with partners, attend international conferences, join business meetings, and others.

Visas relevant to foreign business owners:

Section 9 Visas for Non-Immigrants

1. Business Visa or 9(d): This can be valid for up to a year for single or multiple business trips. The duration of your visit can only last up to 6 months.

Section Special Visas: This includes visas for both investors and business owners.

1. Special Investor’s Resident Visa (SIRV) ⁶

The SIRV requires a certain amount of investment in the Philippines to get access. Once obtaining the visa, the individual can reside in the Philippines as long as their investments remain within the country.

1. Special Visa for Employment Generation (SVEG) ⁶

The SVEG allows an employer to reside in the Philippines. This visa has the requirement of employing at least 10 Filipino citizens. The employers who are granted the SVEG are both considered non-immigrants and receive multi-entry privileges and a conditional extended stay.

Payment of Visa Fees

For additional information and complete guidelines, you can visit DFA's official website.

Business Laws and Regulations for Philippines

This can be a tricky part of starting a business as a foreigner in the Philippines. In most industries, foreign investment is promoted by fiscal and non-fiscal incentives in the Philippines. The country’s Republic Act No. 7042 or the Foreign Investments Act of 1991 (FIA) outlines these incentives and their requirements.

While for some industries there are restrictions in terms of maximum capital investment, all of them can be found in the Philippine Foreign Investment Negative List. If your business of choice falls into the industries outlined in the negative list, you have to follow a defined recap.³

The rules for foreign equity capital are as follows:

1. For domestic market enterprises (which are defined as companies deriving at least 40% of their revenue from sources within the Philippines), Foreign equity is limited to 40%. It also means that you cannot be company president. However, if your domestic market business has a minimum paid capital of US$200,000 or more, the equity cap can be lifted and foreigners can fully own their businesses.⁷

2. For export-oriented enterprises (which are defined as companies getting at least 60% of their revenue from sources outside the Philippines), they can do away with the capitalization requirement and go beyond the 40 percent cap on equity owned by foreigners.⁷

The Philippines also has an Anti-Dummy Law, which penalizes individuals who violate the restrictions on foreign equity and those who evade laws on nationalization.

Use Wise for your International Business

Wise Business allows you to make and receive international payments across currencies easy and transparent. Doing things like paying your employees overseas can be cheaper and faster compared to traditional banks.

Why? Because Wise Business offers the mid-market exchange rate without any mark-ups. Transfers are typically processed in 0–2 working days.

Additional benefits are:

• Multiple transfers in one go through the batch payment tool
• Pay overseas contractors in USD or PHP
• Borderless account - hold, send, and receive funds in one account
• Linkable to accounting software such as Xero
• Automated batch payments through open API to save you time and streamline the process.
• Track your transfers in real time on your account.

Try Wise Business >>

Auto Conversion 👈
With Wise Business you also can set Auto Conversions. Choose your currencies, the amount to convert, and your desired exchange rate. Wise will then automatically exchange the amount when your desired rate is available. This is a great, easy, and safe way to save money if you need to pay employees or suppliers abroad.✅

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Sources:

1. http://uis.unesco.org/en/country/ph

2. https://www.bir.gov.ph/newbizreg/

3. https://www.officialgazette.gov.ph/downloads/2018/10oct/20181029-EO-65-RRD.pdf

4. https://www.sec.gov.ph/wp-content/uploads/2020/01/Anti-Dummy-Law-Commonwealth-Act-108.pdf

5. https://www.dti.gov.ph/negosyo/business-registration-and-permits/

6. https://visasphilippines.com/philippine-visas/special-resident-visas/special-visa-employment-generation/

7. https://www.dayananconsulting.com/foreign-ownership-corporations-philippines/

8. https://www.firstcircle.ph/blog/business-banking-in-philippines

9. https://www.tripleiconsulting.com/how-much-money-need-start-business-in-philippines/

10. https://www.bir.gov.ph/index.php/rdo-external-service-13.html