Foreign entrepreneurs who wish to expand into the Philippines must establish a domestic corporation under local laws or operate as a foreign corporation through a Representative or Branch Office. Each option carries distinct advantages, regulatory requirements, and limitations, shaped by the Revised Corporation Code of 2019 and the Foreign Investments Act of 1991.
We’ll explain and compare each option, including the registration process, so you can determine which best aligns with your business goals.
What is a Domestic Corporation under Philippine Law
A domestic corporation is a business entity incorporated under Philippine laws, governed by the Revised Corporation Code 2019. Formed by at least one incorporator and registered with the Securities and Exchange Commission (SEC), it is treated as a Philippine national. This status grants access to industries without foreign ownership restrictions. However, sectors like mass media (0% foreign equity) or real estate (up to 40% foreign equity) may require Filipino partners, per the Foreign Investments Negative List.
What is a Foreign Corporation under Philippine Law
A foreign corporation is an entity established under foreign laws but authorized to operate in the Philippines as a branch office, representative office, or regional headquarters (RHQ). Governed by the Foreign Investments Act of 1991, it must register with the SEC and meet capitalization thresholds based on your type of office and industry.
Differences Between Domestic and Foreign Corporations
The table below outlines the key differences between domestic and foreign corporations in the Philippines.
| Aspect | Domestic Corporation | Foreign Corporation |
| Formation | Incorporated under Philippine laws (Revised Corporation Code). | Incorporated under foreign laws, operates as a branch or office in the Philippines. |
| Ownership | It can be 100% foreign-owned in unrestricted industries; Filipino partners are needed for restricted sectors. | Fully foreign-owned but subject to industry-specific foreign equity caps. |
| Capitalization | Minimum paid-up capital; higher for specific sectors. | Flexible since the amount depends on the office type and the specific industry. |
| Taxation | Eligible for Board of Investments (BOI) incentives; subject to standard corporate taxes. | Subject to corporate taxes plus withholding taxes on profit remittances abroad. |
| Registration | Simpler process with the SEC; fewer documentary requirements. | Requires an SEC license, authenticated foreign documents, and a resident agent appointment. |
| Industry Access | Full access to unrestricted industries is limited to the Negative List sectors. | Restricted in Negative List sectors; requires compliance with foreign investment rules. |
Required Documents for Business Registration
We have listed the initial application requirements below. Depending on your business structure, specific industry, and operations, you may need additional documents.
Domestic Corporation
Initial application requirements typically include the following:
- Articles of Incorporation and By-laws
- Treasurer’s Affidavit
- Bank Certificate showing the paid-up capital
- Registration Data Sheet
- Endorsements / Clearances from other government agencies (if applicable)
Foreign Corporation
You will need the following documents to register:
- Application Form (depends on the type of office)
- Name verification slip
- Authenticated copy of the parent company’s Board Resolution approving the establishment
- Articles of Incorporation or equivalent from the parent company’s home country
- Financial statements of the parent company for the latest fiscal year
- Proof of inward remittance
- Organizational chart and details of the parent company’s operations
- Registration Data Sheet
- Notarized Resident Agent Acceptance Form (if applicable)
- Affidavit executed by the Resident Agent stating that the applicant is solvent and in sound financial condition (for Representative office and non-stock corporations)
- Additional documents, depending on your business structure and specific industry.
Ensure your documents are complete, accurate, and fully compliant to avoid complications and unnecessary delays.
Steps to Register Your Business in the Philippines
Domestic Corporation
- Reserve a unique company name via the SEC online portal.
- Draft and notarize Articles of Incorporation and bylaws.
- Register with the SEC and submit the incorporator details and treasurer’s affidavit.
- Obtain Barangay Clearance and Mayor’s Permit.
- Secure a TIN from the BIR.
- Enroll with SSS, PhilHealth, and Pag-IBIG for employee benefits.
- Apply for industry-specific licenses or BOI incentives, if applicable.
Foreign Corporation
- Apply for an SEC license to operate with authenticated foreign documents.
- Appoint a resident agent.
- Deposit the required capital with bank proof.
- Secure Barangay and Mayor’s Permits.
- Register with the BIR for a TIN.
- Obtain industry-specific permits, if applicable.
- Establish a local office and meet reporting requirements.
The registration process for domestic and foreign corporations generally takes a month or more. Triple i Consulting can provide professional assistance, streamlining the process and avoiding delays.
Final Thoughts
Choosing between a domestic and foreign corporation in the Philippines hinges on your industry, investment size, and strategic goals. Domestic corporations offer easier setup and access to local incentives but may require Filipino partnerships in restricted sectors. Foreign corporations provide full control but face stricter regulations and higher capital requirements. For personalized guidance, schedule a consultation with Triple i Consulting. We’ll help you make the most informed decision.
Are You Registering Your Corporation in the Philippines?
Incorporating a domestic or foreign corporation in the Philippines requires careful preparation and strict compliance with the SEC and other government agencies. The process can be complex and time-consuming, from drafting incorporation papers to securing permits and registering with tax and social agencies.
Thankfully, the Business Registration Philippines team provides comprehensive support for your business registration, so you don’t have to stress over the paperwork.
Contact us today to schedule an initial consultation with one of our experts:
- Contact Us Here
- Fill Out the Form Below
- Call us at +63 (02) 8540-9623