Business RegistrationHow Foreign Companies Can Establish an RHQ or ROHQ in the Philippines

Thanks to its English-proficient workforce and favorable business incentives, the Philippines has emerged as a strategic hub for multinational corporations looking to expand in Southeast Asia. For foreign companies planning to build a strategic hub in the Philippines, they will need to choose between a Regional Headquarters (RHQ) or a Regional Operating Headquarters (ROHQ) 

We’ll explain their differences, documentary requirements, and registration processes to help you decide.

What is a Regional Headquarters (RHQ and ROHQ)

A Regional Headquarters is a branch of a multinational company that serves as an administrative center for coordinating operations across the Asia-Pacific region. It focuses on supervision, communication, and support for subsidiaries or affiliates without engaging in revenue-generating activities within the Philippines. 

This setup is ideal for companies with global reach, requiring at least five affiliates in different countries, including one outside the region. In the Philippines, regional headquarters come in two primary types:

Regional Headquarters (RHQ), Non-Operating Entity

An RHQ acts solely as a supervisory and communications hub. It cannot sell products or services locally or earn income from Philippine sources, limiting its role to administrative functions.

• Handles planning, logistics coordination, and training for affiliates.
• Requires an annual remittance of at least US$50,000 from the parent company.
• Enjoys tax exemption on foreign-sourced income.
• Eligible for VAT zero-rating on local purchases.
• Best suited for cost-center operations.

Regional Operating Headquarters (ROHQ)

An ROHQ goes beyond administrative functions by providing qualifying services to affiliates. 

• Provides services like R&D, business development, data processing, and technical support.
• Requires a one-time capital remittance of US$200,000.
• Subject to a preferential 10% corporate income tax on taxable income.
• Eligible for incentives such as tax-free importation of equipment.

While an ROHQ can generate income from these services, it remains restricted from serving non-affiliates or engaging in direct local sales. You must register a domestic corporation or branch office to earn income from non-affiliates and local clients in the Philippines.”

RHQ vs ROHQ: Key Definitions and Differences

While both RHQ and ROHQ are extensions of foreign multinationals under RA 8756, their scopes differ significantly. An RHQ is defined as an administrative branch focused on oversight, with no local income generation allowed and fully tax-exempt on operations. Conversely, an ROHQ is an operating entity that can earn from services to affiliates, subjecting it to 10% tax but offering broader functional flexibility.

In summary, an RHQ acts as a back-office hub while an ROHQ can earn revenue by providing services to subsidiaries and affiliates.

Legal Documents Needed for RHQ and ROHQ Registration

Registering either requires submission to the Securities and Exchange Commission (SEC). Core documents include:

• Application Form from the Sec’s eSPARC online portal.
• Certification by the Philippine Consulate/Embassy or the Philippine Commercial Office or from the equivalent office of the Philippine Department of Trade and Industry (DTI) in the company’s country of origin verifying that said foreign corporation is engaged in international trade with subsidiaries, branches or affiliates in the Asia-Pacific (APAC) region and other foreign markets; and in case the equivalent of the DTI issues the certification, the same shall be authenticated by the Philippine Consulate/Embassy.
• Certification from the Principal Officer of the foreign corporation verifying that it is authorized by its Board of Directors or governing body to establish an RHQ in the Philippines.
• Proof of inward remittance 
  • USD 50,000 for RHQ (annual remittance for operational expenses)
  • USD 200,000 for ROHQ (initial investment plus annual funding)
• Registration Data Sheet
• Endorsement or clearance from appropriate government agencies (if applicable);
• Endorsement from the Board of Investments (BOI); and
• Latest authenticated financial statements showing the solvency of the head office.

For ROHQ, additional certification is needed for the services to be provided. All foreign documents must be authenticated.

Registering an RHQ in the Philippines

Here are the steps to register a RHQ or ROHQ:

• Gather Necessary Documents: Collect all required documents as outlined, ensuring they are properly notarized and authenticated by the relevant authority. 
• Deposit Minimum Capital: Provide the required minimum capital to demonstrate your financial commitment to establishing the RHQ or ROHQ. 
• Obtain BOI Endorsement: Before proceeding with the registration process, secure an endorsement from the Board of Investments (BOI). 
• File with the SEC: Once all documents and the BOI endorsement are prepared, submit your application to the Securities and Exchange Commission (SEC). 
• Establish a Registered Office: Set up a physical office in the Philippines to serve as the official address for your RHQ, and be ready to provide supporting documents like a lease agreement. 
• Processing Duration: The review and approval process typically takes a few months, depending on the completeness of your submission and the workload of the involved agencies.
• Additional Requirements: The SEC may request further documents based on your business structure, industry, operations, and, for ROHQs, the specific types of services provided.

The entire process usually lasts 1-3 months. For ROHQ, steps are similar but include higher capital and service details. 

Remember, you must still register the BIR, LGUs, DOLE, and other appropriate government agencies.

Which Should I Choose: RHQ or ROHQ

The choice hinges on your operational goals:

• Choose RHQ if your focus is purely administrative, coordinating regional affiliates without local revenue, benefiting from lower annual costs and full tax exemption. It’s ideal for holding companies or those minimizing tax exposure. 
• Choose ROHQ if you need to provide billable services like IT support or marketing to affiliates, accepting the 10% tax for income generation potential. 

RHQs and ROHQs are primarily designed to support your regional affiliates and subsidiaries. Suppose you plan to engage in broader commercial activities, such as selling directly to non-affiliates or the local Filipino market. In that case, consider setting up a domestic corporation or a branch office instead.

If you’re having trouble choosing the correct business structure, schedule a consultation with us. Business Registration Philippines will be glad to provide you with professional guidance and registration assistance.

Final Thoughts

Establishing an RHQ or ROHQ in the Philippines strategically positions your company in Southeast Asia while giving you access to a cost-effective, English-proficient workforce. With incentives like tax breaks and easy expatriate visas, these structures facilitate seamless expansion. However, you must prepare the required documents, complete the SEC registration process, and register with the appropriate government agencies to ensure smooth operations and compliance with Philippine regulations.

Are You Registering a Regional Headquarters in the Philippines?

Incorporating an RHQ or ROHQ 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:

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