Philippine business requirements establish the legal, financial, and operational foundation for companies operating in one of Southeast Asia’s most dynamic economies, ensuring compliance across multiple agencies while unlocking incentives like CREATE MORE Act tax reductions and BOI/PEZA benefits. Whether selecting a sole proprietorship via DTI BNRS, forming a corporation through SEC eSPARC/SEC ZERO, or meeting foreign ownership thresholds under the Foreign Investment Negative List (FINL), these mandates protect stakeholders, enable banking access, government contracts, and scalable growth.
Understanding Popular Business Structures and Their Specific Requirements
Philippine business requirements vary by entity type, balancing simplicity against liability protection, scalability, and foreign ownership eligibility as defined by the Revised Corporation Code and FINL.
Sole Proprietorships represent the simplest structure for microenterprises and home-based operations, requiring only DTI Business Name Registration System (BNRS) approval with fees of PHP 230-530 for 5-year territorial name protection (national/regional/provincial/city scope). Owners retain unlimited personal liability for debts, taxes, and obligations, making this ideal for freelancers, online sellers below PHP 3 million VAT threshold, or low-risk service providers. No minimum capital; foreign sole props limited to FINL-permitted activities with a USD 200,000 threshold.
Partnerships involve 2+ persons contributing capital/property/services; general partnerships impose full partner liability while limited partnerships cap limited partners at contributions. SEC business registration mandatory for PHP 3,000+ capital (DTI for less); creates juridical personality with nationwide name protection.
Domestic Stock Corporations (2-15 incorporators/shareholders—natural persons, trusts, estates, other corps) form separate legal entities via SEC eSPARC, offering limited liability and perpetual existence. ≥60% Filipino-owned requires PHP 5,000 minimum paid-up; ≤40% foreign matches this. Non-stock variants suit foundations/NGOs.
One Person Corporations (OPCs) enable single natural person/trust/estate ownership with full corporate benefits; appoint Filipino secretary and resident treasurer (surety bond required) within 15 days.
Foreign Ownership via FINL: 100% permitted in exports, IT-BPM, wholesale, e-commerce; mass media (0% foreign), public utilities (40% max), land prohibited, retail PHP 25M minimum. Anti-Dummy Law criminalizes nominees.
Detailed Shareholder, Capital, and Economic Contribution Requirements
Capital thresholds demonstrate economic commitment; central Philippine business requirements verified by the SEC via Treasurer-in-Trust certificates.
- Filipino-Controlled (≥60%): PHP 5,000 paid-up minimum; no bank proof initially.
- Foreign Domestic Market (>40% equity): USD 200,000 standard (25% paid upfront); reducible USD 100,000 (50+ direct Filipino employees or advanced technology); PHP 5,000 (70%+ exports).
- Retail (100% foreign): PHP 25 million entity-wide (PHP 10 million/store).
OPCs/Branches/Rep Offices: Mirror above; branches prove USD 200,000 inward remittance to Universal Banks.
Practical Examples:
- Tech startup (50 devs): USD 100,000.
- 80% export manufacturer: PHP 5,000.
- 60% Filipino e-commerce: PHP 5,000.
- Pure domestic services (100% foreign): USD 200,000.
Bank certificates mandatory; violations trigger Anti-Dummy penalties (PHP 200,000 fines/imprisonment up to 5 years).
Director, Officer Qualifications, and Corporate Governance Mandates
Officer/director rules under the Revised Corporation Code safeguard operations—non-negotiable Philippine business requirements.
Directors (maximum 15): Natural persons of legal age holding ≥1 share, no RCC violations (past 5 years) or crimes >6 years imprisonment. The majority must reside in the Philippines; foreigners require DOLE-approved 9G/47A2 visas (max 3 years initial, extendible).
Required Officers:
- President: Shareholder-director with contract execution powers.
- Treasurer: Philippine resident overseeing finances; OPC dual-role demands surety bond equaling authorized capital.
- Corporate Secretary: Filipino citizen/resident handling compliance, GIS filings, and board minutes.
OPC Nuances: Sole shareholder serves as director/president; separate secretary/treasurer appointments are mandatory.
Governance Essentials: Bylaws define quorum/meetings (annual board/stockholders), proportionate Filipino directors in foreign-majority firms, and conflict disclosures.
Example 100% Foreign Corp:
- President: Expat CEO (9G visa).
- Treasurer: Resident expat CFO.
- Secretary: Filipino corporate lawyer.
Complete SEC Registration Process Using SEC ZERO and eSPARC Platforms
SEC eSPARC/SEC ZERO digitizes primary business requirements for juridical entities in the Philippines.
Step 1: Name Reservation (1-3 days)
Online verification prohibits unregistered “Corp/Inc/OPC/Co” suffixes (RCC Sec 18: PHP 10,000-200,000 fines); 30-90 day validity.
Step 2: Document Assembly (1-2 weeks)
Cover Sheet, FINL-compliant Articles of Incorporation (primary purpose clause), Bylaws, Treasurer Affidavit (TITF bank cert), SEC F-100/F-105 (foreign equity >40%), apostilled parent documents + certified translations. SEC ZERO eliminates notarization via eSAP digital signatures.
Step 3: Online Submission and Approval (2-4 weeks)
eSPARC upload; fees = 1/5 of 1% authorized capital (minimum PHP 2,000 filing + 1% legal research). Digital Certificate of Incorporation issued; hard copy optional.
DTI Sole Proprietorships: BNRS portal completed in 1 day (PHP 230 national, lower local scopes).
Total Timeline: 3-6 weeks for straightforward cases; complex foreign cases take 6-8 weeks.
Local Government Unit (LGU) Business Permits and Clearances Process
LGU authorization verifies location compliance—post-SEC Philippine business requirements.
- Barangay Clearance (1-3 days): Community endorsement confirming ordinance compliance.
- Mayor’s/Business Permit (1-3 weeks): Submit SEC/DTI cert, lease/title, Fire Safety Inspection Certificate (FSIC from BFP), Sanitary Permit (Health Office), Zoning/Locational Clearance (Planning Office), BIR 2303. Fees graduated by gross receipts/capitalization (Class A, highest risk/large scale).
Metro vs. Provincial: Quezon City/Pasig/Taguig/Muntinlupa offer e-portals; provinces use manual systems. Virtual offices are acceptable with compliant addresses. Annual January renewal; late surcharges apply.
Bureau of Internal Revenue (BIR) Tax Registration Requirements
BIR registration operationalizes taxation—universal Philippine business requirements.
- Revenue District Office (RDO) or NewBizReg Portal: BIR Form 1903 (corps/partnerships)/1901 (sole props); attachments include SEC/DTI/Mayor’s Permit, lease contract, owner/director IDs, authorization letter. Outputs: TIN issuance, books of accounts registration (manual/loose-leaf/computerized), Authority to Print (ATP) official receipts/invoices, Certificate of Registration (Form 2303).
- VAT Threshold: PHP 3 million annual sales trigger registration. Processing: 1-2 weeks. Annual PHP 500 registration fee; eFPS/eBIRForms mandatory for medium/large taxpayers.
Mandatory Employer Registrations with Social Security Agencies
Hiring employees activates social protection—an essential Philippine business requirement.
- Social Security System (SSS): Submit R-1 (employer registration), R-1A (employee list); monthly remittances (14% total premium, employer pays 8.5%). Covers retirement, sickness, maternity, and death benefits.
- PhilHealth: ER1 (employer data), ER2 (employee record); 5% premium split (employer 50%).
- Pag-IBIG Fund: Employer registration forms + SEC/DTI docs; 4% contribution (employer/employee 2% each) for housing/savings.
Processing: 1-2 days each. Non-remittance penalties: PHP 5,000-20,000/month + interest; personal officer liability.
Sector-Specific Requirements and Foreign Investor Considerations
- Foreign-Focused: FINL pre-clearance (100% OK: manufacturing exports, BPO/IT, wholesale; restricted: media 0%, utilities 40%); USD 200K capital (job creation/tech/export reductions); SEC License for branches/reps + resident agent; proportional Filipino officers.
- Incentivized Sectors (BOI/PEZA/iBoard): 4-8 year income tax holidays, duty-free capital goods imports, VAT zero-rating (70% export threshold for processing zones). PhilGEPS registration unlocks government procurement.
- High-Regulation: FDA (food/cosmetics), BSP (finance), LTFRB (transport), DOLE (recruitment).
Ongoing Annual Compliance Obligations and Renewal Matrix
Perpetual compliance sustains good standing—recurring Philippine business requirements.
| Agency | Requirement | Deadline | Penalties |
| SEC | GIS + AFS | 120 days post-fiscal | PHP 2K-20K + suspension |
| BIR | Monthly/Quarterly/Annual Returns | Varies | Surcharge 25% + 12%/yr interest |
| LGU | Mayor’s Permit Renewal | January | Surcharge 25% + closure risk |
| SSS/PhilHealth/Pag-IBIG | Monthly Remittances | 10th next month | PHP 5K-20K/month + liens |
GIS updates officers/stockholders; AFS BIR-stamped. Centralized portals streamline.
Practical Timelines, Cost Breakdowns, and Pro Tips
- End-to-End Timeline: 6-12 weeks (SEC 3-6w, LGU/BIR 2-4w, social 2d, bank 1w).
- Cost Ranges: Local PHP 20,000-50,000; Foreign USD 3,000-5,000 (excluding capital).
- Acceleration Tips: Makati CBD virtual offices, SEC-accredited secretaries/lawyers, FINL pre-opinions, bundled service providers.
Final Insights
Mastering Philippine business requirements through structured navigation of SEC ZERO digitization, strategic capital reductions, and multi-agency coordination positions entrepreneurs for incentives and scalability. Local founders leverage a PHP 5,000 entry; foreigners optimize USD 200K via employment/tech/export paths. Professional guidance minimizes timelines of 6-12 weeks across agencies.
Professional Assistance for Philippine Business Requirements
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