Definition of a Philippine Branch Office
A branch office is an enterprise’s extension of its head office that operates in a different country. In this case, the country is the Philippines. A Philippine branch office is formed to execute the business activities of its principal company. It may earn income from its business relations in and out of the Philippines.
A branch office does not have a separate legal entity from its parent company. As such, the parent company shall finance any liabilities of the branch office and should be accountable for the branch office’s activities. However, the branch office is still under the jurisdiction of Philippine laws.
Advantages of a Philippine Branch Office
- The head office has complete control over the branch office.
- The branch office does not need a board of directors but just a resident agent who is a Filipino citizen or a resident.
- A branch office is generally less expensive to establish than a regular corporation.
Minimum Capital Requirements of a Philippine Branch Office
The minimum capital requirement of a branch office for a Domestic Market Enterprise (DME) that sells products and services to the Philippine market is the Philippine Peso equivalent of US$200,000.
However, if the company is engaged in advanced technology or has at least fifteen (15) local employees, the minimum capital is the Philippine Peso equivalent of US$100,000.
Meanwhile, firms that export more than sixty percent (60%) of their overall revenue are exempted from the Philippine Peso equivalent of US$200,000 minimum capital.
Tax Duties of a Philippine Branch Office
Purchases made from VAT-registered suppliers may qualify for exemption from the branch office’s tax duties.
Profits remitted to the parent company shall also be subject to a dividend tax of fifteen percent (15%). Some nations under tax treaties with the Philippines can enjoy lower tax responsibilities of ten percent (10%). These include Austria, Germany, Japan, and the Netherlands. Lastly, the wages paid to local employees will also be subject to withholding tax.
Branch offices in any Philippine Economic Zone Authority (PEZA) are exempted from paying taxes on branch profit remittances.
Philippine Branch Office Starting Requirements
- As mentioned earlier, a Philippine branch office need not have a board of directors. However, it should have a registered resident agent who should either be a Filipino citizen or a foreigner. The resident agent serves as the branch office’s contact person for receiving government summons.
Registered Office Address
- A registered office address is part of the registration process for branch offices in the Philippines. Upon registration with the Bureau of Internal Revenue (BIR) and other local government agencies, starting enterprises should bring proof of their business address in the Philippines. This could be the Certificate of Land Title if the firm owns the office or a Contract of Lease for businesses renting their office space.
Requirements For Opening a Philippine Branch Office
- Accomplished SEC form
- Authenticated/apostilled copy of the Articles of Incorporation from the parent company
- Authenticated/apostilled copy of the parent company’s Board of Resolution approving the formation of the branch office
- Authenticated/apostilled copy of the appointment of the Resident Agent to accept the government summons
- Audited Financial Statement (AFS) of the parent company
- Affidavit of solvency signed by the Resident Agent or President confirming the financial soundness of the parent company.
How to set up a Branch Office in the Philippines
- Get copies of parent company documents that are needed for authentication.
- File for license registration at the Securities and Exchange Commission (SEC).
- Open a “non-resident” savings account in a local bank.
- Complete all necessary forms.
- Pay the fees.
- Secure a license from SEC.
- Acquire a Mayor’s permit from the Mayor’s Office and a Business Permit from the Business Permit and Licensing Office (BPLO) of your local City Hall.
- Complete Bureau of Internal Revenue (BIR) registration.
- If employing Filipinos, file for registration with BIR, Pag-Ibig, Philhealth, and SSS.
Get Professional Help Setting up a Philippine Branch Office
Expand your company’s reach across borders by setting up an office in the Philippines. The best way to start is to get professional help from a reliable company specializing in localized solutions.
Business Registration Philippinesis a website dedicated to helping investors, business owners, and other stakeholders establish and incorporate their enterprises. Topics range from Accounting, Finance, Human Resources, Business Process Outsourcing, Product Registration, Taxation, and more. It is a microsite of Triple i Consulting Inc.
Triple i Consulting is the first ISO 9001:2008 company in the Philippines to provide company registration services to its clients. With over ten years of handling government documents, obtaining business certificates, and delivering high-quality local enterprise consulting services, the solutions provider partners with Business Regisration Philippinesto offer the following benefits associated with setting up a branch office in the Philippines:
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