Business Structures in the Philippines

Starting a business in the Philippines entails knowledge of the different business structures. There are eight (8) types of business structures in the Philippines. These are divided into two main categories.
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Business Entities Governed by Philippine Law

  1.  One Person Corporation (OPC)

    • A One Person Corporation is an entity where the business owner’s assets are separate from the company’s assets. The one and only shareholder may be held accountable only up to the extent of his or her share capital. OPC should be registered with the SEC (Securities and Exchange Commission).
  2. Sole Proprietorship

    • A Sole Proprietorship or sole ownership is another business structure with a sole owner. Sole proprietorship businesses must register with the DTI (Department of Trade and Industry). There are more risks involved with a sole proprietorship type of business than a one-person
  3. Domestic Corporation

    • Due to its comparable traits, domestic corporations can be likened to a Limited Liability Company (LLC) or a Private Limited Company (PLC). Same with OPC, the shareholders of a domestic corporation may only be held accountable up to the extent of their share capital. This business structure should pay debts legally, just like an LLC.
  4. Partnership Business

    • A Partnership business must be registered with SEC. There should be at least two (2) owners with this enterprise. The duties and the revenue is split between the partners of the business.

Foreign Corporations

  1. Branch Office (BO)

    • A branch office in the Philippines is owned by a company founded outside the Philippines. The branch office helps its parent company manage its business functions in the Philippines.  A branch office needs to follow the laws implemented by the Philippines’ SEC and the laws established by the country where the head company is situated.
  2. Regional Area Headquarters (RHQ)

    • An RHQ is formed to execute business functions involving its parent company’s affiliates, branches, and subsidiaries in the Asia-Pacific region. A regional area headquarters cannot produce income or conduct business activities from the Philippines. Its head company funds the operational costs incurred by the RHQ.
  3. Representative Office (RO)

    • A representative office is incorporated in the Philippines to increase local brand awareness. Its main functions are communication, marketing, information dissemination, and quality control. An RO is not detached from its parent company when it comes to a legal entity. Similar to RHQ, a representative office is also not allowed to generate income in the Philippines. Its operating expenses and accountabilities are shouldered by its parent company based outside the country.
  4. Regional Operating Headquarters (ROHQ)

    • A regional operating headquarters is originated to perform services to a multinational company’s affiliates, branches, or subsidiaries in the country, the Asia-Pacific area, or in other foreign markets outside its main location. Aside from the previous entities it is involved with, an ROHQ is not allowed direct or indirect advertisement or solicitation of its services and products for its parent company or any of its affiliates, branches, or subsidiaries.

Updated Guidelines for Foreign-Owned Businesses

Last year, the 12th Foreign Investment Negative List was adjusted to be more in sync with the modifications made through Philippine laws. The list is divided into Lists A and B. List A allows amendments that will reflect revisions made in specific rules. On the other hand, List B does not permit more than one modification every two (2) years.

List A: Areas that Do Not Permit Foreign Ownership

  • Small-scale mining
  • The practice of professions, with the exemption of circumstances permitted by the law
  • Using marine resources in the exclusive economic zone, territorial sea, archipelagic waters, and small-scale utilization of natural resources in bays, lakes, lagoons, and rivers.
  • Retail trade corporations with paid-up capital of less than P25M
  • Cooperatives, with the exemption  of investments made by former natural-born citizens of the Philippines
  • Mass media, with the exemption of the internet and recording business
  • Operation, ownership, and management of cockpits
  • Distribution, manufacturing, repair, and/or stockpiling of nuclear weapons
  • Distribution, manufacture, repair and/or stockpiling of biological, chemical, and radiological weapons and mines
  • Manufacturing firecrackers and other pyrotechnic tools
  • Operation and organization of private detectives, security guard agencies, or watchmen

Areas That Permit Up to Twenty-Five Percent (25%) of Foreign Equity

  • Contracts for the construction of structures related to defense
  • Private recruitment, either for local or overseas deployment

Areas That Permit Up to Thirty Percent (30%) of Foreign Equity

  • A sole proprietorship is a business entity with only one owner. With a sole proprietorship business structure, the sole proprietor obtains all the assets and profits of the enterprise. The amount of corporate taxes owed to the BIR will depend on the profits earned by the business. Sole proprietorship companies must register with the Department of Trade and Industry (DTI).

List B: Partial Foreign Ownership Due to Health/Morals, Defense, Security, and Protection of Corporations

Areas That Permit Up to Forty Percent (40%) Equity

  • Ownership of condominium units
  • Ownership of private lands with the exemption of a natural-born citizen who has lost his Philippine citizenship and who has the legal capacity to enter into a contract under Philippine laws
  • Operation of deep-sea commercial fishing vessels
  • Operation of public utilities
  • Development, exploration, and utilization of natural resources
  • Educational institutions apart from those formed by religious groups and mission boards for foreign diplomatic individuals and their dependents, as well as other foreign temporary residents or for short-term high-level skills development that does not form part of the formal education system as defined in Section 20 of the Batas Pambansa No. 232
  • Contracts for the supply of materials, goods, and commodities to government-owned or controlled corporations (GOCC), agencies, companies, or municipal corporation
  • Procurement of infrastructure projects according to Section, (c), and (e) of the Implementing Rules and Regulations (IRR) of RA No. 9184
  • Private radio communications network
  • Culture, production, milling, processing, trading of rice and corn, and acquiring by barter, purchase or otherwise, rice and corn and the by-products thereof, subject to a period of divestment

Can Foreign Companies Get One Hundred Percent (100%) Equity?

It may be possible for Foreigners to own a company with full ownership or one hundred percent (100%) foreign equity in their business. Contact us to find out if this is possible for your potential line of business.

Let Business Registration Philippines Help You Through Business Registration

Business Registration Philippines assist companies that need help in identifying the proper business structure for their office in the Philippines and those that require assistance in starting the incorporation and registration process

Business Registration Philippines is 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 is the first ISO 9001:2008 company to deliver business registration services to companies in the Philippines. With more than ten years of accounting, business registration, business incorporation, FDA licensing, FDA product registration, and providing business consulting services, the company partners with Business Registration Philippines to offer the following services connected with starting a business structure in the Philippines:

  • Assistance in the completion of requirements
  • Acquiring a Business Permit
  • Securing SEC Certificate of Registration
  • BIR registration
  • Business registration
  • Registration with Pag-IBIG, Philhealth, and SSS
  • And many other government licenses and permits related to your type of business.

Learn more about our other services by contacting us here, filling out the form below, calling us at +63 (02) 8540-9623, or emailing us at to book an initial consultation with one of our business registration experts.

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