Understanding Regional Headquarters (RH)
In today’s globalized economy, companies and individuals seeking to expand their operations internationally often explore establishing a Regional Headquarters (RH). The Philippines, known for its strategic location, skilled workforce, and supportive business environment, offers an attractive destination for setting up an RH.
A Regional Headquarters is a corporate entity established in a foreign country to manage and coordinate a company’s operations in a specific region. It serves as a central hub for overseeing regional activities, such as market research, sales, marketing, and management functions. RHs play a vital role in driving efficiency, maximizing market penetration, and promoting strategic decision-making within a specific geographic area.
Individuals and Corporations Benefiting from RHs:
Both individuals and corporations can benefit from establishing an RH in the Philippines. Some of the key entities that find RHs valuable include:
- Multinational corporations seeking to expand their presence in the Asia-Pacific region.
- Companies engaged in manufacturing, distribution, or services with regional operations.
- Global organizations aiming to centralize their regional management functions.
- Investors looking to tap into the Philippine market or regional markets within Asia.
Regional Headquarters (RH) vs. Regional Operating Headquarters (ROHQ):
While the terms “Regional Headquarters” and “Regional Operating Headquarters” may appear similar, there are distinct differences between the two:
Regional Headquarters (RH): RHs primarily focus on managing and coordinating regional activities without engaging in direct income-generating operations. Their key functions involve strategic planning, decision-making, and support services for regional subsidiaries or affiliates.
Regional Operating Headquarters (ROHQ): In contrast, ROHQs are authorized to conduct income-generating activities. They can provide services to their affiliates, branches, or subsidiaries, both within and outside the Philippines. ROHQs typically engage in back-office operations, such as regional procurement, IT support, training, and human resource management.
To establish an RH in the Philippines, certain requirements must be fulfilled. These may include:
- Minimum Capitalization: RHs are subject to a minimum inward remittance of USD$50,000 or its equivalent in Philippine Pesos.
- Office Space: A RH must have an office space in the Philippines, which serves as the principal place of business.
- Security of Tenure: The lease agreement for the office space should have a minimum initial period of two years.
- Registered Representative: A RH must appoint a resident agent or representative in the Philippines who can receive legal notices and documents on its behalf.
The registration process involves the following steps:
- Choose a name for the RH and verify its availability with the Securities and Exchange Commission (SEC) in the Philippines.
- Accomplish the necessary forms, including articles of incorporation and by-laws, and submit them to the SEC.
- Pay the required fees and obtain the Certificate of Incorporation and the License to Do Business as a Regional Headquarters from the SEC.
- Register with other government agencies, such as the Bureau of Internal Revenue (BIR) and the Department of Labor and Employment (DOLE), as per the specific requirements.
Incentives for Registering a RH Business:
The Philippines offers various incentives to attract businesses to establish RHs in the country. Some notable incentives include:
- Tax Incentives: RHs may qualify for a preferential tax rate of 10% on their taxable income, subject to meeting specific requirements.
- Employment of Foreign Nationals: RHs can employ foreign nationals holding key positions, subject to certain conditions and approval from appropriate government agencies.
Simplified Registration and Licensing: The government has streamlined the registration and licensing process for RHs, allowing for a faster and more efficient establishment.
Registered RHs may avail themselves of the following tax incentives:
- Reduced Corporate Income Tax: RHs are eligible for a reduced corporate income tax rate of 10% on their taxable income.
- Tax Exemption on Dividends: Dividends remitted by a RH to its parent company are tax-exempt in the Philippines.
- Customs Duty Exemption: RHs enjoy customs duty exemption on imported equipment, machinery, and spare parts used exclusively for their operations.
Is Help Available to setup a Regional Headquarters?
Establishing a Regional Headquarters (RH) in the Philippines offers numerous advantages for individuals and corporations seeking to expand their operations in the Asia-Pacific region. By understanding the requirements, registration process, and incentives available, potential RH owners can make informed decisions and leverage the benefits provided by the supportive business environment in the Philippines. As a strategic hub, the country offers a promising platform for driving regional growth, facilitating efficient management, and accessing a vast market with immense potential.
If you are a foreign enterprise seeking efficient assistance to establish your regional operating headquarters in the Philippines, look no further than Triple i Consulting. We provide reliable support and guidance for starting your operations.
Triple i Consulting holds the distinction of being the first ISO 9001:2008 certified company offering business registration services in the Philippines. With over a decade of experience in handling government documentation, obtaining business certificates, and delivering business consulting, we offer a comprehensive range of services to facilitate the establishment of your regional operating headquarters in the Philippines.
Some of our services include:
- Bookkeeping and financial services
- Corporate compliance
- Report filing
- Creation of company manuals, HR rules, and employment contracts
- Office setup and design
- Assistance in finding suitable office locations
- Payroll services
- Registration of the company with the Board of Investments (BOI) and Securities and Exchange Commission (SEC)
- Obtaining the necessary business and mayor’s permits
To learn more about starting an RH or to schedule an initial consultation with one of our RH registration experts, please contact us using any of the following methods:
We are committed to providing the guidance and support you need for a successful launch of your regional headquarters in the Philippines.