Setting up an offshore company is nothing new to companies nowadays. Most of them aim towards lowering their costs to gain profits in their businesses. For that, they have started establishing offices all around the world. The Philippines is also a location wherein the companies are looking forward to investing, as the government is providing benefits for setting up a company in the country. If you want to set up an offshore company in the Philippines, then this article is for you
Offshore Company in the Philippines
An offshore company is a company that is operated, maintained and registered in a foreign location, where the company has been provided with particular legal, financial and tax structure, and has its own set of benefits for setting up in the specific country.
Why Consider the Philippines as Your Next Offshore Company Location?
Before you start pondering upon how to set up an offshore company in the Philippines, these are some of the points you need to understand.
- You are a company who is willing to expand your business worldwide, and you find great potential in investing in the Philippines
- You are looking towards developing a powerful message and setting an example to other companies
- You can analyze your strengths and weaknesses, skill and time devoted towards understanding how to build your company
Once you've followed these points, it becomes easy to focus on how to set up your company in the Philippines. Here are the main reasons why you should consider the Philippines as your next place to start a company
- The Philippines is South-East Asia’s best performing stock markets
Over the past couple of years, the Philippine economy showed a considerable increase in its GDP, at a rate increase of 1% every quarter. The current GDP of the Philippines is valued at 313.6 Billion USD, a rise of 6.3% from last year. This has boosted the confidence of the investors, and the government has also taken some measures to attract more investors
- The Economy in the Philippines has topped the expectations and is growing at a rapid pace
Being situated in a strategic location, and the government's principles in driving towards a better place to do business have helped foreign investors to keep a keen eye on the country and open an offshore company
- Business is done in the country in English
The Philippines has been a country that has always maintained a close relationship with the United States of America and has remained one of the leading investors in the country for decades. This has led the people in the Philippines to learn English, and also have most of the documentation written in English, which is unusual in most of the third world countries.
Process of Setting Up an Offshore Company in the Philippines
Once you have got an idea about setting up your company in the Philippines, here is the process to register your company in the Philippines. Be sure to consider these things to ease your filing of a company.
- A foreign investor cannot form a sole proprietorship business in the country without a massive investment (in case of a corporation, the amount is $250,000)
- A foreign investor can have a 40% stake in the company, and the minimum capital required is PHP 5000 (i.e. $1000)
The Process to Register Your Company in the Philippines
Registering with the SEC
The foremost thing before setting up your company in the Philippines is to express your company's name in the Department of Trade and Industry (DTI) so that no other company uses your name to trade within the country. For Corporations and Partnership companies, registering with the Securities and Exchange Commission (SEC) is enough. Without the SEC License, the corporation cannot operate within the country. The fee for registering with the SEC is PHP 10,000
Registering with the Local Barangay Office
The next thing is to register your business with the Local Barangay Office. The Local Barangay clearance ensures that the firm established is community-friendly and complies to the standards of the Barangay.
Securing a Mayor’s Permit
After obtaining the SEC Registration certificate, the next thing is to get an approval from the mayor's office, that affirms the company has adhered to the city's ordinances and standards such as fire and safety, sanitary clearances and many more. Fees for the Permit are PHP 5000
Registering with the Bureau of Internal Revenue
Once you are done with getting the mayor’s permit, the next thing you should do is to register with the Bureau of Internal Revenue (BIR). You need to produce the Mayor’s Permit before you apply for BIR certificate. Post successful registration with the BIR, you will get a Tax Identification Number (TIN), along with trade name, line of business and the tax amount remitted to the BIR annually. The BIR registration will cost PHP 500 annually
Registration of employees with Other Government Agencies
- Social Security System (SSS): the employers should be registered to the Social Security System, to report the status of employees, let it be permanent, temporary or on a contract basis.
- Philippine Health Insurance Corporation (PhilHealth): As per the National Health Insurance Act, every employer must be registered to PhilHealth and pay a substantial amount of profit to PhilHealth. This is to ensure that the employees have health insurance to aid them with hospital costs.
- Home Development Mutual Fund (Pag-IBIG Fund): This is something similar to PhilHealth, but for the housing of an employee in the organization. According to RA 7742, SSS members, who earn a minimum of PHP 4000 per month must pay a substantial amount, to provide employees with adequate housing facilities.
So, this is the procedure to follow to register your offshore company in the Philippines. Here are a few benefits of setting up a foreign company in the Philippines.
Benefits of setting up an offshore company in the Philippines
- Strategic Location
- Subsidized taxes for foreign entities
- Can Incorporate a company easily
- Ease of doing trade within the country
- Strong legal Framework of the country
- Stable and robust government within the country
- Very Cheap Labour Costs
- Good communication skills
So, these are some things you need to know about setting up an Offshore Company in the Philippines. We at Business Setup Worldwide do provide company setup services like incorporation, legal aid, audit services, accounting and bookkeeping services and much more. Contact us for more. We are here to help you out!