Setting up a business in the Philippines as a foreigner

It is a common misconception in the Philippines that foreigners cannot own a business unless they are married to a Filipino citizen or only if they open the business with Filipino owners.

Trade restrictions for foreigners

In reality, foreigners are allowed to own and operate a business in the Philippines. However, they have more requirements than Filipino business owners.

In addition, certain business activities or industries are restricted to Filipino owners only. The good news is that there are also industries that can be 100% owned by foreign owners.

Here are the business options for foreigners:

  • Wellness Center
  • Insurance adjustment companies, credit companies and investment houses
  • Training centers engaged in the development of high-level short-term skills
  • Business to business – Foreigners can own a business that provides services or sells to other businesses. The minimum investment for a business-to-business (B2B) business is between 100,000 USD (4.8 million Php) and 200,000 USD (9.6 million Php).
  • Internet Business – Any business operating only on the Internet, with the exception of mass media, can be 100% owned by foreigners.
  • National companies – For this type of business, foreign owners must also invest at least 100,000 US dollars (4.8 million Php, especially if the business has 50 or more employees and is interested in advanced technology. The category “domestic market enterprise” is in fact broad and encompasses aspects including the provision of services in the domestic market or the production of various goods for sale.
  • Export companies – As long as the business type of the business or business is not on the negative list, the business can be 100% foreign owned.

Companies that cannot be owned by foreigners (0% foreign ownership)

The following companies are on negative list A, with 0% or no foreign participation authorized:

  • Agencies for guards, security guards or private investigators
  • Any business involving nuclear weapons
  • Cooperative
  • Manufacture of firecrackers / pyrotechnic devices
  • Manufacture or related activities (including distribution) of biological / chemical and radiological weapons or anti-personnel mines
  • Mass media, except recording or internet commerce
  • Operating cockpits
  • Practice any profession, except teaching in higher education
  • Retail businesses with paid-in capital of less than US $ 2.5 million
  • Small-scale mining
  • Use of marine resources

Documents to prepare

Here are some of the things you need to prepare if you need to open a business in the Philippines as a foreigner:

  • Articles of incorporation
  • Clearance certificate from other government agencies
  • Community tax certificate
  • Complete the employee data form
  • Rental contract, if applicable
  • Copy of the letter of authorization from the municipality
  • Fire safety and electrical inspection certificate
  • Foreign investment application form (for subsidiaries of foreign companies)
  • government issued identification document
  • List of members (with amount contributed) certified by the secretary
  • Barangay location and clearance (from company location)
  • Notarized bank certificate
  • Certificate of occupancy and building permit
  • Payment of registration fees set on the territorial basis with documentary stamp duty
  • Proposed trade name registration form
  • Registration fees
  • Treasurer’s affidavit
  • Verification slip form
  • Written undertaking (if the name of the company has been changed by a trustee or director)

Setting up a business in the Philippines as a foreigner

Step 1. Make sure you do your research into the industry or business area you are venturing into. Some domains allow 100% foreign ownership, others 0%! There are also fields that allow up to 25%, 30%, and 40% foreign ownership.

2nd step. Register company name. You must do this in the following government agencies:

  • DTI (Department of Trade and Industry) for the sole proprietorship
  • SEC (Securities and Exchange Commission) for company or general partnership

Step 3. Register for the BIR (Bureau of Internal Revenue) and get your TIN (Tax Identification Number).

Step 4. Register as an employer with these government agencies:

  • SSS (Social security system)
  • Pag-IBIG (also known as HDMF, Home Development Mutual Fund)
  • PhilHealth
  • DOLE (Department of Labor and Employment)

Step 5. Obtain all necessary permits and licenses, including:

  • Mayor’s business permit
  • Building permit (if you need to build a building for your business)

Step 6. Hire and train your workers.

Step 7. Begin the operation.


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