Guide to Register a Domestic Corporation in the Philippines

For investors and businesses looking to establish their presence in the Philippines, one of the most popular business structures is a domestic corporation. However, understanding the nuances of domestic corporations is essential to ensure compliance and maximize business opportunities.

In this article, we will walk you through the essentials of a domestic corporation including types based on ownership, key requirements, and the process to register one.

What is a Domestic Corporation in the Philippines?

The Revised Corporation Code of the Philippines (R.A. 11232) legally defines a domestic corporation as a company incorporated under its provisions and governed by local laws. It is required to maintain its principal office in the Philippines and is taxed on income derived within the country.

In principle, it is similar to LLC/PLC in other countries as it offers limited liability and its rights and responsibilities are distinct from its shareholders.

Domestic corporations can be fully foreign-owned, fully Filipino owned, or joint ventures. 

Types of Domestic Corporations in the Philippines Based on Ownership Structure

The ownership structure of a domestic corporation is primarily defined by the percentage of foreign equity. This classification significantly impacts the company’s compliance requirements and the industries it can operate in.

Based on ownership, domestic corporations can be be divided into 3 categories:

1. Fully Filipino-Owned Domestic Corporations

These are the corporations where Filipino citizens own 100% of shares of the company. Such domestic corporations enjoy unrestricted participation in all business sectors and access to government incentives for local enterprises.

2. Foreign-Owned Domestic Corporation (More Than 40% Foreign Equity)

Foreign-owned domestic corporations are local companies where foreign ownership exceeds 40%. These corporations can operate in any industry as long as the sector is not restricted by the Foreign Investment Negative List (FINL).

For example, sectors such as small scale mining operations and private security agencies are closed to foreign ownership. Therefore, these companies are not allowed to participate in those sectors.

Examples of industries open to majority foreign ownership (over 40%) in the Philippines include: 

• Wholesale Trade
• Manufacturing and Processing (excluding sectors involved with natural resources) 
• Internet and E-commerce businesses
• Wellness centers
• Adjustment, lending, and financing companies, as well as investment houses.
• IT businesses
• Business Process Outsourcing (BPO)
• Tourism and Hospitality businesses such as hotels, resorts, travel agencies

3. Domestic Corporation with Less Than 40% Foreign Equity

These companies are classified as Filipino-owned for regulatory purposes, enabling foreign investors to engage in industries where foreign participation is permitted but capped. 

For example, while a fully foreign-owned domestic corporation cannot operate in the advertising sector, a corporation with less than 30% foreign equity qualifies to do so. This structure allows businesses to meet ownership restrictions while still benefiting from foreign investment.

If you are unsure about where your planned activities fall, our local experts will evaluate your eligibility requirements for full/partial foreign ownership under the FINL and handle the incorporation process on your behalf to ensure compliance with local laws.

Legal Requirements for Establishing a Domestic Corporation in the Philippines

When establishing a domestic corporation in the Philippines, you must comply with several key regulations.

Corporate Structure of Domestic Corporation

A domestic corporation must have at least four key officers. These officer roles are essential to ensure proper governance and compliance with local laws:

• President: The individual responsible for overseeing the corporation’s operations.
• Corporate Secretary: This officer must be a Filipino citizen and reside in the Philippines.
• Treasurer: The person in charge of managing the corporation’s finances.
• Compliance Officer: An officer dedicated to ensuring that the corporation adheres to legal and regulatory standards.

Capital Requirements for Domestic Corporations

The minimum capital requirement for domestic corporations in the Philippines varies based on the level of foreign equity and the industry. Here are the general guidelines:

• Filipino-Owned Corporations: The minimum capital requirement is approximately USD 100 (PHP 5,000).
• Foreign-Owned Corporations: The minimum paid-up capital requirement for foreign-owned domestic corporations is USD 200,000. However, this reduces to USD 100,000 if the business employs at least 50 employees or uses advanced technology.

How to Register Your Domestic Corporation in the Philippines

1. Secure SEC Registration

Submit mandatory documents, including the Articles of Incorporation, By-Laws, and Treasurer’s Affidavit, to the Securities and Exchange Commission (SEC). Once approved, the SEC issues a Certificate of Incorporation.

2. Comply with Tax Registration Requirements

After SEC registration, your corporation must secure a Taxpayer Identification Number (TIN) from the Bureau of Internal Revenue (BIR) and meet requirements for VAT, withholding taxes, and regular filings. Emerhub’s experts can streamline your tax registration and ensure full compliance with Philippine tax regulations.

3. Obtain a Business Permit from the LGU

Secure a Mayor’s Permit or business permit from the local government unit (LGU) where your business will operate. This process typically involves submitting a completed application form, proof of SEC registration, and lease agreement or proof of business address.

4. Obtain Additional Permits and Licenses for Your Domestic Corporation

Depending on your industry, you’ll need additional permits such as environmental clearances or industry-specific licenses. For companies employing foreign workers, our relocation experts can secure the relevant work permits in your stead.

5. Post-Registration Compliance

Upon your company establishment, it is crucial to ensure your ongoing compliance with local regulations. This includes:

• Annual Filings: Submit audited financial statements and general information sheets to the SEC.
• Tax Filings: File monthly, quarterly, and annual tax returns with the BIR.
• Corporate Records: Maintain updated books of accounts and corporate minutes.
• License Renewal: Ensure timely renewals of mandatory and industry specific licenses and permits

Register Your Domestic Corporation in the Philippines with Emerhub

Emerhub enables investors and entrepreneurs to set up and expand their business operations across markets such as Philippines, Malaysia, Indonesia, Thailand, and Vietnam.

Our local experts handle the company registration process on your behalf and secure necessary licenses and permits, allowing you to start your business operations in the Philippines in compliance with local laws.

For more details, fill out the form below. One of our local experts will get in touch with you!