Guide to Register a Regional Operating Headquarters (ROHQ) Philippines

A Regional Operating Headquarters (ROHQ) allows foreign corporations to set a presence in the Philippines. Instead of a separate legal entity like a corporation, an ROHQ is an extension of a parent company overseas. 

However, not all companies can establish an ROHQ. Eligibility is often limited to those with existing branches, subsidiaries or affiliates in other Asia-Pacific regions. If you want to establish an ROHQ in the Philippines, we will provide you with all the essential information from requirements to tax implications. 

What is an ROHQ in the Philippines?

A Regional Operating Headquarters (ROHQ) is defined as an extension of a foreign corporation. The primary purpose of starting an ROHQ is to focus on administrative and operational support for a foreign corporation’s activities in the region.

For instance, Germany’s flagship carrier Lufthansa Technik established an ROHQ in the Philippines to coordinate its maintenance, repair, and overhaul (MRO) activities in Asia Pacific. Their presence in the country is focused on aircraft maintenance services, and parts of procurement for its global operations.

How is an ROHQ Different from a Branch Office? 

Many often interchange ROHQs with Branch Offices due to their similarities as extensions for foreign corporations. The terminology used, particularly the term “headquarters” in the name can further blur the lines between their distinct roles and functions.  However, branch offices and ROHQ are different business structures. 

While both serve to facilitate business operations without separate legal entities, here are differences between an ROHQ and a Branch Office in the Philippines:

Feature	ROHQ	Branch Office
Legal Structure	Extension of a foreign corporation; no separate legal identity	Considered a separate entity for tax purposes
Income Generation	Allowed to derive income from qualifying services	Can conduct business activities and generate income directly
Permitted Activities	Limited to specific qualifying services	Broader scope of business activities permitted
Tax Rate	Enjoys a lower corporate income tax rate of 10% on taxable net income in the Philippines.	Subject to the standard corporate tax rate of 30% on Philippine-sourced income.

List of Business Activities Allowed for ROHQs in the Philippines

ROHQs don’t operate as full-fledged businesses and have limited operations in the country. These are primarily designed to ensure that ROHQs function as support centers rather than direct competitors in the local market.

 As outlined under Republic Act 8756, here are the activities permitted for ROHQs in the Philippines: 

• General Administration and Planning – oversee and coordinate operations and strategic direction to ensure alignment with corporate objectives.
• Business Planning and Coordination – develop business strategies and facilitate collaboration among various departments and affiliates in your Philippine ROHQ. 
• Sourcing/Procurement of Raw Materials and Components – identify and acquire necessary materials and components from local suppliers to support the production needs of your organization.
• Corporate Finance Advisory Services – Provide financial consulting and strategic advice on matters such as investment, capital structure, and financial planning.
• Training and Personnel Management – develop training programs and managing human resources to enhance employee skills and align workforce capabilities 
• Logistics Services – manage transportation, warehousing, and distribution of goods to ensure efficient supply chain operations.
• Research and Development Services – innovative activities aimed at creating new products or improving existing ones to enhance competitiveness in the Philippine market.
• Technical Support and Maintenance – provide ongoing technical assistance and maintenance services for products or systems.
• Data Processing and Communication – manage data-related services, including data analysis, processing, and communication systems that support decision-making processes.
• Business Development – identify new business opportunities, partnerships, and markets for the parent company’s affiliates to drive growth and expansion strategies.

Legal Requirements for Starting an ROHQ in the Philippines

Starting an ROHQ in the Philippines involves navigating a specific set of legal requirements established by Philippine law to encourage foreign investment in the country. Under the Republic Act No. 8756, here’s what you need to start an ROHQ in the country: 

• A minimum capital of $200,000 (or its equivalent) into the Philippines, evidenced by a bank certificate within 30 days of receiving the ROHQ registration certificate.
• ROHQs can only be set up by foreign corporations that have existing subsidiaries, branches, or affiliates in the Asia-Pacific region and other foreign markets. 
• Must secure a registered office address in the Philippines supported by lease contracts or land titles. 
• Must reserve a unique name for your ROHQ with the SEC together with a License to do Business. 

Another requirement to register an ROHQ in the Philippines is to appoint a resident agent. Local experts such as Emerhub can represent your company to handle all legal matters within the Philippines. We can help gather all the necessary information and liaise with local government agencies to expedite the registration process. 

Tax Implications for ROHQs in the Philippines

One of the biggest advantages of starting an ROHQ in the Philippines are the tax incentives set in place by the local government to attract foreign investment. With an ROHQ, you can enjoy reduced income tax rates at 10% instead of the 25% for domestic corporations. You also have a reduced withholding tax rate of 15% for employed expats, and enjoy exemptions from local taxes, fees, and charges (except for real property taxes on land improvements and equipment). 

To help you navigate tax compliance in the Philippines, Emerhub’s accounting services can help you get started in bookkeeping, invoicing, and preparing financial statements. Additionally, we also have payroll services to cover your employee salary records, and calculate deductibles for employee benefits. 

Start your own headquarters in the Philippines with Emerhub! Fill out the form below and one of our local consultants can guide you through the country’s complex business landscape.