Foreign investors set up offshore companies in the Philippines for one of two reasons. Some are building a captive unit to handle finance, IT, or back-office work for their own organization. Others are entering the market directly, setting up a BPO or IT services company to sell to their own external clients.
Both paths require registration with the SEC and adhering to tax, and permit requirements in the Philippines. However, the registration process involves specific legal and financial steps that can be challenging to navigate. This guide breaks down what you need to know to establish a legally compliant offshore business.
What Is an Offshore Company in the Philippines?
An offshore company is a business entity that operates in a country other than where its owners are based. In the Philippines, this typically means a foreign-owned entity that serves clients abroad, supports a parent company's operations, or manages regional business functions.
Foreign investors often set up offshore in the Philippines for a few common reasons:
- Investment holding: Offshore entities can hold shares, real estate, or other assets, which simplifies ownership structures and can improve tax efficiency.
- International trade: Companies handling cross-border transactions use offshore structures to streamline import and export operations.
- Asset protection: Placing assets in a separate jurisdiction can shield them from legal claims or economic instability back home.
- Estate planning: Offshore companies give families a cleaner way to structure inheritance and transfer wealth across borders.
Industries like IT-BPM, financial services, e-commerce, healthcare support, and hospitality are the most common users of this model.
Foreign equity for offshore companies: IT-BPO, SaaS, and other offshore service businesses generally sit outside List A and B of the Foreign Investment Negative List (FINL). As a foreigner, you can qualify for full foreign ownership without needing a local partner.
Requirements for Starting an Offshore Company in the Philippines
A Registered Legal Entity
To set up an offshore company, you need the right corporate structure to serve as your legal vehicle in the Philippines. Your structure determines your legal liability, your tax obligations, and your eligibility for state incentives.
Most investors set up their offshore company as a Domestic Corporation, often structured as a One Person Corporation (OPC). This structure lets your offshore company generate local revenue and protects you from personal liability through the corporate veil. It also scales more easily than a branch or representative office as your team grows.
As the single stockholder of an OPC, you keep full control of your offshore company. The law still requires you to appoint a resident Corporate Secretary and a resident Treasurer. Furthermore, you must also name a Nominee and an Alternate Nominee to take over management if you become incapacitated.
Other structures exist too, including Branch Offices, Representative Offices, and Regional Headquarters. Each carries different rules on liability and income depending on your parent company's goals. Read our guide to legal entities in the Philippines to compare every option side by side.
Our local experts in the Philippines can provide you with advice on the best legal structure for your offshore company.
Capital Requirements for Foreign Investors
Under the Foreign Investments Act, a foreign-owned offshore company needs US$200,000 in paid-up capital, or the peso equivalent. Most offshore companies sell services to clients abroad rather than to the local Philippine market. Because of that, the most common way to reduce this requirement is by qualifying as an Export Market Enterprise (EME).
To attain EME status, you need to export at least 60% of your goods or services to clients outside the Philippines. With this status, you can reduce the requirement down to PHP 5,000 under the Revised Corporation Code, though most investors deposit more to fund operations. The SEC verifies your export status during registration, often through a BOI or PEZA endorsement.
A few other pathways can lower your capital requirement further, including DOST technology certification, a Filipino employee threshold, startup endorsement, and majority Filipino ownership. Each comes with its own trade-offs. See our guide on reducing your paid-up capital requirement in the Philippines for the full breakdown.C. Local Government Unit (LGU) Permits
To legally operate an offshore company, you must obtain approvals from the local municipality where your organization will be physically located. This localized licensing process ensures that your business complies with specific community standards and safety regulations. To secure your right to operate locally, you must obtain two primary documents:
- Barangay Clearance: serves as a community-based permit confirming that your business activity is recognized by the local neighborhood authorities.
- Mayor’s Permit (Business Permit): a comprehensive license issued by the City Hall. Obtaining it is often the most time-consuming part of the LGU stage because it involves a multi-departmental gauntlet of inspections. Your office space must pass rigorous checks for:
- Fire safety: ensuring adequate exits and extinguishers
- Sanitary conditions: health department approval
- Zoning: verifying that your building is legally designated for commercial or IT-BPO use
Failure to secure this permit renders your SEC-registered company "inactive" in the eyes of the law, preventing you from legally issuing receipts or hiring a local workforce.
Taxation and Incentives for Offshore Companies in the Philippines
Government incentives are a major reason foreign investors choose to set up an offshore company in the Philippines. In November 2024, the CREATE MORE Act (Republic Act 12066) updated the incentive framework introduced by the original CREATE Law. Here's what applies to your offshore company today.
- Corporate tax rates: The regular corporate income tax rate is 25%. It drops to 20% if your offshore company's net taxable income stays below PHP 5 million and your total assets, excluding land, stay below PHP 100 million.
- PEZA incentives: Register your offshore company with PEZA and you can qualify for an income tax holiday of four to seven years. The exact length depends on your industry and location. After that period, a 5% special tax on gross income earned replaces the standard corporate tax.
- BOI incentives: Offshore companies registered with the Board of Investments (BOI) can access a similar income tax holiday of four to seven years. They also get duty exemptions on imported capital equipment and raw materials. CREATE MORE also extended VAT incentives to qualifying BOI-registered export enterprises, a benefit previously reserved mostly for PEZA locators.
- VAT and duty exemptions: PEZA and BOI-registered offshore companies get VAT zero-rating on local purchases, now including some locally procured services, plus duty exemptions on imports.
- Local tax cap: CREATE MORE caps local taxes for incentivized offshore companies at 2% of gross income. This replaces the separate local taxes and fees that used to apply on top of national incentives.
Our local experts can help you decide which government-backed incentives fit your offshore company as part of our end-to-end incorporation service.
Incorporating Your Offshore Company in the Philippines
Starting an offshore entity involves navigating multiple government departments in sequence. Emerhub manages the entire setup process for foreign investors, removing operational friction and regulatory delays.
Here is how Emerhub handles your company launch from start to finish:
- Structure and Capital Consultation: We evaluate your business model, verify FINL compliance, and select the optimal corporate entity.
- Corporate Name and SEC Registration: Our legal team reserves your corporate name, drafts Articles of Incorporation, and secures your SEC Certificate
- Capital Remittance and Banking Setup: We guide your foreign capital remittance and coordinate directly with bank compliance officers to open your account.
- Local Permits and BIR Tax Setup: Emerhub secures your Barangay Clearance, Mayor's Business Permit, Tax Identification Number, Certificate 2303, and Authority to Print.
- Employer Registration and Ongoing Compliance: We register your entity with SSS, PhilHealth, and Pag-IBIG, then manage your ongoing accounting and tax filings.
Ready to expand your business into the Philippines? Contact Emerhub to consult with our corporate incorporation team and launch your offshore entity with full legal compliance.
Frequently asked questions
What is the Foreign Investment Negative List, and how does it affect my business?
It's a government-issued list that restricts or prohibits foreign ownership in specific sectors, including mass media, public utilities, and small-scale mining. Most offshore service businesses, including IT-BPO and SaaS companies, fall outside these restrictions.
How long does it take to register an offshore company in the Philippines?
It should typically take around 30–60 days, depending on the business structure, government processing times and the completeness of your application.
Do I need a local partner to set up an offshore business?
No, unless your business falls under foreign ownership restrictions. Otherwise, 100% foreign ownership is allowed.
Can an offshore company hire foreign employees in the Philippines?
Yes, but foreign employees need Alien Employment Permits (AEP) and must comply with local immigration laws.
Can a 100% foreign-owned company own land in the Philippines?
Land ownership is reserved for Filipino citizens and corporations that are at least 60% Filipino-owned. However, the Investor's Lease Act lets a foreign-owned company sign a lease for up to 50 years, renewable for another 25. That gives you a 75-year window, which covers most investment ventures. You can also own the building, improvements, or specific office units outright, as long as foreign interest in the condominium project stays under 40%.
How long does the entire incorporation process take?
Two to four months for a fully compliant setup. That timeline accounts for processing times across agencies and the lead time needed for apostille or consularization of foreign documents.
Do I need a local partner or resident director?
No local partner is required unless your business falls under a foreign ownership restriction. However, your Corporate Secretary must be a Filipino citizen and resident, since they handle fiduciary duties and receive legal summons. Your Treasurer must also be a Philippine resident but doesn't need to be a citizen.
Can I repatriate profits to my home country easily?
You can repatriate profits from your offshore company in the Philippines to your home country. You must register your initial capital and any subsequent inward remittances with the Bangko Sentral ng Pilipinas to obtain a Bangko Sentral Registration Document (BSRD). Without a BSRD, moving large sums of money out of the country legally becomes very difficult. Coordinate with your commercial bank early in your financial setup.