What are the legal requirements for setting up a Business Process Outsourcing company in the Philippines?

The Philippines has become a major destination for Business Process Outsourcing (BPO) service providers and accounts for approximately 15 percent of the global BPO market. Setting up a BPO company in the Philippines is a challenging task, especially for foreigners who are unfamiliar with the regulations. This blog will act as a guide to describe the legalities and the process of setting up a BPO company with Emerhub.

Steps for registering a BPO company in the Philippines

Emerhub will take you through the following process in order to register your BPO company in the Philippines by obtaining: 

1. SEC license to operate
2. Business Permit in the locality where the business is situated
3. Certificate of Registration with the Bureau of Internal Revenue
4. Certificate of Registration with the Social Institutions
5. Securing Philippine Economic Zone Authority (PEZA) Registration
6. Bank account setup (Certificate of Deposit)

Security Exchange Commission (SEC) license to operate

In order to set up a BPO company in the Philippines, Emerhub first registers your company with the Securities and Exchange Commission (SEC). This will equip you with a permit to carry out business transactions in the Philippines. 

Process:

1. Submission of online application
2. SEC approval
3. Routing of documents to signatories
4. Payment and Physical submission of hard copies
5. Release of the Certificate

It takes approximately 30 working days to gain an SEC Certificate.

Registration in Local Government Unit (LGU)

The Local Government Unit (LGU) issues the business permit or Mayor’s permit in the Philippines where your company’s office is located. It is to be noted that business permits are to be renewed each year otherwise the business will be charged a 25% tariff on the renewal fee with an additional 2% every month. Emerhub will apply on your behalf with the relevant LGU.

Process:

1. Submission of Application Form and documents
2. Inspection
3. Assessment of fees
4. Payment
5. Issuance of Business Permit

This process takes approximately 30 working days to complete.

Certificate of Registration with the Bureau of Internal Revenue (BIR)

The Bureau of Internal Revenue (BIR) is the national taxing authority in the Philippines. Registration with the BIR is mandatory before setting up a BPO company. It should be done with the BIR Revenue District Office which has jurisdiction over your place of business. Emerhub registers your business with the BIR manually, while all future transactions are reported online. 

Process:

1. Application of TIN (Taxpayer Identification Number)
2. Secure authorized computation from the officer-in-charge
3. Payment of DSTs (Documentary stamp tax)
4. The request for a Template from an Authorized Printer
5. Submission of documentary Requirements
6. Acceptance of the documentary requirements
7. Release of COR (Certificate of Registration)
8. Release of ATP
9. Stamping of Books of Account

The process takes approximately 14 days.

Certificate of Registration with Social Institutions

Emerhub has to register you with Social Institutions in the Philippines as soon as the first employee is hired. Social institutions work for the welfare of people through a monthly contribution scheme in which the employer is required to contribute a portion of the employee’s monthly salary. These institutions provide benefits to the workers in the Philippines which are working in various sectors. These benefits include:

• Philhealth is the medical insurance program by the Philippine Health Insurance Corporation (PHIC) that provides universal health coverage to Filipino workers, overseas workers, as well as the indigent community.
• SSS – Social Security System provides protection against various contingencies such as old age, disability, calamities, sickness, pregnancies, unemployment, and death.
• Pag-IBIG is the Home Development Mutual Fund (HDMF) is a provident savings system that provides housing loans to private and public employees, as well as to self-employed people who apply for membership. It offers land acquisition loans and affordable housing financial assistance to its members with a low-interest rate that can be paid for up to 30 years.

Process:

The process of registration is similar for all three aforementioned institutes:

1. Preparation of documents by Emerhub
2. Signing of documents by the authorized signatory
3. Submission to the government agency
4. Evaluation of documents submitted
5. Release of Certificate
6. Creation of online access

It takes 30 working days to register with the social institutions in the Philippines to set up a BPO company.

Securing Philippine Economic Zone Authority (PEZA) Registration

Philippine Economic Zone Authority (PEZA) manages and facilitates foreign investment and promotes these investments inside special economic zones. Export-oriented and BPO companies usually benefit from PEZA’s incentives. Their incentives range from duty-free importation and tax holidays to simplified documentation procedures. In order to set up your BPO company, Emerhub will first register it in a PEZA-certified location or economic zone. 

Process:

1. Submission of application documents for pre-screening
2. Payment of application fee and obtaining official receipt
3. Submission of truly filled application form along with other required documents
4. Wait for receipt of Board Resolution
5. Submission of pre-registration requirements as stated in Board Resolution
6. Payment of registration fee 
7. Sign registration agreement with PEZA

The process takes approximately 21 working days for PEZA registration.

Bank account Set up

A corporate bank account opened in your BPO company’s name is required to carry out business transactions. This bank account allows you to manage the financial activities including revenue, payroll, and profit of the business.

Process:

1. Preparation of bank forms by Emerhub
2. Secure the signature of the authorized signatories and directors
3. Submission to the relationship manager
4. Evaluation of documents by the financial institution
5. Issuance of the account number 

It takes approximately 30 working days for a bank account setup.

Process timeline for setting up a BPO company in the Philippines

1. Security Exchange Commission (SEC) license: 30 working days
2. Registration in Local Government Unit (LGU): 30 working days
3. Certificate of Registration with the Bureau of Internal Revenue (BIR): 14 working days
4. Certificate of Registration with the Social Institutions: 30 working days
5. Securing Philippine Economic Zone Authority  (PEZA) Registration: 21 working days
6. Bank account set up: 30 working days

Register your company with Emerhub

We understand that incorporation of a new business into an international market is time-consuming and frustrating. We are here to make sure it’s not!

To execute all these steps, Emerhub can assist in Business Process Outsourcing company formation in the Philippines with a total estimate of 60 days. We will incorporate your company with the SEC, BIR, LGU, and Social Institutions.

Get in touch today by filling out the form below.