How to Set Up an IT Company in the Philippines in 2026

The Philippines is a hotspot for IT-related services in Southeast Asia. In 2025, the country’s IT industry (particularly in the IT-BPM) sector, reached over USD 40 billion in export revenues. Together with the country’s young English-speaking tech-savvy workforce and business incentives through PEZA and BOI ecozones, many foreigners are starting their own IT companies in the Philippines. 

Although the Ease of Doing Business Act (RA 11032) had streamlined and digitalized the incorporation process, compliance with the SECs and LGUs remains rigorous. Aside from registering your company, you also need to comply with labor and tax registration as well as open a corporate bank account. Furthermore, you can sign up for PEZA or BOI promotion for fiscal and non-fiscal benefits.

This guide provides a comprehensive step-by-step roadmap for setting up an IT-related entity in the Philippines. We will tackle what are primary business structures best suited for IT firms, the registration process, and what are incentives available for starting an IT company in the Philippines. 

Defining the Business Model and Structure of Your IT Company

The first step in the setup process is determining your market orientation and legal entity type. In the Philippines, IT is generally considered a service industry, which allows for full foreign equity provided specific thresholds are met. 

Export vs Domestic Market Enterprise

Market classification is the most critical factor for foreign investors. To put it simply, you have to decide whether you want to target clients domestically or overseas. This will impact your minimum paid-up capital, eligibility for tax incentives, and your legal right to maintain full ownership as a foreigner. 

Under the Republic Act No. 11647 (amending RA 7042), the government distinguishes between export and domestic enterprises: 

In general, if your primary clients are overseas (e.g., US/Europe) or generating foreign currency revenues like software development, BPO, or AI services, an Export Enterprise is ideal. This will allow you to apply for PEZA/BOI incentives and special visas for foreign staff, ideal for scalable hubs in ecozones like Cebu or Clark. 

On the other hand, if you are mainly servicing clients within the Philippines (e.g., local apps, fintech for peso users) under 60% exports, you should consider Domestic Market Enterprise. 

Choosing the Legal Entity

To start an IT firm in the Philippines, you should select the right legal business structure. This will dictate your liability exposure, tax flexibility, and ability to scale. For IT firms, the structure must align with your long-term operational goals, whether you are running a lean software development shop or a large-scale BPO. 

Here are the most common legal entity for IT companies in the Philippines:

• Foreign Owned Domestic Corporation: The most common structure for foreigners. It offers limited liability and is eligible for all tax incentives under the CREATE MORE Act. It requires at least one incorporator (who can be a foreigner).
• One Person Corporation (OPC): Ideal for solo tech founders. The OPC has no minimum capital and provides a separate legal personality, though it requires a “Nominee” and “Alternate Nominee” to take over in case the owner is incapacitated.
• Branch Office: This is a Philippine extension of a foreign head office. While it maintains the “brand” of the mother company, the head office is legally liable for all Philippine branch debts. A Branch is subject to the same USD 200,000 capital requirement as a Domestic Market Enterprise (DME).

Appointing Key Officers

Under the Revised Corporation Code (RA 11232), every corporation in the Philippines is required to appoint a Board of Directors. They will serve as the primary governing body, responsible for strategic oversight and ensuring rigorous corporate governance. 

In order to start the foundations of your IT company, you must have the following officers:

1. President: considered the executive head of your organization. They can be foreigners and do not need to be a resident.
2. Corporate Secretary: Must be a Filipino citizen and resident. They are responsible for SEC filings and board minutes.
3. Treasurer: Must be a resident of the Philippines (regardless of citizenship). This is the officer the BIR and banks will hold accountable for financial matters.

 Incorporation Process for IT Firms

Once your structure is finalized, you must proceed with mandatory government registrations. In 2026, these steps will be handled through the SEC’s Electronic Simplified Processing of Application for Registration of Company (eSPARC) and the HARBOR system.

Step 1: SEC Registration and Name Reservation

To start the incorporation process for your IT firm, you must reserve a company name and submit your Articles of Incorporation and Bylaws via eSPARC. Your name must be unique and must end with mandatory suffixes such as “Corporation,” “Incorporated,” “Corp.,” or “Inc.” One Person Corporations must use the suffix “OPC”. You can use our company name search to check for available names in the Philippines. 

Part of the SEC registration process is stating your primary purpose as an IT company with the correct PSIC code. 

Your primary activity must be your main income generating activity, accounting for 50% of total revenues. If your purpose is too vague, the SEC may reject the application or the BIR may misclassify your tax profile.

If you need assistance in reserving a company name with the SEC, Emerhub’s local compliance experts can assist you. 

Step 2: Local Government (LGU) Permitting

After SEC registration, you must obtain local clearances from Local Government Units (LGU) where your office is situated. These permits validate your physical existence within the locale to ensure you comply with local zoning laws and safety standards. 

This is especially important for IT companies since it confirms your office infrastructure. For example, if you have servers rooms and high density workstations, you need to meet the city’s fire and electrical safety codes. 

Here are approvals you need from the LGU:

• Barangay Clearance: A local neighborhood permit proving your presence in the community.
• Fire Safety and Sanitary Permits: These require physical inspections of your office. For IT companies, the focus is on server room safety and adequate ventilation.
• Mayor’s Business Permit: This is the final license to operate within the city.

Step 3: BIR Registration for Tax Compliance

Part of the set up process is to obtain a Certificate of Registration (BIR Form 2303) from  the  Bureau of Internal Revenue (BIR). It outlines every tax type your IT firm is liable for such as Corporate Income Tax (CIT), Value-Added Tax (VAT), and various Withholding Taxes. 

Here are other tax registration and compliance:

• Electronic Invoicing System (EIS): In 2026, most IT companies are mandated to issue e-invoices. This involves integrating your software with the BIR’s central portal to report transactions in real-time.
• Authority to Print (ATP): Even with e-invoicing, you may need a backup Authority to Print for manual receipts in case of system downtime.
• VAT Registration: If your revenue exceeds PHP 3 million, you must be VAT-registered. However, as an IT exporter, you should apply for VAT Zero-Rating, meaning you don’t charge VAT to your foreign clients and can claim a refund for the VAT you pay on local expenses.

Step 4: Opening a Bank Account & Managing Financial Accounts

Opening a corporate bank account is a critical step after SEC registration for IT firms. It enables you to make paid-up capital deposits, tax payments, payroll, and BIR compliance. Foreign-owned IT companies must use a local peso (PHP) account, with USD options for exporters via major banks like BDO, BPI, or UnionBank.

To open a corporate bank account, you must have the following: 

1. SEC Certificate
2. Articles of Incorporation/ By-Laws
3. Notarized Board Resolution authorizing the account and signatories
4. Latest GIS
5. Company TIN
6. 2 valid IDs per signatory (passport/ACR I-Card for foreigners staying >59 days)
7. Lease/utility bill for address
8. Minimum deposit (PHP 25,00 – 500,000).

In general, you would need to visit the bank branch to open a corporate bank account or use digital options like BPI/MSB for pre-approval. As part of our end-to-end incorporation service, Emerhub can be your agent in the Philippines to help you open a bank account. 

Step 5: Labor and Payroll Compliance

Before you hire an employee for your IT company, you must also complete statutory employer registration under the Philippine Labor Code. There are three key agencies you should register as an employer:

• SSS (Social Security System): Register all local IT staff for social insurance covering retirement, disability, sickness, maternity, and unemployment benefits.
• PhilHealth (Philippine Health Insurance Corporation): Enroll employees and dependents in national health insurance for subsidized hospitalization, outpatient care, and medicines, supporting wellness for long-hour coding teams and remote workers.
• Pag-IBIG (Home Development Mutual Fund): Mandatory provident fund providing housing loans and matched savings contributions (employer covers 2% of monthly salary), helping IT professionals afford homes in Metro Manila or Cebu hubs.

To help you with labor compliance, our partners from RecruitGo, can help you onboard IT professionals from software engineers to customer service representatives.

Securing Tax Incentives (PEZA vs. BOI) for Tech & IT

To maximize profitability, your IT firm should register with an Investment Promotion Agency (IPA). These programs are designed to attract FDIs, especially in IT and tech. You can choose between PEZA and BOI depending on your physical office strategy and your remote work policy. 

PEZA Registration (For Ecozone-Based Offices)

The Philippine Economic Zone Authority (PEZA) is for companies that rent space in accredited IT Parks or Buildings. This has historically been the standard for the IT-BPO industry.

• Incentives: 4–7 years of Income Tax Holiday (ITH), followed by a 5% Special Corporate Income Tax (SCIT) on Gross Income.
• Constraint (The 50% Rule): Under the current 2026 framework, PEZA-registered IT firms are generally allowed a maximum of 50% Work-From-Home (WFH). If more than half your staff works remotely, you may lose your tax incentives for that portion of the business.

BOI Registration (For Remote/Hybrid IT Firms)

The Board of Investments (BOI) is now the preferred choice for software companies that do not wish to be tied to a specific IT building.

• Incentives: Similar ITH and Enhanced Deductions as PEZA. While BOI companies usually don’t get the 5% SCIT indefinitely, they can avail of the Enhanced Deductions Regime (EDR), which allows for a 20% income tax rate with massive deductions for labor, power, and training.
• Flexibility: BOI allows for 100% WFH for IT service exporters. This makes it the only viable choice for modern distributed tech teams that do not want to force employees into a physical office in Metro Manila or Cebu.

Emerhub provides comprehensive, end-to-end support for IT founders. We manage your incorporation, tax incentive applications, and ongoing payroll so you can focus on your product.

Tell us about your plans to start an IT company in the Philippines. Fill out the form below for a free consultation with our local compliance experts in the Philippines.