Setting Up a Wholesale or Retail Trade Company in the Philippines
Foreign ownership in Philippine retail used to come with steep capital requirements, mandatory BOI pre-qualification, and a long list of conditions. With the RA 11595 amending the Retail Trade Liberalization Act, retail has never been more accessible to foreigners.
Minimum capital threshold dropped by 80%, pre-qualification requirements are less strict and 100% foreign ownership equity. However, the registration process for companies still requires careful navigation.
In this guide, we will cover how to set up a wholesale or retail trade company in the Philippines. We will cover what is the best structure for foreigners, legal framework, and requirements for wholesale or retail trade.
Wholesale vs. Retail Trade: What's the Difference?
Before diving into the registration process, it helps to understand how Philippine law distinguishes between wholesale and retail trade.
Retail trade refers to the act of habitually selling goods directly to the general public for consumption, regardless of the volume per transaction. It is governed by the Retail Trade Liberalization Act (Republic Act No. 8762, as amended by RA 11595).
On the other hand, wholesale trade involves selling goods in bulk to retailers, industrial, commercial, or institutional users, or other wholesalers. Wholesale trade is generally more open to foreign participation and does not carry the same capital thresholds as retail.
The distinction matters because foreign ownership rules and minimum capital requirements are applied differently to each.
Can Foreigners Own a Trade Company in the Philippines?
Foreigners can own a trade company but it depends on whether you are setting up a wholesale or retail business, and how much capital you intend to invest.
Foreign Ownership in Retail Trade
Under RA 11595 (effective January 2022), foreign nationals and corporations may now own up to 100% of a retail trade enterprise in the Philippines, provided that:
- The foreign retailer has a minimum paid-up capital of PHP 25,000,000 (approximately USD 500,000);
- The foreign retailer's country of origin does not prohibit the entry of Filipino retailers (reciprocity requirement); and
- For foreign retailers operating more than one physical store, the minimum investment per store is at least PHP 10,000,000.
Companies with at least 60% Filipino ownership are exempt from these minimum capital thresholds.
Note: The minimum paid-up capital is subject to review every three years by the DTI, SEC, and NEDA.
Foreign Ownership in Wholesale Trade
Wholesale trade is open to 100% foreign ownership, provided the business meets the general Foreign Investment Act (FIA) requirements. For a foreign-owned domestic market enterprise, the minimum paid-up capital is USD 200,000. This can be reduced to USD 100,000 if the business employs at least 50 direct employees or uses advanced technology as determined by the Department of Science and Technology (DOST).
Corporations with at least 60% Filipino equity have no minimum capital requirement under the FIA for wholesale trade.
| Ownership Structure | Retail Trade | Wholesale Trade |
|---|---|---|
| 60% Filipino / 40% Foreign | No minimum capital required | No minimum capital required |
| 41%–100% Foreign | PHP 25,000,000 min. paid-up capital(+ PHP 10M per store if more than 1 store) | USD 200,000 (or USD 100,000 with 50+ employees or advanced tech) |
Registration Process for Retail Operations in the Philippines
Setting up a wholesale or retail trade company in the Philippines involves registrations with multiple government agencies. Throughout this whole process, Emerhub’s local experts will guide you through the whole setup process. Here is a detailed breakdown of each step.
Step 1: Choosing the Right Business Structure
Foreign investors entering the Philippine trade sector typically register through one of the following structures:
- Domestic Corporation (Subsidiary): A locally incorporated company that is a separate legal entity from its foreign parent. This is the most common structure for foreign-owned retail and wholesale businesses. It can engage in both importing and local trade activities.
- One-person Corporation: allows a single individual to form a corporation without co-shareholders or a board of directors. The sole stockholder serves simultaneously as director and president. An OPC provides limited liability protection and perpetual corporate existence, making it a practical option for solo foreign entrepreneurs entering the trade sector.
- Branch Office: An extension of the foreign parent company that is not a separate legal entity. A branch office can conduct revenue-generating activities in the Philippines. It requires a minimum inward remittance of USD 200,000 as assigned capital.
For most wholesale and retail trade businesses, a domestic corporation or OPC offers the most operational flexibility and is preferred for long-term market entry. The choice between the two comes down primarily to the number of investors: a domestic corporation suits multi-shareholder setups, while an OPC is ideal for a single foreign entrepreneur seeking full operational control.
You can consult with Emerhub’s compliance experts on the best structure depending on your long-term business plan.
Step 2: Securities and Exchange Commission (SEC) Registration
All corporations in the Philippines must register with the SEC. For foreign-owned entities, this step also involves securing a license to transact business in the Philippines (for branch offices) or a certificate of incorporation (for domestic subsidiaries).
An SEC registration gives your company legal personality. It gives you the right to enter into contracts, hire employees, issue receipts, and access rights under Philippine corporate law.
Part of our incorporation service is to help your business register with the SEC via the eSPARC portal. We will submit all the needed requirements including your Articles of Incorporation and By-Laws.
Estimated processing time: 30 working days
Step 3: Local Government Unit (LGU) Business Permit
Once your SEC registration is in place, you must secure a Business Permit (also called Mayor's Permit) from the Local Government Unit (LGU) where your business is physically located. This permit confirms that your business complies with local ordinances, zoning regulations, and safety requirements.
Emerhub will help liaise with LGUs to secure a Mayor’s Permit. We can help submit the LGU application form with supporting documents (SEC certificate, lease contract, barangay clearance, fire safety certificate, sanitary permit, and zoning clearance).
Estimated processing time: 30 working days
Step 4: Bureau of Internal Revenue (BIR) Registration
The Bureau of Internal Revenue (BIR) manages all tax-related matters in the Philippines. Your BIR registration gives your business tax identity and enables you to legally issue official receipts, invoices, and file tax returns.
We will help you apply for a Taxpayer Identification Number (TIN), as well as other BIR registrations such as Authority to Print (ATP) and Certificate of Registration (BIR Form 2303).
Estimated processing time: 14 working days
Step 5: Corporate Bank Account
A dedicated corporate bank account is required for all financial transactions, payroll, and tax payments. For foreign-owned corporations, the Bangko Sentral ng Pilipinas (BSP) certification of inward capital remittance is typically required at this stage.
Some banks may require KYC (Know Your Customer) checks which require a meeting with the bank. Our local consultants can act as your representative and submit all needed requirements for opening a bank account.
Estimated processing time: 30 working days
Step 6: Obtaining Secondary and Provisional Licenses
Emerhub can also help you secure additional licenses depending on your business activities. We can help secure an Import/Export License from the Bureau of Customs (BoC) if you are importing goods directly into the Philippines or exporting products abroad. We can also help you secure a License to Operate (LTO) and a Certificate of Product Registration (CPR) for regulated goods (e.g. food, cosmetics, medical devices, etc).
If you’re ready to enter the retail business in the Philippines, fill out the form for a free first-time consultation with our local compliance officers.
Frequently asked questions
Can a 100% foreign-owned company engage in retail trade in the Philippines?
Under RA 11595 (effective January 2022), fully foreign-owned corporations may engage in retail trade in the Philippines, provided the minimum paid-up capital of PHP 25,000,000 is met and the investor's home country allows Filipino retailers to operate there. This is a significant liberalization from the previous rules, which required minimum paid-in capital of USD 2.5 million and imposed complex prequalification requirements.
What is the difference between paid-up capital and authorized capital stock?
Authorized capital stock is the maximum amount of shares a company is authorized to issue as stated in its Articles of Incorporation. Paid-up capital (or paid-in capital) refers to the portion of the subscribed capital stock that shareholders have already paid in full. Philippine law requires that at least 25% of the authorized capital stock be subscribed, and at least 25% of that subscribed amount be paid-up at the time of incorporation (minimum of PHP 5,000). For foreign-owned enterprises, separate minimum paid-up capital rules apply as described in this article.
Do I need an FDA License to Operate before I can start trading?
Only if your products fall within FDA-regulated categories, such as food, beverages, cosmetics, drugs, medical devices, or tobacco products. If you are trading non-regulated goods (such as clothing, electronics not emitting radiation, furniture, or industrial equipment), an FDA LTO is not required. It is strongly recommended to assess your product portfolio against the FDA's regulated categories before incorporation, as the FDA licensing process can add several months to your launch timeline.
Can a wholesale trade company also sell directly to consumers (retail)?
A company's Articles of Incorporation define its primary and secondary business purposes. If you intend to conduct both wholesale and retail activities, both should be stated as corporate purposes. However, engaging in retail as a foreign-owned entity will trigger the retail trade capital requirements and reciprocity rules under RA 11595. It is advisable to clearly structure your business activities at the outset to ensure regulatory compliance.
What are the annual compliance requirements after incorporation?
Once incorporated, your trade company must comply with the following ongoing requirements: Non-compliance can result in significant penalties and, in serious cases, revocation of business licenses.
How long does the entire registration process take?
When all processes are handled in parallel by experienced professionals, the total timeline from SEC incorporation to receipt of all primary registrations (SEC, BIR, LGU, social institutions, and bank account) is approximately 60 working days. The BIR registration is typically the fastest component at around 14 working days. Secondary licenses such as FDA LTO and BOC accreditation require additional time and should be initiated concurrently where possible.