When you fill out a registration form to incorporate a business in the Philippines, you need to find out your "Industrial Classification" or your PSIC code. The PSIC code helps categorize your business and determines your business’ legal and financial trajectory. Selecting the wrong code can lead to costly delays, unnecessary regulatory hurdles, or even legal complications.
In this guide, we’ll break down what you need to know about PSIC 2019. We will focus on how to best select PSIC codes and how to find the right code for your business activity. We will also cover how it directly impacts your business from foreign ownership qualification under the Foreign Negative Investment List (FINL) to tax compliance.
Understanding What is PSIC
The PSIC is a hierarchical system that categorizes economic activities in the Philippines regulated by the Philippine Statistics Office (PSA). It is used by multiple government and non-government agencies to identify what kind of business activities your company is involved in.
It organizes industries into a five-level hierarchy based on the type of productive activity, modeled after the UN's International Standard Industrial Classification (ISIC Rev. 4). It includes:
- 21 broad sections (lettered A-U)
- 88 divisions (two-digit codes like 01)
- 245 groups (three-digit codes)
- 519 classes (four-digit codes)
- 1,360 sub-classes (five-digit codes)
For example, when you register a software business with the SEC, you must select the right PSIC code (in this case, 62011 “Software Development Services). This code is then encoded into your Articles of Incorporation under your "Primary Purpose”. It will determine how your business will be taxed and what local government permits you will need.
Identifying your Primary vs. Secondary Activities
Your company’s PSIC code should best describe the main activity of your company. Your primary activity serves as your core classification and is the first thing regulators check during audits or permit renewals.
As per PSA guidelines, your primary activity should be contributing over 50% of total output or receipts. For example, a firm milling rice and wholesaling it selects "rice milling" (e.g., PSIC 10611) if milling dominates revenue.
On the other hand, secondary activities are additional lines of business performed by the same entity but not dominant. During the registration process, you must also list these secondary activities. It supports statistical tracking but does not define your core classification.
While it may seem like the easiest pathway, you must avoid choosing a "not elsewhere classified" (n.e.c.) code. This is a catch-all category used for economic activities or businesses that don't fit precisely into any other defined code within the classification system. It often triggers more scrutiny from regulators and government agencies such as the BIR or the SEC.
Breaking Down PSIC 2019 Hierarchical Levels
As covered earlier, PSIC is a hierarchical system that breaks down from broad sectors to niche activities. It allows for precise identification from general sectors to specific activities.
To illustrate how a PSIC code works, here is the full hierarchy of a rice milling company:
- Section: C (Manufacturing)
- Division: 10 (Manufacture of food products)
- Group: 106 (Grain milling)
- Class: 1061 (Rice/corn milling)
- Sub-class: 10610 (Rice/corn milling, including husked, milled, polished, glazed, parboiled or converted rice; production of rice flour; corn milling)
Codes are numerical and build progressively. A division code like "10" expands to group "101," class "1010," and sub-class "10101," allowing precise identification from general sectors to specific activities.
Sections (Alpha Codes)
These represent the broadest economic sectors, labeled from A to U. Choosing the correct Section is the critical first step in filtering out irrelevant regulations and identifying the general regulatory framework your business belongs to. For example, Section J covers "Information and Communication," while Section G covers "Wholesale and Retail Trade."
The table below outlines the 21 major sections of the PSIC 2019:
| Section | Description |
|---|---|
| A | Agriculture, Forestry, and Fishing |
| B | Mining and Quarrying |
| C | Manufacturing |
| D | Electricity, Gas, Steam, and Air Conditioning Supply |
| E | Water Supply; Sewerage, Waste Management and Remediation Activities |
| F | Construction |
| G | Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles |
| H | Transportation and Storage |
| I | Accommodation and Food Service Activities |
| J | Information and Communication |
| K | Financial and Insurance Activities |
| L | Real Estate Activities |
| M | Professional, Scientific, and Technical Activities |
| N | Administrative and Support Service Activities |
| O | Public Administration and Defense; Compulsory Social Security |
| P | Education |
| Q | Human Health and Social Work Activities |
| R | Arts, Entertainment, and Recreation |
| S | Other Service Activities |
| T | Activities of Households as Employers |
| U | Activities of Extra-territorial Organizations and Bodies |
Divisions and Groups (Numeric)
These numeric codes narrow the field further within each section. Under Section J, for instance, you might find Division 62, which focuses specifically on "Computer Programming, Consultancy, and Related Activities." This level begins to separate general IT support from high-level software engineering or systems integration.
Here are some examples of sections with different divisions:
| Section | Division | Industrial Description |
|---|---|---|
| C | 10 | Manufacture of Food Products |
| C | 21 | Manufacture of Basic Pharmaceutical Products and Pharmaceutical Preparations |
| F | 41 | Construction of Buildings |
| G | 46 | Wholesale Trade, except of Motor Vehicles and Motorcycles |
| G | 47 | Retail Trade (except Motor Vehicles) |
| I | 56 | Food and Beverage Service Activities (Restaurants and Catering) |
| J | 62 | Computer Programming and Consultancy |
| K | 64 | Financial Service Activities, except Insurance and Pension Funding |
| L | 68 | Real Estate Activities |
| M | 69 | Legal and Accounting Activities |
| M | 70 | Activities of Head Offices; Management Consultancy Activities |
| N | 78 | Employment Activities (Recruitment and Staffing) |
| N | 82 | Office Admin and Support Activities (BPOs and Call Centers) |
Classes and Sub-classes (5-digit codes)
This is the granular level required for official BIR and SEC registrations. A specific 5-digit code tells regulators exactly what your day-to-day operations look like.
To illustrate the hierarchical nature of PSIC codes, below are the 5 most common sub-classes frequently used by new businesses:
| Section | Division | PSIC Code | Industry Class / Sub-class |
|---|---|---|---|
| J | 62 | 62011 | Software Development Services |
| J | 62 | 62020 | Computer Consultancy Activities |
| M | 70 | 70200 | Management Consultancy Activities |
| N | 82 | 82200 | Activities of Call Centers |
| G | 47 | 47111 | Retail Sale in Non-specialized Stores (Sari-sari stores) |
| G | 47 | 47913 | Retail Sale via Internet (E-commerce) |
| I | 56 | 56102 | Cafeterias, Cafes, and Coffee Shops |
| L | 68 | 68110 | Real Estate Buying, Selling, Renting, Leasing and Operating |
| N | 78 | 78100 | Activities of Employment Placement Agencies |
For more information about specific PSIC Codes 2019, get in touch with our local experts in the Philippines.
How Your PSIC Codes Impact Your Business
Your PSIC code directly establishes the regulatory and operational framework your business must follow in the Philippines. This code is essentially how government agencies will view your company based on your business activity. Each code has its own set of rules and regulations to follow, from foreign equity restrictions to tax obligations.
PSIC and the Foreign Investment Negative List (FINL)
For foreigners, your PSIC code directly affects foreign equity following the Foreign Investment Negative List (FINL). If your PSIC code falls within a restricted category, the SEC will strictly enforce the corresponding ownership caps within those sectors. For instance:
- Retail Trade: If your PSIC code falls under retail, you are subject to the Retail Trade Liberalization Act. This requires a minimum paid-up capital of PHP 25 million for foreign-owned entities.
- Mass Media: Strictly reserved for Filipino citizens. If your PSIC code suggests any form of mass media, a 100% foreign-owned company will be rejected at the SEC level.
- Recruitment: Reserved for 75% Filipino-owned entities.
Choosing a PSIC code that’s within the same umbrella of a restricted industry can lead to your registration being delayed or denied. At Emerhub, we carefully review your intended activities to ensure your PSIC code accurately reflects your business while remaining compliant with ownership laws.
Impact on Local Business Taxes (LBT)
Your PSIC code affects how much Local Business Tax (LBT) applies when renewing your Mayor's Permit. The tax rate is often determined by your PSIC classification, which varies depending on the nature of the industry.
As an example, manufacturers are often taxed at a lower rate per thousand pesos of sales to encourage local production, whereas Retailers typically face higher rates.
Misclassifying your business into a "Non-Essential" or higher-tax category can result in years of overpayment. Furthermore, if LGU assessors during the annual renewal (Business One-Stop Shop) find that your revenue streams do not match your declared PSIC code, they may unilaterally reclassify your business. This can lead to tax assessments, surcharges, and interest.
Compliance with the BIR and Regulatory Reporting
Your PSIC code also determines the specific tax type applicable to your business. When you register with the BIR, your PSIC code is encoded into your Certificate of Registration (COR or Form 2303). The BIR uses your PSIC code to define your tax profile and establish benchmarks for compliance.
This, in turn, affects the following:
- Tax Audit Risk: The BIR uses industry-specific benchmarks (e.g. profit margins and cost-of-sales ratios) for every PSIC category. If your financial reports deviate from the standard for your specific PSIC code, the BIR’s risk-based assessment system is more likely to flag your entity for a tax audit or an investigation.
- Withholding Tax Rates: Your industry classification determines which Expanded Withholding Tax (EWT) rates apply to your transactions. Certain industries, such as professional services or contractors, have specific withholding requirements that are triggered by their PSIC classification.
- Statistical and Regulatory Reporting: As your business grows, you may be required to participate in the Annual Survey of Philippine Business and Industry (ASPBI). The nature of the survey and the specific data points required are based entirely on your PSIC code.
For businesses seeking 0% VAT rating (such as exporters or BPOs), your PSIC code serves as primary evidence of your eligibility for such tax treatments.
At Emerhub, we look at your business model, your long-term goals, and your ownership structure to ensure that your PSIC code matches your business activity. Our end-to-end incorporation service is tailored to your needs in the Philippines.
Need help navigating Philippine compliance? Whether it's PSIC codes, SEC registration, or tax optimization, Emerhub is your partner in the Philippines. Fill out the form for a free consultation.
Frequently asked questions
Where can I find the full list of PSIC 2019 codes?
The official list is maintained by the Philippine Statistics Authority (PSA). You can access their interactive search tool on the PSA website. However, be aware that the search tool often requires specific keywords that match their technical definitions. You can also send us an email for more information about PSIC codes in the Philippines.
Can I change my PSIC code after my business is already registered?
Yes, you can. However, it’s not as simple as just editing a form. Changing your primary PSIC code usually involves amending your SEC or DTI registration (if the nature of the business changes) and then updating your records with the BIR and your Local Government Unit. It is best to do this during your annual renewal or during a major corporate restructuring.
What happens if I choose a PSIC code that is on the Negative List by mistake?
If you are a 100% foreign-owned company and you select a PSIC code that is reserved for Filipinos (like certain types of small-scale retail or advertising), the SEC will likely flag your application during the pre-processing stage. You will be required to either change your business purpose or change your ownership structure to comply with the law.
Does my PSIC code affect my eligibility for BOI or PEZA incentives?
Absolutely. Both the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA) have specific "priority sectors" listed in the Strategic Investment Priority Plan (SIPP). Your eligibility for tax holidays and other incentives is directly tied to whether your PSIC code falls under these prioritized activities.
Is the PSIC the same as the PSCC?
While they sound similar, the PSIC classifies industries (what your business does), while the PSCC (Philippine Standard Commodity Classification) classifies products and commodities (what you are importing or exporting). If you are involved in trading, you will likely need to deal with both.
Do I need a different PSIC code for every branch I open?
Generally, no. If your branches are doing the same activity as your head office, they will use the same PSIC code. However, if you open a new branch that engages in a completely different line of business (e.g., your head office is a consultancy, but your branch is a restaurant), you will need to register that specific activity with the LGU and BIR for that location.