Guide to Registering A Manufacturing Company in the Philippines

Setting up manufacturing operations in the Philippines combines strategic proximity with other ASEAN trading hubs, along with several business incentives to promote growth potential. In this guide, we’ll explore the capital requirements, necessary licenses, and registration steps for starting a manufacturing company in the Philippines.

Manufacturing Company Benefits and Incentives

One of the major incentives for manufacturing in the Philippines is the country’s Export Processing Zones (EPZ). Goods that are manufactured, imported, or exported within these designated areas in the Philippines are exempt from customs fees and duties. These zones also offer incentives like tax holidays and duty-free importation of raw materials.

Companies operating within an EPZ in the Philippines are given extra benefits and incentives. This includes tax holidays and exemptions on duties for importing raw materials. The specific benefits that apply to your manufacturing company are determined by the special economic zone’s oversight agencies:

Philippine Economic Zone Authority (PEZA) Incentives

PEZA is a government agency under the Department of Trade and Industry (DTI) created to encourage foreign investors to set up a business in the Philippines. This agency offers fiscal and non-fiscal incentives for foreign companies which include:

Fiscal Incentives	Non-Fiscal Incentives
Income Tax Holiday (ITH): Qualified companies are exempted from income tax for up to 8 years depending on their project classification Duty-Free Importation: Exempted from duties on imported raw materials and capital equipment Special Corporate Income Tax Rate: A reduced rate of 5% based on gross income after the ITH period.	Simplified customs procedures Employment of non-resident foreign nationals Special visas with multiple entry privileges are extended to spouses and families.

Board of Investments (BOI) Incentives

The Board of Investments incentives are designed to attract investments targeted in the Philippines like the IT and the Research and Development sectors. Their fiscal incentives are similar to incentives offered by PEZA which include:

Fiscal Incentives

Non-Fiscal Incentives

Income Tax Holiday (ITH): Eligible businesses are exempted from income tax for up to 6 years Local Business Tax Exemption: Exemption for 4 to 6 years from local business tax depending on the project classification Duty-Free Importation: Can import capital equipment, spare parts, and accessories without incurring duties Tax Credits: Available for raw materials and supplies Extra Deductions: Businesses can receive extra deductions from taxable income for labor expenses and infrastructure investments

Simplified customs procedures Employment of non-resident foreign nationalsImportation of consigned equipment for up to 10 years Bonded manufacturing or trading warehouses can be used to defer duties for imported goods until they are sold or used in production

Key Requirements For Setting Up A Manufacturing Company in the Philippines

Minimum Capital Requirements for Manufacturing Operations

The minimum capital requirements for setting up a manufacturing company in the Philippines depend on the level of foreign ownership and the market orientation of the business:

• For manufacturing companies with 40% or less foreign ownership: The minimum paid-up capital is USD 100
• For manufacturing companies with more than 40% foreign ownership: The minimum paid-up capital is USD 200,000 for a Domestic Market Enterprise where less than 60% of production is exported. However, for export Market Enterprises where at least 60% of production is exported, there’s no minimum capital requirement
• Special cases for manufacturing companies with more than 40% foreign ownership: If the company employs at least 50 direct employees or involves advanced technology (as certified by the Department of Science and Technology), the minimum paid-up capital can be reduced to USD 100,000.

Mandatory Licenses and Permits for operating A Manufacturing Company

When establishing a manufacturing company, you must obtain different licenses and permits depending on your targeted industry. Below you’ll find some of the most commonly required  licenses for ensuring compliance with local manufacturing regulations in the Philippines:

• License to Operate (LTO): Mandatory for food manufacturers to ensure compliance with health and safety standards.
• Certificate of Product Registration (CPR): Required for each product that is manufactured to certify that it meets safety and quality standards.
• DTI Registration: Sole proprietorship companies must register with the DTI and get their business name certified. Corporations and partnerships require registration with the Securities and Exchange Commission (SEC).
• Mayor’s Permit: Mandatory for all businesses operating within the Philippines.
• Environmental Compliance Certificate (ECC): Obtainable from the Department of Environment and Natural Resources (DENR). To ensure businesses comply with current environmental laws.
• Department of Labor and Employment (DOLE) Certification: Companies employing five or more employees in the Philippines are required to register with the Department of Labor and Employment for both employer and employees.

How to Register a Manufacturing Company in the Philippines?

Emerhub’s team of experts can assist you with gathering the necessary documentation, liaising with local officials, and obtaining all the permits or licenses to efficiently navigate the process of registering your manufacturing company in the Philippines:

1. Register with the Securities and Exchange Commission (SEC) and secure a Certificate of Incorporation.
2. Register with the Bureau of Internal Revenue (BIR) for taxation and invoicing. 
3. Obtain mandatory and operations-specific licenses such as the Mayor’s Permit, Environmental Compliance Certificates, etc. as mentioned above. We will advise you on the necessary licenses and permits based on your planned business activities and acquire them on your behalf.
4. Open a corporate bank account by submitting an application form with the required documents at your preferred bank. We can handle this process for you and liaise with the local banks for a smooth process.
5. Register your employees with the local governing authorities. This includes Phil-Health, the Department of Labor and Employment, Pag-IBIG, and Social Security Systems (SSS).

Interested in starting a manufacturing company in the Philippines? Fill out the form below and one of our local consultants will get back to you as soon as possible.