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Liz Servañez
Liz Servañez serves as Branch Manager in the Philippines.
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Christine Aguilar
Christine Aguilar serves as Head of Operations in the Philippines.
Want to establish an offshore company in the Philippines? Here’s what most foreign entrepreneurs discover the hard way: the country has transitioned from a simple outsourcing destination to a sophisticated global hub for high-value services. For decades, the Philippines has been the “BPO Capital of the World,” but the narrative is shifting toward “Offshore Excellence.” This evolution stems from a potent mix of the country’s vast talent pool, lower operational costs, and seamless compatibility with Western work culture.
However, establishing an offshore company can be challenging. You have to coordinate with multiple agencies including the Securities Exchange Commission (SEC), the Local Government Unit (LGU), and other agencies depending on your business activity. Each of these steps requires precise, often notarized, documentation where even a minor clerical error can cause significant delays.
To help you through this process, we will walk you through how you can set up an offshore company in the Philippines. We will cover regulations and restrictions for foreign-owned entities, different business structures for offshore companies, and the registration process.
Legal Essentials: What Foreign Investors Must Know Before Incorporating
In recent years, the government has moved aggressively to attract foreign direct investment (FDI). The Revised Corporation Code of the Philippines defines what is a foreign corporation and mandates an SEC license for local operation. It integrates with the Foreign Investments Act, supporting exemptions under the FINL for export-oriented setups while enforcing Anti-Dummy Law compliance.
The Revised Corporation Code was also extended to allow One-person Corporations (OPCs). This removes the need for multiple incorporators and minimum paid-up capital (except in regulated sectors) so you can quickly establish 100% foreign-owned firms in permitted industries.
Understanding the Foreign Negative Investment List (FINL)
Foreigners can establish a legal entity in the Philippines but there are some sectors that are restricted to foreign ownership. These restrictions aim to balance FDIs with protecting national interests, local businesses, and constitutional mandates.
Before establishing an offshore company in the Philippines, you must check the Foreign Negative Investment List to ensure you can operate a business within that sector as a foreigner. This list contains all the sectors that are prohibited or restricted to foreign investment. It is divided into two categories:
- List A: Contains sectors where foreign ownership is limited by the Philippine Constitution or specific national laws. These are the most rigid restrictions.
- List B: Contains sectors where ownership is limited for reasons of national security, defense, public health, and morals, or to protect local small-and-medium enterprises (SMEs).
Pro-Tip: Most IT-BPO, SaaS, and offshore service companies fall outside these lists, meaning they are eligible for 100% foreign ownership.
Minimum Paid-up Capital Requirements: How Much Do You Invest?
When establishing an offshore company in the Philippines, you must also meet the financial entry barrier. It demonstrates your commitment as a business and the government’s way to sift out “shell companies” that are at risk for liabilities.
This is the amount that must be actually “paid up” into the company bank account during incorporation. If you don’t register your initial capital remittance to the National Bank (Bangko Sentral ng Pilipinas – BSP), you may face legal hurdles when repatriating profits and dividends.
Under the Foreign Investment Act, foreign-owned companies need US$200,000 (or peso equivalent) in paid-up capital. However, this requirement can be dropped to half (USD 100,00), if you meet the either of these criteria:
- You utilize Advanced Technology certified by the DOST.
- You employ at least 50 direct Filipino employees.
You can be exempt from the minimum paid-up capital requirements if you export at least 70% of your services including offshore BPO and IT services. Your export status must be verified during SEC Registration (often via BOI or PEZA endorsement).
On the other hand, if you plan to enter the retail sector (including e-commerce), the paid up capital is USD 450,000 (~PHP 25 million) under the Retail Trade Liberalization Act.
Choosing The Business Structure for Your Offshore Company
A key step in setting up an offshore company in the Philippines is to determine your business structure. This will determine your legal liability, tax obligations, and your eligibility for state incentives. Changing your entity type mid-stream is legally complex and costly, so alignment with your long-term operational goals is essential.
| Structure | Legal Status & Liability | Operational Capability |
|---|---|---|
| Domestic Corporation / OPC | Separate entity; Parents/Founders are shielded by a “corporate veil.” | Permitted to generate income; ideal for long-term, scalable operations. |
| Branch Office | Extension of parent; Parent company holds full legal liability. | Permitted to generate income; simplifies global brand presence. |
| Representative Office | Extension of parent; Parent company holds full legal liability. | Income Prohibited; restricted to market research and coordination. |
| Regional HQ (RHQ) | Extension of parent; Parent company holds full legal liability. | Income Prohibited; acts as an administrative hub for APAC affiliates. |
| Regional Operating HQ (ROHQ) | Extension of parent; Parent company holds full legal liability. | Restricted Income; can only charge affiliates for “qualifying services.” |
Note on Domestic Corporation: while you have total control as the “Single Stockholder,” the law requires you to appoint a Corporate Secretary and a resident Treasurer. Furthermore, you must designate a “Nominee” and “Alternate Nominee” to take over management should the single stockholder become incapacitated.
Business Structure Navigator
Determine the legal vehicle for your Philippine operations.
Do you intend to generate revenue in the Philippines?
Do you require a “Corporate Veil”?
Is this office serving multiple regional affiliates?
Domestic Corporation / OPC
• Provides a separate legal entity (“Corporate Veil”).
• 100% foreign ownership permitted in most sectors.
Branch Office
• Direct extension of foreign parent company.
• Simpler links for profit remittance (15% BPRT).
Representative Office
• Strictly a cost center; income derivation is prohibited.
• Fully funded by inward remittances from parent.
Regional Headquarters (RHQ)
• Cannot earn income from local or regional sources.
• Administrative supervision of subsidiaries and branches.
Regional Operating HQ (ROHQ)
• Permitted to derive income from “qualifying services” to affiliates.
• Efficient way to centralize backend operations.
How to Establish an Offshore Company in the Philippines
Starting an offshore company in the Philippines requires you to register your company with the SEC as well as obtaining permits from the LGU and other government agencies.
1. SEC Registration
To start the incorporation process, you need to register a business name with the SEC. Your business name should be unique and distinguishable from other existing companies. You can check for existing company names in the Philippines for free with Emerhub.
Here is a checklist of what you need to register your company:
- Name Verification Slip
- Articles of Incorporation (AOI) & By-Laws
- Treasurer’s Affidavit: Certifying that the minimum paid-up capital has been received.
- SEC Form F-100
- Proof of Inward Remittance
- Apostilled/Consularized IDs for all foreign incorporators (typically legible passport copies).
- Board Resolution (If the incorporator is a parent company)
- Tax Identification Number (TIN)
2. Local Government Unit (LGU) Permits
To legally operate an offshore company, you must obtain approvals from the local municipality where your organization will be physically located. This localized licensing process ensures that your business complies with specific community standards and safety regulations. To secure your right to operate locally, you must obtain two primary documents:
- Barangay Clearance: serves as a community-based permit confirming that your business activity is recognized by the local neighborhood authorities.
- Mayor’s Permit (Business Permit): a comprehensive license issued by the City Hall. Obtaining it is often the most time-consuming part of the LGU stage because it involves a multi-departmental gauntlet of inspections. Your office space must pass rigorous checks for
- Fire safety: ensuring adequate exits and extinguishers
- Sanitary conditions: health department approval
- Zoning: verifying that your building is legally designated for commercial or IT-BPO use
Failure to secure this permit renders your SEC-registered company “inactive” in the eyes of the law, preventing you from legally issuing receipts or hiring a local workforce.
3. BIR (Bureau of Internal Revenue) Registration
With your Mayor’s Permit secured, you must officially enter the Philippine tax system by registering with the Bureau of Internal Revenue (BIR). During this step, you need to secure a corporate Tax Identification Number (TIN) and receive your Certificate of Registration (Form 2303).
Furthermore, this is where you satisfy the mandatory requirement of registering your Books of Accounts (manual, loose-leaf, or computerized) to ensure transparent financial tracking. Crucially, the BIR is where you obtain the Authority to Print (ATP) your official invoices and receipts.
In the Philippines, you cannot legally collect service fees from offshore clients or issue valid commercial invoices without these BIR-stamped documents. Operating without them exposes your offshore venture to severe penalties and can lead to the “disallowance” of your business expenses during an audit.
4. Statutory Employer Registration
If you are hiring Filipino employees, you are legally required to register as an employer with the following government agencies:
- SSS (Social Security System): Provides a comprehensive social insurance program covering contingencies such as retirement, disability, sickness, and maternity benefits for all your local employees.
- PhilHealth (Philippine Health Insurance Corporation): Delivers mandatory medical insurance coverage. This ensures your employees and their legal dependents have access to subsidized hospitalization and outpatient health benefits.
- Pag-IBIG (Home Development Mutual Fund): A national provident savings fund designed to provide employees with affordable housing loans. It also serves as a long-term savings vehicle through employer-matched contributions.
5. Bank Account Opening
To manage finances locally, you must open a corporate bank account for your offshore company. To successfully open a corporate account, you must present a comprehensive dossier of original documents. This includes your SEC Certificate of Incorporation, Articles of Incorporation, By-Laws, and your approved Mayor’s Permit. Philippine banking institutions maintain exceptionally rigorous “Know Your Customer” (KYC) protocols, driven by strict local Anti-Money Laundering (AML) regulations. Some well-known banks in the Philippines are BPI, MetroBank, Land Bank of the Philippines, and BDO.
To start an offshore company in the Philippines, you must have prior knowledge of the country’s business and corporate landscape. With 14+ years of experience, Emerhub’s local experts can guide you through the incorporation process. We can help liaise with multiple government agencies and arrange all the necessary documentation for all the needed permits and approvals.
Tell us about your plans to expand your business in the Philippines. Fill out the form below for a free consultation with our local experts!
FAQs About How to Set Up an Offshore Company
Under the 1987 Philippine Constitution, land ownership is strictly reserved for Filipino citizens and corporations that are at least 60% Filipino-owned. However, for offshore operations, this is rarely a dealbreaker.
Under the Investor’s Lease Act, a foreign-owned company can enter into a long-term lease agreement for up to 50 years, which is renewable for another 25. This 75-year window provides the long-term security needed for major capital investments. Furthermore, while you cannot own the land, you can own the building, improvements, or specific office units (condominiums) outright, provided that the foreign interest in the condominium project does not exceed 40%.
Yes, the 13th-month pay is a non-negotiable legal mandate under Presidential Decree No. 851. It applies to all rank-and-file employees (non-managers) regardless of their designation or employment status. The amount must be at least 1/12 of the employee’s total basic salary earned within the year and must be paid no later than December 24th.
While a “fast-track” setup is technically possible, a realistic timeline for a fully compliant offshore entity is 2 to 4 months. This accounts for the “wait times” associated with different government agencies and the lead time required for the Apostille or Consularization of foreign documents.
- Bank & Statutory Social Agencies: 2–4 weeks (KYC verification is the primary bottleneck here).
- SEC: 1–2 weeks (after name approval).
- LGU (Barangay & City Hall): 2–4 weeks (varies significantly by city, with Makati and Taguig having efficient digital systems).
- BIR: 2 weeks (requires physical presence for interview and briefing).
Under the Revised Corporation Code, you do not need all directors to be residents, but you must appoint key resident officers for legal accountability. Specifically, the Corporate Secretary must be a Filipino citizen and a resident of the Philippines to handle fiduciary duties and service of summons.
The Treasurer does not have to be a Filipino citizen, but they must be a Philippine resident. These resident roles ensure that the government has a local point of contact for tax compliance and legal responsibilities, even if your main board of directors is based entirely overseas.
Yes, provided you follow the proper “exit strategy” from the start. To send dividends and profits home via the official banking system, you must register your initial capital and subsequent inward remittances with the Bangko Sentral ng Pilipinas (BSP) to obtain a Bangko Sentral Registration Document (BSRD).
This document is essentially your “permission slip” to purchase foreign currency from local banks to remit funds abroad. Without a BSRD, you may find yourself restricted from legally moving large sums of money out of the country, making early coordination with your commercial bank a critical component of your financial setup.
