How to Set Up a Domestic Corporation in the Philippines — Guide 2024

Updated: June 14, 2024

Are you looking to start a business in the Philippines? This article will cover the necessary requirements, the steps for registration, and the tax responsibilities of a domestic corporation.

• What is a Domestic Corporation? 
• What are the Different Types of Domestic Corporations in the Philippines? 
• What is the Organizational Structure of a Domestic Corporation?
• What are the officer requirements for a Domestic Corporation in the Philippines? 
• What are the Documentary Prerequisites for a Domestic Corporation? 
• What are the Steps in Registering a Domestic Corporation? 
• What are the Minimum Capital Requirements for a Domestic Corporation? 
• What are the Tax Responsibilities of a Domestic Corporation?
• FAQ’s about Domestic Corporation

Domestic Corporation in the Philippines

A domestic corporation in the Philippines is a business entity incorporated under Philippine laws. Operating within the country, it is subject to local regulations and taxation. Domestic corporations can engage in a wide range of business activities, including business process outsourcing (BPO), manufacturing, retail, services, trade, power, and internet services, to name a few.

Different Types of Domestic Corporations

Following the Philippine Foreign Investments Act of 1991, a domestic corporation can have any of the following equity structures:

• A domestic corporation with no foreign equity (100% Filipino-owned)
• A domestic corporation with less than 40% foreign equity
• A foreign-owned domestic corporation with more than 40.01% foreign equity

The foreign equity structure is determined by the nationality of the shareholders of the domestic corporation.

While 100% Filipino-owned domestic corporations can freely operate in any economic activity or industrial sector, domestic corporations with foreign ownership either have limitations or are restricted from participating in economic activities included in the Philippine Foreign Investments Negative List (FINL).

Organizational Structure of a Domestic Corporation

Similar to a traditional PLC or LLC, a domestic corporation in the Philippines has the following organizational requirements:

• Upon the passage of the Revised Corporation Code, domestic corporations must have at least two (2) up to (fifteen) 15 incorporators and/or directors forming the corporation. The incorporators can now be natural and/or juridical persons-local or foreign, subject to the current FINL. Each incorporator or director must hold at least one capital stock share. In all cases, however, there must be at least two directors who are natural persons.
• Generally, Philippine residency is no longer required for the incorporators and/or directors.  However, the extent of Filipino ownership and or foreign equity under the foreign investment rules still apply.

Officer Requirements for a Domestic Corporation

A domestic corporation in the Philippines must have at least three key officers:

• President: May be a non-resident but must be a director holding at least one share.
• Treasurer: Must be a resident of the Philippines.
• Corporate Secretary: Must be both a citizen and resident of the Philippines.
• In compliance with the Anti-Dummy Law, all of the corporate officers in a majority Filipino-owned corporation are required to be Filipino citizens. Election of foreigners as members of the board of directors should be in proportion to their allowable participation or share in the capital of the corporation.

Documentary Requirements for Registering a Domestic Corporation

Articles of Incorporation

• The domestic corporation’s name
• Business purposes of the domestic corporation
• The principal address of the corporation, which may either be a physical or virtual office.
• The names, nationalities and addresses of the incorporators and the total number of incorporators (there must be at least two incorporators)
• The names, nationalities and addresses of the initial directors, as well as the total number of directors (there must be at least two directors)
• The Authorized Capital Stock of the domestic corporation.
• The total amount of subscribed and paid-up share of stocks of the corporation.  Note: Under the Revised Corporation Code, no minimum amount of the Authorized Capital Stock is required to be actually subscribed and paid-up.

Shareholder Information

• Copies of the foreign shareholders’ passports
• Philippine Tax Identification Number (TIN) of the shareholders of the corporation
• Two valid forms of identification for each of the shareholders

Internal Rules and Bylaws of the Domestic Corporation

The domestic corporation must establish written rules for the election of board directors and officers, as well as guidelines for general meetings. The bylaws should also detail the specific roles and expectations for each officer.

Steps in Registering a Domestic Corporation

• Register the domestic corporation’s name with the Securities and Exchange Commission (SEC). The domestic corporation’s name cannot be one which is already in use or be deemed to be obscene, misleading, or inappropriate.
• Register the domestic corporation with the appropriate Local Government Unit (LGU) to acquire:
  • A Mayor’s Permit from the Mayor’s Office
  • Barangay Clearance
  • A Business Permit from the Business Permit and Licensing Office (BPLO) of the relevant Municipal/City Hall
• Acquire the Corporate Taxation Registration from the Bureau of Internal Revenue (BIR).
• Register the domestic corporation as an employer and each of their employees to the following labor welfare agencies  :
  • Department of Labor and Employment
  • Philippine Health Insurance Corporation (PhilHealth) health insurance
  • Home Development Mutual Fund (HDMF or Pag-Ibig Fund) housing loan benefits
  • Social insurance from the Social Security System (SSS)

Minimum Capital Requirements for a Domestic Corporation