How to Set Up a Regional Operating Headquarters in the Philippines — 2024
Updated: August 9. 2024
Establishing a Regional Operating Headquarters (ROHQ) in the Philippines entails foreign companies meticulously navigating through a series of essential steps to guarantee a seamless and prosperous setup process. By following the comprehensive guidelines below, businesses can efficiently establish the groundwork for their ROHQ operations in the Philippines:
- What Is a Regional Operating Headquarters in the Philippines?
- How Can a Regional Operating Headquarters Derive Income?
- What Are the Incentives for ROHQs in the Philippines?
- Fiscal Incentives
- Non-Fiscal Incentives
- What Are the Registration Requirements for ROHQs in the Philippines?
- Frequently Asked Questions
What Is a Regional Operating Headquarters in the Philippines?
A Regional Operating Headquarters (ROHQ) is a foreign company based in the Philippines and the Asia-Pacific Region, allowing it to offer services and generate income. Only foreign corporations with regional connections can establish an ROHQ, which operates under the laws of the parent company’s country of origin. The parent company must also provide an annual inward remittance of $200,000 for operational expenses and capitalization.
How Can a Regional Operating Headquarters Derive Income?
An ROHQ can derive income from several services in the Philippines. These include:
- General administration
- Business planning
- Sourcing and procuring components and raw materials
- Marketing and sales promotion
- Training services
- Financial advisory services for corporate business
- Personnel management
- Logistics
- Research and product development services
- Technical support
- Business Development
However, an ROHQ is restricted from providing these services to entities beyond its own affiliates and subsidiaries. Additionally, it is not allowed to engage in soliciting or marketing products and services on behalf of its parent company or other related entities.
What Are the Incentives for ROHQs in the Philippines?
Various fiscal and non-fiscal incentives are available for ROHQs in the Philippines. These include:
Fiscal Incentives
- Local tax, fees, and charges exemption (this does not include real property tax on equipment and land improvement)
- Materials for conferences and training can be imported tax and duty-free
- Brand new motor vehicles can be imported (subject to payment of the relevant taxes and duties)
Non-Fiscal Incentives
- Multiple Entry Visa for expatriates, their spouses, and any unmarried children under 21.
- Expatriates are free for paying via reefs (except administrative costs)
- Expatriates are exempt from securing the Alien Certificate of Registration
- A non-immigrant visa is processed in three working days once requirements have been submitted to the Bureau of Immigration
- Preferential tax rate of 15% on salaries and other forms of compensation available to expatriates.
- Exempt from travel tax
- Household goods and personal items can be imported tax and duty-free.
What Are the Registration Requirements for ROHQs in the Philippines?
Foreign businesses can establish their ROHQ in the Philippines after obtaining a License to Do Business from the Securities and Exchange Commission (SEC). To acquire this license, the corporation must submit the following documentation:
- Application Form
- Philippine Consulate/Embassy certification verifying that the company is engaged in international business and trade with branches and subsidiaries in the Asia-Pacific Region. The Philippine Commercial Office and the Philippine Department of Trade and Industry (DTI) in the company’s home country can also provide this.
- Certification from the Principal Officer of the foreign company confirming that an ROHQ in the Philippines has been authorized by the governing body or the Board of Directors
- Proof that the company has paid inward remittance of US$200,000
- Registration Data Sheet
- If applicable, clearance or endorsement from any relevant government agencies.
- Clearance or endorsement from the Board of Investments
- Latest financial statements demonstrating the head office’s solvency
Allow Us to Assist You in Establishing Your Regional Operating Headquarters in the Philippines
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Frequently Asked Questions
Why would a foreign company set up an ROHQ in the Philippines?
Multinational corporations often establish an ROHQ in the Philippines to streamline operations, reduce costs, and take advantage of the country’s attractive tax incentives for foreign investments.
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Does the parent company need to provide an annual inward remittance for an ROHQ in the Philippines?
Yes, the parent company must provide an annual inward remittance of $200,000 for the ROHQ’s annual support, operating expenses, and capitalization.
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How much is the tax of an ROHQ in the Philippines?
ROHQs are required to pay a 10% income tax on their sources of income in the Philippines. In addition, they must pay a 15% branch profit remittance tax on the income remittances to the head company abroad. This is based on the total profits allocated for remittance. However, this can be reduced if there are any appropriate tax treaties between the Philippines and the country in which the foreign company was established.
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