How to Set Up a Regional Operating Headquarters in the Philippines — 2024
There are numerous things you should know for any foreign entity looking to set up a Regional Operating Headquarters (ROHQ) in the Philippines.
What Is a Regional Operating Headquarters in the Philippines?
A Regional Operating Headquarters (ROHQ) is a base set up by a foreign company that can earn an income in the Philippines by performing numerous services in the Philippines and the further Asia-Pacific Region.
However, only foreign corporations with branches, subsidiaries, clients, or affiliates in the region can set up a Regional Operating Headquarters. An ROHQ must also follow the laws of the country in which the company was established. For example, if the company was organized in the United States, the ROHQ should adhere to the laws of the US in regards to formation, existence, and dissolution. As such, it does not follow the laws of the Philippines and is considered an extension of the parent company, which will also be liable for the ROHQ.
Additionally, the parent company must deposit an inward remittance of $200,000 for annual support for operating 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
- Research and product development services
- Technical support
However, an ROHQ can not offer these services to entities other than its own affiliates and subsidiaries. It is also prohibited from soliciting and marketing products and services on behalf of its parent company and other connected entities.
What Are the Incentives for ROHQs in the Philippines?
There are several fiscal and non-fiscal incentives for ROHQs in the Philippines. These include:
- 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)
- 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 only set up their ROHQ in the Philippines once they have secured a License to Do Business from the Securities and Exchange Commission (SEC). To obtain this license, the corporation needs to provide 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. This can also be provided by the Philippine Commercial Office and the Philippine Department of Trade and Industry (DTI) in the company’s home country.
- 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 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
InCorp Can Help You Set Up Your ROHQ in the Philippines
If you are considering setting up an ROHQ in the Asia-Pacific region, InCorp can help you with numerous corporate and business solutions.
We boast over five years of local market expertise in the Philippines and have a team of qualified chartered accountants, lawyers, corporate secretaries, and other professionals. We can help you source a workforce from the local labor pool and assist with any administrative procedures involved in setting up an ROHQ.
If you would like to know more, contact us today.
Frequently Asked Questions
Why would a foreign company set up an ROHQ in the Philippines?
There are several reasons why a multinational corporation might set up an ROHQ in the Philippines. Usually, this is to separate operations and minimize business costs. Additionally, the country offers numerous tax incentives to foreign businesses investing in the Philippines.
How much tax does an ROHQ have to pay in the Philippines?
ROHQs are required to pay 10% income tax on their sources of income in the Philippines. In addition, they must pay 15% branch profit remittance tax on the income remittances to the head company abroad. This is based on 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.
Set Up ROHQ Company the Philippines With Ease
With a full suite of business registration and corporate compliance services, we are dedicated to helping you enjoy a seamless company formation process.