How to Set Up a Branch Office in the Philippines — 2024 Guide
Do you seek to operate a branch office in the Philippines? This article will discuss everything you need to know about the requirements, process, cost, and benefits of registering a branch office in the Philippines.
- What is a Branch Office?
- What are the requirements for a Branch Office in the Philippines?
- How much is the Initial Capital Deposit?
- What are the steps for Registering a Branch Office?
- How long will it take to register a Branch Office in the Philippines?
- What are the benefits of operating a Branch Office?
- FAQs about Branch Office
Branch Office in the Philippines
A branch office is an extension of a parent company that operates in a different location, often in a foreign country. Unlike a subsidiary, which is a separate legal entity, a branch office remains legally and financially connected to its parent company.
This means any liability incurred by the branch office will be the responsibility of the head office. While the daily operations of a branch office in the Philippines are still run by the head office, it must still operate under the laws and regulations of the Philippines.
Requirements Before Operating a Branch Office
Prior to branch office operations you may need to prepare for the following to ensure that you will run a lawful business.
- Board Resolution and Authorization. A board resolution from the parent company authorizing the establishment of the branch office in the Philippines, including the appointment of a resident agent.
- Articles of Incorporation and Bylaws. Authenticated copies of the Articles of Incorporation and Bylaws of the company, translated into English if necessary.
- Resident Agent. A resident agent must be appointed by the parent company to receive notices and legally act on its behalf with its transactions in the Philippines. The resident agent can be either an individual residing in the Philippines or a domestic corporation.
- Financial statements. Authenticated copy of the audited financial statements of the parent company for the past year, translated into English if necessary.
- Initial Capital Deposit. A deposit of the required initial capital into a local bank account.
- Corporate Bank Account. You must open a corporate bank account in the Philippines.
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Initial Capital Deposit for a Branch Office
The minimum paid-up capital requirement for a branch office in the Philippines is US$200,000. However, this amount can be reduced to US$100,000 if the branch engages in advanced technology or employs at least fifty local workers. For branches intending to operate as Domestic Market Enterprises (DMEs) solely selling products and services within the Philippine market, the capitalization requirement remains US$200,000.
However, if the branch plans to be an export-oriented business that exports 60% or more of its total revenue, it is exempt from the US$200,000 minimum paid-up capital requirement and can register with as little as PHP5,000 or US$100.
Steps for Registering a Branch Office in the Philippines
- Submit the following required documents to the Securities and Exchange Commission (SEC)
- Application form for registration of a foreign corporation
- Intended Business Name
- Articles of Incorporation and By-Laws of the parent company
- Board resolution authorizing the establishment of the branch office
- Financial statements of the parent company, audited by an independent auditor
- Proof of inward remittance of the required capital
- Acquire a license to do business as a branch office from the SEC.
- Open a local bank account of the branch office.
- Register with the Bureau of Internal Revenue (BIR), Secure a Tax Identification Number (TIN), and register books of accounts and official receipts.
- Register the branch office with the labor welfare agencies such as the Social Security System; Department of Labor and Employment; Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (HDMF) to ensure employee coverage with the agencies’ programs and coverage.
Requirements and registrations may vary depending on the specific industry the branch office is engaged in. It is imperative to comply with the submission of the above along with additional requirements, if any, to ensure the seamless operations of the branch office.
Registration of a Branch Office Estimated Timeline
The timeline of the registration of a branch office is estimated to be approximately a minimum of 12 weeks from the submission of complete requirements. weeks. This will depend on the completeness and orderliness of documents submitted and the timeliness of the evaluation and processes of the different government agencies.
Advantages of Operating a Branch Office
- Streamlined Management. A branch office is an extension of the parent company with this, the corporation will have a more centralized management and simplified decision making.
- Plenty of Tax Benefits. Branch offices may benefit from favorable tax treatments, such as eligibility for income tax holidays when registered with the Investment Promotion Agencies (i.e. PEZA, BOI and freeport zones), reduced corporate tax rates, access to availment of double taxation treaties, and fewer tax responsibilities for the parent company.
- Cost-Effective. Setting up a branch office requires lower setup and operational costs compared to establishing a new corporate entity.
- Operational Flexibility. A branch office can be easier to relocate or close in any case the business environment changes or other reasons.
- Easier Operation Set Up. Setting up a branch office involves less regulatory complexities compared to an incorporated subsidiary.
Related Read: Exploring Different Investment Options in the Philippines
Let Us Assist You in Setting Up Your Branch Office in the Philippines
If you have any inquiries or concerns regarding branch office registration, you may reach us and our experienced business consultants are dedicated to helping you expand your business beyond borders.
Frequently Asked Questions
What is a foreign branch office?
A foreign branch office is an extension of a company in a foreign country, typically permitted to carry out the parent company’s business activities within that country.
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What is the difference between a branch office and a subsidiary?
A branch office is not a distinct legal entity from the parent company. In contrast, a subsidiary is an independent legal entity, although it is usually fully owned by the parent company.
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Is a branch office considered a separate legal entity?
A branch office is not a separate legal entity from the head office or parent company, meaning any liabilities incurred by the branch office are the responsibilities of the head office or parent company.
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What is the minimum paid-up capital when establishing a branch office in the Philippines?
The minimum paid-up capital when establishing a branch office is US$200,000. For export-oriented (60% of gross sales) – usually at least ₱5,000. However, it will still vary depending on the industry of the business.
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What are the requirements of a resident agent in a branch office in the Philippines?
A resident agent can be a local resident, a domestic corporation, or a foreign national with a valid Philippine Visa.
Author
Hello!
I have a client from Japan and Singapore who is interested in setting up a branch office in PH.
The branch office is meant to support remote research and admin tasks. Some executive search work in country may also be possible in the future.
In line with that, may we request for your quotations for below two options:
1. Set up of foreign branch office
2. Set up of local bpo office
Locations being checked on are Manila, Cebu and Boracay.
Thank you!
Hi Francine,
Thank you for your inquiry. We have also received your question via the contact form. Our team will respond to you as soon as possible.