What is a representative office?
A representative office is foreign-owned corporation, organized and existing under foreign laws. It cannot derive income within the Philippines and is fully financed by the foreign corporation. Its main purpose is to deal directly with the clients of the parent company to conduct information dissemination, setup communication centers, and market company products. It may be used to provide customer service and support to the company and its products.
A representative office may also act as a quality control center of the products for an export-oriented company, making it an ideal business structure in the Philippines for any company looking for a customer service or marketing center.
A Philippine representative office is a cost center and it is not allowed to earn income in the Philippines, thus, exempted from 30% income tax and 12% value added tax. It is however subject to withholding taxes on its income payments and compensation.
To support its operation in the Philippines, it is required an initial capitalization of US $30,000 to be inwardly remitted to the Philippines. And a resident agent is appointed on whom summons and other legal processes against the same may be serve in all actions or other legal proceedings against the Company.
Registration requirement to SEC:
- Reserve Name from SEC
- Authorized Board Resolution for the creation and establishment of the office in Philippines
- Latest audited financial statements of the parent company certified by an independent certified public accountant and authenticated by the Philippine consulate or embassy.
- Authenticated copies of the Articles of Incorporation and By-Laws of the parent company with an English translation, if in the foreign language.
- Authorized resident agent for the Philippine office (must have Filipino residency)
- Certified remittance of minimum paid-up capital to local bank of the US $30,000.
- Obtained licenses and clearances from necessary government offices
- Resident agent acceptance of appointment, unless the agent is the signatory in the appliction form.
- Affidavit executed by the President or Resident Agent stating that the applicant is solvent and sound in its financial condition.
SEC will assign a tax identification number (TIN) upon release of License to do Business in the Philippines and the TIN shall be registered to Bureau of Internal Revenue (BIR). For tax exemption refer to BIR Revenue Memorandum Order 20-2013 Prescribing the Policies and Guidelines in the Issuance of Tax Exemption Rulings to Qualified Non- Stock, Non- Profit Corporation and Association Under Section 30 of National Internal Revenue Code of 1997, As Amended.
Business Permit should be secured with the local government unit of business operation. Also, employer registration with Social Security System (SSS), Philippine Health Insurance Corporation (Philhealth), and Home Development Mutual Fund (HDMF) is a mandatory if the Company will employed salaried workers.
If the representative office can secure professionals who will handle the registration and securing the licenses and quickly established a representative office here in the Philippines.