Legal Steps for Registering an Offshore Company in the Philippines

Registering an offshore company in the Philippines involves navigating a series of legal and regulatory steps to ensure compliance with local laws. Offshore companies are typically established for various reasons, such as tax optimization, global expansion, and access to local markets. Here’s a comprehensive guide to the legal steps for registering an offshore company in the Philippines.

1. Understanding Offshore Companies

Definition: An offshore company is a business entity incorporated outside the jurisdiction where its primary operations and offices are located. In the Philippines, offshore companies are often used for holding assets, conducting international trade, and managing investments.

2. Choosing the Type of Offshore Company

Types:

• Branch Office: An extension of a foreign company that conducts business activities in the Philippines.
• Representative Office: An office established to conduct non-revenue-generating activities, such as market research and liaison services.
• Regional Operating Headquarters (ROHQ): An office that provides management, financial, or other support services to affiliates, subsidiaries, or branches in the Asia-Pacific region.
• Regional or Area Headquarters (RHQ): A supervising, communications, and coordinating center for the affiliates, subsidiaries, or branches in the Asia-Pacific region.

3. Pre-Registration Requirements

Action: Gather and prepare necessary documents for registration. Documents Needed:

• Parent Company’s Board Resolution: Authorizing the establishment of the offshore company and designating authorized representatives.
• Articles of Incorporation and By-Laws: Certified copies from the parent company.
• Financial Statements: Audited financial statements of the parent company for the past year, authenticated by the Philippine Embassy or Consulate.
• Appointment of Resident Agent: A resident agent must be appointed to receive legal notices on behalf of the offshore company.

4. Name Verification and Reservation

Action: Verify and reserve the company name with the Securities and Exchange Commission (SEC). Process:

• Name Reservation: Conduct a name search and reserve the desired business name through the SEC’s online portal.

5. Registering with the Securities and Exchange Commission (SEC)

Action: Submit the necessary documents to the SEC to obtain a License to Do Business. Documents Needed:

• Application Form: Duly accomplished SEC Form F-104 (for Branch and Representative Offices).
• Board Resolution: A certified copy authorizing the establishment of the offshore company.
• Articles of Incorporation and By-Laws: Certified copies from the parent company.
• Financial Statements: Audited financial statements authenticated by the Philippine Embassy or Consulate.
• Resident Agent’s Acceptance: Written acceptance by the resident agent.
• Proof of Inward Remittance: Proof of inward remittance of the required capitalization.

Minimum Capital Requirement:

• Branch Office: USD 200,000 (can be reduced to USD 100,000 if engaged in activities involving advanced technology or employing at least 50 direct employees).
• Representative Office: USD 30,000.
• ROHQ and RHQ: USD 200,000.

Process:

• File the documents with the SEC.
• Pay the necessary filing fees.
• Wait for the SEC to review the documents and issue the License to Do Business.

6. Obtaining Local Business Permits

Action: Secure necessary local government permits to operate legally. Process:

• Barangay Clearance: Apply for a Barangay Clearance from the barangay where the principal office is located.
• Mayor’s Permit: Obtain a Mayor’s Permit from the city or municipal hall. Submit the Barangay Clearance, SEC registration, lease contract, and other required documents.

7. Registering with the Bureau of Internal Revenue (BIR)

Action: Register the offshore company with the BIR to obtain a Tax Identification Number (TIN) and other tax-related registrations. Documents Needed:

• BIR Form 1903: Application for Registration for Corporations/Partnerships.
• Articles of Incorporation and By-Laws: Certified copies from the SEC.
• SEC Registration: Certificate of Registration from the SEC.
• Proof of Address: Lease contract or proof of principal office address.

Process:

• Submit the documents to the BIR Revenue District Office (RDO) where the principal office is located.
• Pay the registration fee and Documentary Stamp Tax (DST).
• Obtain the Certificate of Registration (BIR Form 2303) and authority to print official receipts.

8. Registering with Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (Pag-IBIG)

Action: Ensure compliance with employee benefits regulations. Process:

• SSS Registration: Submit the SSS Form R-1 (Employer Registration Form) and other required documents.
• PhilHealth Registration: Submit the Employer Data Record (ER1) and other required documents.
• Pag-IBIG Registration: Submit the Employer’s Data Form (M1-1) and other required documents.

9. Compliance with Reporting Requirements

Action: Ensure ongoing compliance with regulatory and reporting requirements. Requirements:

• Annual Reports: Submit annual reports and audited financial statements to the SEC.
• BIR Compliance: File annual income tax returns, quarterly VAT returns, and other tax-related filings with the BIR.
• Employee Benefits Compliance: Regularly update and remit contributions to SSS, PhilHealth, and Pag-IBIG.

Best Practices for Registering an Offshore Company

1. Engage Legal and Accounting Professionals

   • Work with experienced legal and accounting professionals to ensure compliance with all regulatory requirements and to handle complex legal and tax matters.

2. Maintain Accurate Records

   • Keep thorough records of all submissions, approvals, and correspondence with government agencies.

3. Regular Compliance Audits

   • Conduct regular internal compliance audits to ensure ongoing adherence to local laws and regulations.

4. Stay Informed

   • Stay updated on changes in Philippine laws and regulations that may impact the offshore company’s operations.

Conclusion

Registering an offshore company in the Philippines involves navigating a detailed regulatory landscape. By following the outlined steps and adhering to best practices, foreign corporations can successfully set up and operate an offshore company in the Philippines.