What is a Representative Office?
A Representative Office is not subject to income tax and VAT as it does not generate revenue.
A Representative Office is 100% owned and controlled by its foreign parent and can be registered with USD 30,000 with an initial inward remittance annually.
Only a Resident Agent is needed instead of a full board, and and FCB Law Office offers this as part of its services if you should need it.
What are the Requirements for a Representative Office?
As an Extension, a Representative Office can be set up with only a Resident Agent as well as the below simple requirements. Other items such as forms can be accomplished during the process.
Foreign Company Info
FCB Law Office will need documents and information from the Foreign Company so that we can successfully complete the registration. These may be the foreign Articles of Incorporation, etcetera.
Resident Agent Needed
A Representative Office will only require a Resident Agent instead of a full blown board. A Resident Agent will be tasked with receiving summons on behalf of the company. FCB Law Office can offer this service as needed.
Actual Location
A definite physical office must be determined as this will be required at the onset as it is very difficult to change a business address once the company is registered. A virtual office can be used if necessary.
Capitalization
A Representative Office is capitalized at USD 30,000 which must be remitted yearly since the entity is a cost center and goes not generate any revenue (which incidentally means that it is not subject to income taxes and VAT on sales).
Atty Britanico and A
Representative Office in the Philipines
A Representative Office allows a foreign company to establish a fully subsidized cost center in the Philippines in support of the business of the overseas parent company. It is limited to information dissemination and support services and allows the company to tap into the Philippines educated English speaking work force and maintain full control. It is the best option for those seeking a dedicated support center in the Philippines.
Atty Britanico, Founder
Atty Britanico and A
Representative Office in the Philipines
A Representative Office allows a foreign company to establish a fully subsidized cost center in the Philippines in support of the business of the overseas parent company. It is limited to information dissemination and support services and allows the company to tap into the Philippines educated English speaking work force and maintain full control. It is the best option for those seeking a dedicated support center in the Philippines.
Atty Britanico, Founder
What are the Advantages & Disadvantages of a Representative Office?
A Representative Office is uniquely positioned to support head office operations and has several advantages, namely the lack of income taxes and VAT taxes on sales.
Liability extends to Foreign Parent
Resident Agent Only, instead of Board
100% Foreign Ownership
No Income Tax and VAT
What is the Representative Office Process
Email Us and outline the situation. Include your goals and a detailed explanation of what the entity is going to do so in the Philippines such as what support services it will provide to the parent.
Assessment FCB Law Office will assess the information provided and determine if a Representative Office is a good fit for you or if you would be better served by a Branch Office or a Domestic Corp.
Signing of Registration Documents FCB Law Office will complete the Registration Documents and inform you as to how they should be prepared so that they are accepted by the SEC.
Registration at the SEC The first step would be to register the Representative Office at the Securities and Exchange Commission, as this document is needed for the other steps.
Registration at the BIR FCB Law Office will register the Representative Office at the Bureau of Internal Revenue for its tax number.
Registration at City Hall The Representative Office will also be registered at the City Hall so that it can receive its local business permit and be cleared to do business at the local level.
Registration at Govt Statutory Agencies As well as the other registrations are complete, the registration for employee benefits should be completed at Pag-ibig, Philhealth and the SSS.
Further Reading
Denying Paternity in the Philippines When a Wife’s Child is Not Her Husband’s
Denying paternity in the Philippines requires filing a Petition to impugn legitimacy which must be filed with the court within a brief window of time, beyond which the action is barred by law. The legitimacy of the child will no l...
Guide to Child Support in Philippine Law
To File a case for Child Support in the Philippines you will need to prepare documents that prove the child’s paternity, show the Spouse’s financial capacity and itemize the child’s expenditures. Read more…...
How to Reconstitute a Philippine Land Title
In this post, I go through the process of how to ask the Registry of Deeds to replace its copy of your title. This process is called reconstitution and I go through the step by step as well as providing detailed information on wha...
Child Custody and Child Travel To and From the Philippines
Child custody issues are often intertwined with concerns about the child’s travel into and out of the Philippines. This discusses the interplay between the two...
Frequently Asked Questions
What is a Representative Office in the Philippines?
A Representative Office is an extension of its foreign parent company in the Philippines. It serves as an administrative support or liaison office and does not generate income. It performs non-revenue generating services such as quality control, customer support, and accounting.
What is the capital requirement for a Representative Office in the Philippines?
A Philippine Representative Office’s Capitalization is USD 30,000. This amount is also remitted annually by the parent company to cover the office’s expenses, as the office does not make any income.
Who is a Resident Agent and why is one required for a Representative Office in the Philippines?
A Resident Agent is a local representative who liaises with the SEC and other government agencies in the Philippines. The Resident Agent can be a local, a foreigner, or a domestic corporation and must be a resident of the Philippines. They are required because the Representative Office, being an extension of a foreign company, does not need a Board of Directors.
How does taxation work for a Representative Office in the Philippines?
The Representative Office does not generate any income and thus does not pay any income or VAT taxes. However, withholding taxes on employee compensation from 0 to 35% and on any remittances to the head office are applicable.
What is the process for setting up a Representative Office in the Philippines?
The process includes appointing a Resident Agent, determining an office address, gathering necessary documents and information, funding the business, registering at the SEC, addressing SEC concerns, and continuing post-SEC company formation by completing BIR Requirements and submissions at the City Hall, Pag-ibig, SSS, and Philhealth.
What are the SEC requirements for a Representative Office in the Philippines?
The requirements include an application form, name verification slip, authenticated financial statements, Certificate of Inward Capital Remittance and Certificate of Bank Deposit of US$30,000.00, among others.
What is the importance of having an office address for a Representative Office in the Philippines?
An office address is crucial during the process of company formation. The address should be in the same Bureau of Internal Revenue District Office (BIR RDO) and the same local government unit. Changing the address can be cumbersome, as it involves closing and reopening the office registration with local government units and the BIR RDO.
What happens if a company wants to change the address of its Representative Office in the Philippines?
Changing an office address could take up to 6 months or more depending on the result of the BIR audit. The process involves closing the office at the current local government units and BIR RDO and reopening it at the new location, with a potential BIR audit before closure.
What is the purpose of the annual inward remittance of USD 30,000?
The annual inward remittance of USD 30,000 is meant to cover the expenses of the Representative Office in the Philippines as it does not generate any income of its own.
What does it mean that a Representative Office in the Philippines does not generate income?
It means that a Representative Office does not engage in any business or activities that earn it revenue. Its activities are restricted to non-revenue generating processes, like back-office work.
