HOW TO DO BUSINESS IN THE PHILIPPINES

By: Atty. Rufino M. Margate, Jr. / Discover Philippines

Table of Contents

I.   BUSINESS PLANNING, ORGANIZING& REGISTRATION

        1.  Business Plan

             1.a  Marketing Plan

             1.b  Viability Study

             1.c  Financial Plan

             1.d  Legal Due Diligence

        2.  Forms of business organization

             2.a  Single proprietorship

             2.b  Partnership

             2.c  Corporation

        3.  Registration with the Department of Trade and Industry

        4.  Registration with the Securities and Exchange Corporation

             4.a Corporation

             4.b Partnership

        5.  Registration with the Bureau of Internal Revenue

        6.  Obtaining  Licenses and Permits from the local Government.

        7.  Registration with the Social Security System and PhilHealth.

        8.  Registration with Pag-Ibig or Home Development Mutual Fund

        9.  Registration with the Department of Labor and Employment.

       10.  Other Agencies

II.  BUSINESS & INVESTMENTS OPEN TO FOREIGNERS

       1.  General Policy

       2.  Export Enterprises vs. Domestic Market Enterprises

       3.  Nationality of Investor

       4.  Restrictions or Limitations to Foreign Investments

             4.a  No Foreign Equity Allowed

       4.b Up to 25% Foreign Equity Allowed

             4.c Up to 30% Foreign Equity Allowed

             4.d Up to 40% Foreign Equity Allowed

             4.e Up to 60% Foreign Equity Allowed

        5. Retail Trade

III.  INCENTIVES TO INVESTMENTS

  1.  Registering the business with the Board of Investments (BOI)

        2.  Locating the investment in the Special Economic Zones.

        3. Establishing 100% Foreign-Owned Regional Headquarters (RHQs), Regional

            Operating Headquarters (RHQs) and Regional Warehouses (RWs) of

            multinational companies.

             3.a  Regional Headquarters (RHQs)

 3.b Regional Operating Headquarters (ROHQ)

             3.c Regional Warehouse (RW)

       4.  Investing in 100% Foreign-Owned It Business.

       5.  Individuals Foreigner’s Investment under SPECIAL INVESTORS’S RESIDENT

            VISA (SIRV), SPECIAL RETIREES VISA (SRRV) and SIRV in TOURISM-

            RELATED PROJECTS.

       6.  Other Incentives

IV.  TAXATION

       1.  Income Tax       

             1.a  Corporations (includes partnerships, etc.)

                    1.a.1  Domestic and Resident Foreign Corporation, in general

                    1.a.2  Income tax rates on passive income of domestic and foreign

                              corporation.

                    1.a.3  Non-Resident Foreign Corporation

                    1.3.4  Corporations Improperly Accumulating Profits.

              1.a  Individuals 

      2.  Withholding tax system:

      3.  Various Tax Treaties

      4.  Value Added Tax

      5.  Percentage Taxes

      6.  Excise taxes

      7.  Documentary stamp tax

      8.  Customs Duties

      9.  Estate taxes

     10.  Gift Taxes

     11.  Local Taxes

     12.  Real Property Taxes

V.   LABOR LAWS & REGULATIONS

 1.   State Policy on Labor

       2.   Security of Tenure

       3.  Hours of Work and Weekly Rest Days

       4.  Mandated Economic Benefits.

4.1 Minimum Wage

4.2 Overtime Pay work in excess of eight hours

4.3 Premium Pay for work within eight hours

4.4 Nightshift differential pay

4.5 Service incentive leave

4.6 13^th Month Pay

4.7 Paternity Leave

4.8 Holiday Pay

4.9 Benefits under Collective Bargaining Agreements (CBA)

4.10 “Non-diminution” rule.

        5.  Social Security Benefits

        6.  Employment of young workers and women

        7.  Medical and Dental Facilities

        8.  Workers’ right to self-organization and Collective Bargaining Agreements

        9.   Sexual harassments in workplaces.

        10.  Employment of  foreigners

        11.  Closure of Establishments, Reduction of  Personnel and Retirement

VI.  BANKSERVICES

1.       Deposit Products 

2.       Loan Products

3.       Other Products / Services

VII.  COST OF DOING BUSINESS

       1.  Basic Monthly Salaries and Wages

       2.  Rental or Lease Rate

       3.  Cost of Utilities

       4.  Retainers fee of certain professionals and service contractors

VIII.  IMPORT & EXPORT REGULATIONS

      1.  The advent of trade liberalization

      2.  Import Procedures

     2.a   Registration as Importer

           2.b   Declaration by Filing a Written Entry

           2.c   Examination, Appraisal and Classification

           2.d   Release of Goods to importers

           2.e  Modes of payments of imports

      3. The Tariff and Customs Code of the Philippines

      4.  Export Procedures