DOING BUSINESS

IN THE PHILIPPINES
 DOING BUSINESS
IN THE PHILIPPINES

EUROPEAN CHAMBER OF COMMERCE OF THE PHILIPPINES

19th Floor, Philippine AXA Life Center Bldg.,

Sen. Gil Puyat Ave. cor. Tindalo Street,
Makati City, Metro Manila, Philippines, 1200

8845-1324 to 26

[email protected]

www.eccp.com
 TABLE OF
CONTENTS
6 Message from ECCP President
7 Message from KPMG
8 Message from Department of Trade and Industry
14 The Philippines
18 Setting Up Your Business in the Philippines
22 Taxation
38 General Reportorial Requirements
43 Directory of Partners

5
 MESSAGE FROM MESSAGE FROM
ECCP PRESIDENT KPMG

The European Chamber of Commerce of the Philippines (ECCP) is pleased to present the latest edition of its Doing Dear All,
Business in the Philippines booklet, a handy guide for those interested in exploring various business opportunities
I am excited that the ECCP has asked KPMG in the Philippines to share our insights in this year’s “Doing Business in
the country has to offer. We would like to extend our sincerest thanks to KPMG Philippines for being our content
the Philippines.”
partner and for their support in completing this publication.
This excitement stems from the recent enactment of laws and rules that have a significant impact on how businesses
2021 was an exciting year for the European-Philippine business community with the advancement of key economic
operate in the country.
reforms such as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and the Amendments to
the Retail Trade Liberalization Act. Furthermore, the year 2022 opened on a high note with the advancement of the In January 2018, the TRAIN Law restructured the schedules for personal income tax and excise tax, broadened the tax
amendments to the Public Services Act and the Foreign Investments Act. As of writing, these have been transmitted base for VAT, and increased other tax rates. The Revised Corporation Code, which went into effect in February 2019,
to the President for signing. Despite the country hitting a snag in its first year navigating the “new normal”, recent reformed the regulatory framework for investors’ corporate vehicles through which they operate in the Philippines.
reforms offered a wide elbow room for policymakers to boost the country’s economic prospects as a vital market in
Then in April 2021, the much-anticipated Republic Act No. 15534, also known as the “Corporate Recovery and
the region for foreign direct investments.
Tax Incentives for Enterprises Act” or the CREATE Law, took effect. This landmark legislation introduced major
The ECCP aims to further build on the progress of the past years in making the Philippine business environment amendments to the corporate tax laws and presented the new incentive package for investors.
friendlier for European companies and ensuring that these businesses can make the most of these positive
And the changes keep coming! In the course of writing the content for this publication, we made revisions in view of
developments. More than forty years later, the ECCP remains committed to creating a competitive, fair, and more
the amendments to the implementing rules and regulations of the CREATE Law. We also await Congress’ approval
inclusive business environment in the Philippines. The Chamber also maintains a strong business network that holds
of other tax laws, as well as the Philippine President’s signature on the bill amending the Foreign Investments Act.
great potential in translating connections to tangible business opportunities.
Having said the above, I am without doubt that this booklet gives new and updated content – a must read for investors
We hope that this publication will encourage potential investors to do business here in the Philippines. As always, the
in the Philippines.
ECCP stands ready to support businesses in taking their first step into one of the most dynamic and fastest growing
countries in ASEAN. Should you be interested in discussing our insights further, I would be happy to discuss these with you.
Thank you.

Lars Wittig Maria Carmela M. Peralta

ECCP President Head of Tax
Tax Principal

6 DOING BUSINESS IN THE PHILIPPINES 7

 MESSAGE FROM CONNECT. ENGAGE. GROW.
DEPARTMENT
YOUR BUSINESS WITH
OF TRADE AND
INDUSTRY IN 4 EASY STEPS

Interested to learn more about the Philippine market, specific industry

sectors, identify business partners, or invest in the Philippines?
The Department of Trade and Industry (DTI) sends its heartfelt congratulations to the European Chamber of ECCP is the chamber of choice to realize your business plans.
Commerce of the Philippines (ECCP) on the publication of Doing Business in the Philippines, which reaffirms the
organization’s commitment to strengthen European-Philippine economic ties as it provides potential investors with
a complete guide to starting and maintaining a business in the country.

Over the years, this growing partnership between our regions has resulted in enhanced bilateral economic
Fill up the form.
cooperation, such as preferential access in major markets through our Free Trade Agreements (FTAs). In fact, 1 Go to www.eccp.com/contact and enter
the Philippines is the only ASEAN country given trade preference in the European Union (EU) market’s Generalised
System of Preferences Plus (GSP+). And with the entry of the Philippines into the Regional Comprehensive details about your business requirements.
Economic Partnership (RCEP) Agreement, we expect that this will also play a major role in the country’s growth
strategy as this establishes a modern, comprehensive, high-quality, and mutually beneficial partnership that will
facilitate the expansion of regional trade and investment and contribute to global economic development.

Amid the challenges of the pandemic, the Philippine government has remained consistent in its efforts to facilitate ECCP will send the proposal based on your
greater trade and investment in the country by continuously pursuing reforms that foster a better business
2 requirement with tailor-fit services to match
environment. Among these initiatives is the realization of the game-changing Corporate Recovery and Tax
Incentives for Enterprises (CREATE) Act, which rationalizes, modernizes, and offers more relevant incentives your needs.
to investors. Meanwhile, under the Strategic Investment Priorities Plan (SIPP) of CREATE, we have identified
industries for the grant of incentives to attract high-value, high-tech projects that will create more jobs and further
boost the Philippines’ competitiveness in the global market. All of these, together with the review of other economic
restrictions, have the common goal of attracting more investments that will create more jobs and opportunities in
the country. Do not forget to sign the agreement once
As we remain focused on balancing the need to protect lives and livelihood, DTI looks forward to its continuing 3 the terms and conditions have been finalized
partnership with ECCP in creating a more competitive business environment and a level playing field for both Europe between your company and ECCP.
and the Philippines. With your steadfast support, we are optimistic that we will soon be able to recover and realize
our common aspiration for inclusive growth, sustainable development, and a more prosperous tomorrow.

Thank you and mabuhay!

The ECCP team will move forward with the
Hon. Ramon M. Lopez
4 scope of work and will remain in close contact
Secretary
with you throughout the entire process.

To know more about Business Services, you may inquire to

[email protected] and [email protected].

8 DOING BUSINESS IN THE PHILIPPINES 9

 WHAT WE PROVIDE
ABOUT ECCP As a membership organization, the ECCP is proud
to have over 700 members amongst its ranks. The
chamber provides a wide variety of services to its
member companies, individuals and organizations
and strives to make its members’ viewpoint heard on
economic and business issues, legislative measures
The European Chamber of Commerce of the Philippines
and administrative regulations. The ECCP identifies
(ECCP) is a service-oriented organization whose main
business opportunities, facilitates business contacts,
goal is to foster close economic ties and business
and provides market intelligence research for European
relations between the Philippines and Europe. The
and Philippine companies alike. The ECCP keeps
ECCP does this by providing a wide range of consultancy
its members informed through its digital channels,
services and by creating linkages between companies,
publications, and e-newsletters.
organizations, and individuals with existing or potential
business interests in Europe and the Philippines. It Through its strong relationship with partners in
is also at the forefront of pro-business, pro-growth government, the ECCP is able to support its member
advocacy in the Philippines, representing European companies by facilitating market access and ensuring a
business interests for increased market access and level playing playing field for both European and Filipino
trade facilitation, at the highest level of Philippine companies alike. The ECCP’s 15 sector committees
political discussions. regularly meet to discuss issues and actionable
solutions, which are then elevated to the government
The ECCP sees itself as the stepping stone for Europeans
through a series of advocacy tools which include
into the Philippine market and for Filipinos into the
letters to members of the government, drafting of
European market.
bills, creation of position papers on proposed reforms
or current issues, and a collection of Advocacy Papers
published every year. ECCP positions cover crosscutting
issues and sector specific position papers, listing key
recommendations on actions needed to support market
access for European businesses and enable long term
economic welfare for the Philippines.
The ECCP promotes trade and investments between
Europe and the Philippines by providing a wide range of
information, import assistance counseling on the local
business environment, and advice on how to invest in
the Philippines. The ECCP also offers business advisory
services, market/feasibility studies, and other market
entry requirements of newcomers to the Philippines
market.
Visiting or exhibiting in international trade fairs is one of
the most effective market entry measures. The ECCP, as
an international trade fair information center, provides
extensive services to exhibitors and visitors of European
and Asian trade fairs. The ECCP also represents some
of the leading European fairs in fashion and textiles,
consumer goods, electronics, information technologies,
industrial goods, building materials, and food. The ECCP
endorses and co-organizes Philippine trade fairs and
shows which are of interest to European exhibitors.
One of the objectives of the ECCP is to strengthen
commercial and investment relations to the benefit
of companies in Europe and the Philippines. Special
programs have been developed to identify partners in
technology, production, subcontracting, distribution or
joint venture opportunities in both markets. Counseling
and linkages to support facilities form part of our
services alongside market intelligence and research
services.

10 DOING BUSINESS IN THE PHILIPPINES 11

 ABOUT KPMG
IN THE PHILIPPINES

WHAT WE DO
AUDIT & ASSURANCE
R.G. Manabat & Co., a Philippine partnership and
a member firm of the KPMG global organization of Financial Statements Audit, Attestation Services,
independent member firms affiliated with KPMG Prospective Reporting, Regulatory Audit, Other forms of
International Limited, a private English company limited attestation
by guarantee.
We adopt a global approach spanning professional TAX
disciplines, industry sectors and national borders. The Tax Corporate Compliance, Tax Advisory Services, Tax
diverse public and private sector backgrounds of our Advocacy Services, Global Mobility Services, Transfer
partners and principals, coupled with extensive training, Pricing Services, Customs, Trade and Excise Advisory,
and backed up by the wide knowledge resources and Company Administration
network of KPMG professionals, allow the firm to give
real-world solutions to increasingly complex business
and regulatory issues.
ADVISORY
Management Consulting, Risk Consulting, Deal Advisory
No. 1 Winner of the International Tax Review 2021
Ranked as Tier 1 in Transfer Pricing TECHNOLOGY CONSULTING
Ranked as Tier 1 in General Corporate Tax Practice Cyber Security, Technology Risk and Assurance Services,
Consulting Firm of the Year, Asia Risk Awards 2020 Digital Transformation

12 DOING BUSINESS IN THE PHILIPPINES 13

 Foreign Investments; the Real Estate Activities with PhP

THE PHILIPPINES 2.70 billion or 16.0% share, then by the Administrative

and Support Service Activities with PhP 2.38 billion or
14.2% contribution.
The Philippines has been considered as one of the dynamics are mainly rooted in strong consumer demand In the World Competitiveness Ranking by the Institute
most competitive economies in the East Asia Pacific backed up by a flourishing labor market and dynamic of Management and Development (IMD), the Philippines
region. From having an average annual growth of 4.5% remittances. The Philippine economy has also made in 2021 was ranked 52 out of 64 countries as it was
between 2000-2009 to attributing a 6.4% annual growth significant progress in delivering inclusive growth since challenged with reviving businesses and consumer
between 2010-2019. Boasting increased urbanization, a decline of 6.7% in poverty rates and a decline of 2.2% confidence, implementing vaccination rollouts, building
a continuously growing middle class, as well as having in its Gini coefficient was observed. resilient social infrastructure especially in health and
a large and young population, the country’s economic education, sustaining increased investments in physical
and digital infrastructure, and maintaining fiscal health
while adequately providing stimulus and support,
especially for vulnerable sectors.
Despite the Covid-19 pandemic, the Philippines has
achieved significant headway in recent years. This
progress is reflected in the country’s rapid adaptation
and economic recovery from the pandemic disruptions.
With the government’s efforts for efficiency to
encourage investors in doing business in the Philippines,
the country will eventually be able to graduate to an
upper-middle-income country. However, there is
still considerable work to be done to strengthen the
country’s global competitiveness. To push the Philippine
economy to new heights, it is critical to strengthen
and promote these efforts to enhance business and
government procedures, as well as to grow the Philippine
manufacturing sector, expand ASEAN integration, and
improve trade facilitation.

Even with the economic disruptions caused by the of Doing Business and Efficient Government Service
Covid-19 pandemic, the Philippine economy is still able Delivery Act of 2018” aims to strengthen and promote
to rapidly adapt and recover from a -17% GDP growth rate efficiency and simplicity in business and government
in the 2nd quarter of 2020 to 12.1% in the 2nd quarter of processes through digitalization with the ICT industry.
2021. The main contributors for this rapid growth were Additionally, the country’s Comprehensive Tax Reform
the Wholesale and retail trade; repair of motor vehicles Program promotes a just taxation system, it allows easier
and motorcycles with 6.4% contribution; Manufacturing market penetration and establishment of businesses
industry with 6.3%; and Construction Industry with with a sustainable flow of revenue. This would then
16.8%. allow businesses to channel their resources to make
meaningful investments in people and infrastructures.
Driven by public investment and a recovery in the
external environment, the country was still able to The Philippines as it is in the heart of Asia is considered
achieve a 3.7% year-on-year expansion in the first half an important geographic location for businesses. Given
of 2021 amidst the recovery to Covid-19. With continued that the country has a relatively low cost of living, and
efforts from both the government and its citizens, the that the headline inflation rate last December 2021
country is starting to get back on track from being a has eased to 3.6%, doing business in the Philippines
lower-middle-income country with a gross national can be as strategic and cost-efficient for international References:
income per capita of $3,430 in 2020 to an upper- businesses.
• Department of Finance. (2019). About Tax Reform. DOF. https://taxreform.dof.gov.ph/about-tax-reform/
middle-income country having a per capita income
range of $4,096-$12,695 in the short term. There are Philippine Statistics Authority (PSA) reported that the • Department of Trade and Industry. (2018). RA 11032 - Ease of Doing Business and Efficient Government Service Delivery Act
also visible signs of recuperation in domestic activities, total Foreign Investments received by the Philippines of 2018. DTI. https://www.dti.gov.ph/faps/ease-of-doing-business/
community mobility, industrial output, and recently with in the 3rd quarter of 2021 amounted to Php 16.82 billion • Institute of Management Development. (2021). WORLD COMPETITIVENESS RANKING 2021 (1). IMD. https://www.imd.org
bank lending activities. However, there are still probing which was 45.8% lower than its previous quarter.
These were driven by investments from Japan which • Philippine Statistics Authority. (2021). GDP Growth Rate in 2021 (2021-458). PSA. https://psa.gov.ph/national-accounts
challenges that may impede economic growth given the
continuing threat of the pandemic amidst limited policy accounted for 66.4% of the total approved Foreign • The World Bank. (2021). The World Bank in the Philippines. https://www.worldbank.org/en/country/philippines/overview#1
space. Investments, followed by the Netherlands with 9.2% and • Philippines Economic Update : Regaining Lost Ground, Revitalizing the Filipino Workforce (English). Washington, D.C. : World
the British Virgin Islands with 4.2%. These investments Bank Group. http://documents.worldbank.org/curated/en/099710012062131492/P1774080b8d6f508b0944c08618e5c8a18d
Government efforts were also placed to encourage were mostly allocated to the Manufacturing industry
• International Monetary Fund. (2018). The Philippines’ Economic Outlook in Six Charts. https://www.imf.org/en/News/
doing business in the Philippines. RA 11032, or the “Ease which received PhP 11.01 billion or 65.5% of the total
Articles/2018/09/27/na092718-the-philippines-economic-outlook-in-six-charts

14 DOING BUSINESS IN THE PHILIPPINES 15

 KEY COUNTRY FACTS
KEY COUNTRY FACTS: Divided into 3 island groups –
Luzon, Visayas, and Mindanao – and with 17 regions, the
Philippines is a country with rich history, diverse culture,
and natural resources.
GOVERNMENT: A republic with a presidential form of LUZON
government wherein power is equally divided among its
three branches: executive, legislative, and judicial.
Manila
CURRENCY: Philippine peso (Php)
LANGUAGES: Filipino (official), English
RELIGIONS: Christianity, Islam

Cebu

VISAYAS

1 Source: https://psa.gov.ph/

MINDANAO

INDEX (2020 Data) RANKING Main FDI Investors

(January-October 2021):
IMD - World 45/63 Singapore 559.6
Competitiveness Yearbook
Japan 462.4
Doing Business Survey 95/190 USA 94.2
Hong Kong 48.0
Heritage Foundation 70/180
Germany 32.1
Source: Department of Trade and Industry, QuickStats; In US$ M
16 DOING BUSINESS IN THE PHILIPPINES 17
 CORPORATE VEHICLE
SETTING UP YOUR Foreign corporations intending to do business in the
Philippines may consider either a stock corporation or a

BUSINESS IN
branch as their corporate vehicle.

CORPORATION
Any person, partnership, association, or corporation,

THE PHILIPPINES singly or jointly with others but not more than 15 in
number may organize a corporation for any lawful
purpose/s. Incorporators who are natural persons
must be of legal age. Each incorporator must own or be
BRANCH
a subscriber to at least one share of the capital stock.
[Note: The Revised Corporation Code allows the setting
up of what is called a One Person Corporation, which To establish a branch, the foreign corporation should
is a corporation with a single stockholder. The single apply with the SEC for a license to transact business in
stockholder shall be the sole director and the president. the Philippines. The application shall be accompanied
However, only a natural person, trust, or an estate may by, among other things, a copy of its Articles of
form a One Person Corporation.] Incorporation and By-Laws, certified in accordance
with law, along with their translation into English, if
In setting up a corporation, the Articles of Incorporation necessary.
duly signed by the incorporators and the treasurer
and acknowledged or authenticated in such form and Another requirement will be the statement under oath
manner as may be allowed by the Philippine Securities of the corporation’s president or any authorized person
and Commission (SEC) should be filed with the SEC that the applicant is solvent and in sound financial
together with the other documentary requirements. condition. The application shall provide for the assets
and liabilities of the corporation as of the date not
A corporation shall have perpetual existence unless its exceeding one year immediately prior to the filing of the
Articles of Incorporation provides otherwise. application.

The number of directors of a corporation shall not be Also attached to the application shall be a certificate
more than 15. The directors shall be elected for a term of under oath duly executed by the authorized official/s
one year from among the holders of stocks registered in of the jurisdiction of its incorporation, attesting to the
the corporation’s books. Each director shall hold office fact that the laws of the country or State of the applicant
until the successor is elected and qualified. A director allow Filipino citizens and corporations to do business
who ceases to own at least one (1) share of stock shall therein, and that the applicant is an existing corporation
cease to be such. in good standing.

For certain corporations vested with public interest, The foreign corporation should appoint a resident agent
the board of directors shall have independent directors authorized to accept summons and process in all legal
constituting at least twenty percent (20%) of such proceedings and all notices affecting the corporation,
board. An independent director is a person who, pending the establishment of the local office. The
apart from shareholdings and fees received from the resident agent may be an individual residing in the
corporation, is independent of management and free Philippines and must be of good moral character and of
from any business or other relationship which could or sound financial standing. The resident agent may also
could reasonably be perceived to materially interfere be a domestic corporation lawfully transacting business
with the exercise of independent judgment in carrying in the Philippines. It must likewise be of sound financial
out the responsibilities as a director. Independent standing and must show proof that it is in good standing
directors must be elected by the shareholders present as certified by the SEC.
or entitled to vote in absentia during the election of
directors. There are special types of branches. One is the
representative or liaison office which deals directly with
The corporate officers of a corporation shall be the the clients of the parent company but does not derive
president, treasurer, secretary, and such other officers income from the host country and is fully subsidized
as may be provided in the By-Laws. If the corporation is by its head office. It undertakes activities such as but
vested with public interest, a compliance officer should not limited to information dissemination and promotion
also be elected. There are requirements for any person of the company’s products as well as quality control of
to be elected to these positions. products.
18 DOING BUSINESS IN THE PHILIPPINES 19
 MINIMUM PAID-UP CAPITAL Generally, foreign investment in export enterprises
whose products and services are not in the FINL is
REQUIREMENTS allowed up to 100% ownership.
The Revised Corporation Code does impose minimum
paid-up capital requirements for setting up corporations Under the 11th FINL, issued on 29 October 2018, foreign
or branches. However, depending on the activity to ownership in domestic market enterprises with
be engaged in, special laws may apply that require a paid-in equity capital of less than the equivalent of
minimum paid-up capital. USD200,000.00 is limited to 40%. The paid-in equity
capital threshold is reduced to USD100,000.00 if the
domestic market enterprises use advanced technology
FOREIGN OWNERSHIP or employ at least 50 direct employees.
Pursuant to the Foreign Investments Act (FIA) of 1991,
foreign ownership in an enterprise will be allowed up As of this writing, the legislative amendments to the FIA
to 100% unless foreign ownership in the enterprise have been enacted and are awaiting the signature of the
is prohibited or limited by the Foreign Investment Philippine President. It is expected that a new FINL will
Negative List (FINL). The FINL is the list of areas of be issued.
economic activity where foreign ownership is limited to
a maximum of 40% of the outstanding capital stock of a
corporation.

PROCEDURE FOR SETTING-UP

The registration with the SEC is the first step for setting up a corporation or branch. Afterwards, the corporation or
branch must be registered with the following:

Local government unit (LGU) having jurisdiction over the entity to

1. secure the mayor’s permit / business license and other related permits

2. Bureau of Internal Revenue (BIR) having jurisdiction over the entity

The entity will also register with the BIR its manual books of accounts and secure an
Authority to Print (ATP) for its manual invoices/official receipts. However, if the new
entity wishes to use a computerized accounting system (CAS) or computerized books
of account (CBA) and/or its components, the entity shall inform the BIR office where
it is registered of its intention to use the same. The entity should submit the required
documents referred to in Revenue Memorandum Order No. 9-2021. The BIR office will
issue an Acknowledgement Certificate within three working days from receipt of the
complete documentary requirements.

Social security agencies to comply with the social security laws

3. imposing mandatory contributions for employees

If the entity will engage in a project or activity that In the case of a branch, within 60 days after the issuance
may qualify for tax incentives, an application for the of the license to transact business in the Philippines,
registration of the project or activity should be filed it shall deposit with the SEC for the benefit of present
with the relevant Investment Promotion Agency (IPA) for and future creditors in the Philippines securities
purposes of availing of the tax incentives. satisfactory to the SEC with an actual market value of
at least Php500,000.00 or such other amount that may
The foreign investment should be registered with the be set by the SEC. This requirement shall not apply to
Bangko Sentral Ng Pilipinas (the Philippine Central foreign banking or insurance corporations.
Bank) if the foreign currency will be purchased from the
Philippine banking system to repatriate/remit capita/
profits/dividends.

20 DOING BUSINESS IN THE PHILIPPINES 21

 PHILIPPINE TAX SYSTEM CORPORATE INCOME TAX

TAXATION
TAXING AUTHORITY General Tax Rates
The Philippines has two levels of taxation – national and Having taken effect on 11 April 2021, Republic Act (RA)
local. At the national level, the government agencies No. 11534, otherwise known as the “Corporate Recovery
that exercise taxing authority are the BIR and Bureau of and Tax Incentives for Enterprises Act” or the CREATE
Customs (BOC). The BIR administers the imposition and Law, introduced
collection of internal revenue taxes such as the income
tax and value-added tax (VAT). The BOC handles the as- amendments to the National Internal Revenue Code
sessment and collection of customs revenues from im- (NIRC). The regular corporate income tax (RCIT) rate has
ported goods. been reduced from 30% to 25%, effective 01 July 2020.

At the local level, the different LGUs – provinces, cities, However, the tax base and the income covered by the
municipalities, and barangays – exercise varying levels RCIT rate will depend on the type of corporation involved
as shown in the table below:
of taxation powers over persons under their jurisdiction.

Type of Corporation Tax Base Source of Income

Domestic corporations
All sources within and
(i.e., created or organized under Philippine laws Taxable Income
without the Philippines

Branches / Resident Foreign corporations (i.e.,

engaged in trade or business in the Philippines) Taxable Income Philippine-sourced income

Non-Resident Foreign Corporations

(i.e., not engaged in trade or business in the Gross Income Philippine-sourced income
Philippines)

However, for domestic corporations, the RCIT is • Charitable and other contributions
reduced to 20% in case they have net taxable income
not exceeding Php5,000,000.00 and total assets not • Research and development
exceeding Php100,000,000.00, excluding the land on
which the particular business entity’s office, plant, and
• Pension trusts.
equipment are situated.
Note that there are special tax rates that could apply
for certain corporations. An example is the case In lieu of the above-enumerated deductions, domestic
of hospitals which are nonprofit and proprietary and resident foreign corporations may elect a standard
educational institutions. These are subject to the 10% deduction in an amount not exceeding 40% of its gross
tax. However, the tax rate for them from 1 July 2020 to income.
30 June 2023 is 1%.
Domestic and resident foreign corporations are required
The term “taxable income” refers to gross income less to file their income tax returns and pay the RCIT due. In
allowable deductions. The allowable deductions are the contrast, the tax on non-resident foreign corporations
following: is collected via the withholding tax mechanism. The
income payments to them will be subject to a final
• Ordinary and necessary trade, business, or withholding tax at the rate of 25% in general to be
professional expenses withheld and remitted to the BIR by the income payors.

• Interest Minimum Corporate Income Tax

• Taxes Domestic and resident foreign corporations are liable
for the minimum corporate income tax (MCIT) on their
• Losses gross income, starting on the 4th year following the
year in which such corporations commenced business
• Bad debts operations, and when such MCIT is greater than the
RCIT. Any excess of the MCIT over the RCIT shall be
• Depreciation carried forward and credited against the RCIT for the
• Depletion of oil and gas wells and mines three immediately succeeding taxable years.

22 DOING BUSINESS IN THE PHILIPPINES 23

 Under the CREATE Law, the MCIT rate has been reduced tax may be required on certain items of income provided
from 2% to 1% effective on 01 July 2020 and until 30 under the NIRC. The tax withheld by the withholding
June 2023. agent is constituted as a full and final payment of the
income tax due from the payee on the said income. The
Withholding Tax System payee is not required to file an income tax return for the
particular income. Examples of the final withholding
The corporation or the branch will be considered taxes are the 25% tax on income payments to non-
withholding agents required to withhold the applicable resident foreign corporations and the 15% tax on profit
withholding tax on income payments to suppliers/ remittances from a Philippine branch to its head office.
vendors. In case of failure to withhold and remit to the
BIR the taxes withheld, the income payments may not be Tax Treaties
claimed as deductions for income tax purposes.
The Philippines has entered into a number of tax treaties
There are two types of withholding tax on income with other tax jurisdictions. Under these tax treaties,
payments: the expanded withholding tax (also called tax exemptions or preferential tax rates may be availed
creditable withholding taxes) and the final withholding of for income payments to non-resident corporations.
tax.
Foreign investors should consider whether they
Income payments subject to the expanded withholding would avail of tax treaty benefits in relation to their
tax are enumerated under the revenue regulations investments in the Philippines. Tax treaty benefits
issued by the Secretary of Finance. These are income could be a consideration in deciding the tax jurisdiction
payments to natural or juridical persons residing in the of their entity that will set up the corporation or branch
Philippines. Beginning 01 January 2019, the EWT rates office in the Philippines. A lower tax rate for dividends or
shall not be more than 15% of the income payment. branch profit remittances or an exemption from capital
gains tax on sale of shares could be enjoyed. Potential
The expanded withholding tax is intended to equal or at tax treaty benefits could play a role also in structuring
least approximate the tax due from the payee on said royalty or loan agreements.
income. The income recipient is still required to file an
income tax return, to report the income and/or pay the Pursuant to the BIR’s administrative rules, a Tax Treaty
difference between the tax withheld and the tax due on Relief Application (TTRA) or Request for Confirmation
the income. (RFC) should be filed with the BIR accompanied by the
documentary requirements enumerated in Revenue
On the other hand, the income payments to the Memorandum Order No. 14-2021. If the regular rates
corporation or branch may be subject to the expanded have been imposed on the said income, the nonresident
withholding tax. The taxes withheld may be claimed shall file the TTRA with the BIR. When the treaty
as tax credits against the income taxes due from the rates or exemptions have been applied by the income
corporation or branch. These credits should be properly payor/withholding agent on the income earned by the
substantiated. nonresident, the income payor/withholding agent shall
file with the BIR the RFC. The deadlines for filing the
On the other hand, subject to revenue regulations to be
RFC are as follows:
issued by the Secretary Finance, the final withholding

Type of Income Date of Filing

Capital Gains At any time after the transaction but shall not be later than the last
day of the fourth month following the close of the taxable year when
the income is paid or when the transaction is consummated

Other types of income At any time after the close of the taxable year but not later than the
last day of the fourth month following the close of such taxable year
when the income is paid or becomes payable, or when the expense/
asset is accrued or recorded in the books, whichever comes first.

One consolidated RFC per nonresident income recipient contemporaneous. The documentation may be in
shall be filed, regardless of the number and type of English. There is no requirement to translate the
income payments made during the year. documentation into the local language.

Transfer Pricing To date, the Philippines has not adopted the Action
13 initiatives of the OECD on Base Erosion and Profit
Transfer pricing regulations were issued in early 2013. Shifting strategies. It has also not issued guidelines on
These regulations are patterned after the Organization Advanced Pricing Agreements and the implementation
for Economic Cooperation and Development (“OECD”) of the “Mutual Agreement Procedures” provisions of tax
Transfer Pricing Guidelines. These regulations treaties.
require the transfer pricing documentation to be

24 DOING BUSINESS IN THE PHILIPPINES 25

 Starting in 2020, BIR requires the following taxpayers to ii. Outstanding balances of loans and non-
submit a related-party transaction disclosure form (BIR trade amounts due from/to all related
Form No. 1709) as an attachment to the annual income parties.
tax return:
b. Related party transactions meeting the following
• Large Taxpayers materiality threshold:

• Taxpayers enjoying tax incentives i. If involving sale of tangible goods in the

aggregate amount exceeding Php60
• Taxpayers reporting net operating losses Million within the taxable year
for the current taxable year and the
ii. If involving service transaction, payment
immediately preceding two (2) consecutive of interest, utilization of intangible goods
taxable years or other related party transaction in the
aggregate amount exceeding Php15
• A related party which has transactions with Million within the taxable year
the above. c. If the transfer pricing documentation was required
to be prepared during the immediately preceding
Further, any of the above taxpayers should prepare the
taxable period for exceeding either (a) or (b) above.
transfer pricing documentation if they meet any of the
following materiality thresholds: Further, the transfer pricing documentation is not
required to be attached to the related-party transaction
a. Annual gross sales/revenue for the subject taxable
disclosure form and/or annual income tax return. It will
period exceeding Php150 Million and the total
be submitted only when requested by the BIR during
amount of related-party transactions with foreign
an investigation. Written agreements on related-party
and domestic related parties exceeds Php90 Million
transactions should be in place as they are typically
In computing this threshold, the following items required to be submitted during an investigation.
shall be included:
For taxpayers that are not required to submit the
i. Amounts received and/or receivable from related-party transaction disclosure form and prepare
related parties or paid and/or payable to the transfer pricing documentation, it is still advisable
related parties during the taxable year to prepare the transfer pricing documentation if they
but excluding compensation paid to key have significant related-party transactions. Such
management personnel, dividends, and documentation serves as a readily available defense in
branch profit remittances; and case of a transfer pricing investigation.

PERSONAL INCOME TAX

For personal income tax purposes, the tax rates, and the income to be taxed depend on the profile of the individual
taxpayer as shown by the table below:

Taxpayer Source of Income Tax Rates Tax Base

Resident citizens Philippine and non-Philippine sources Graduated rates Taxable
from 0% to 35% Income
Non-resident citizens, including Philippine sources only
citizens working and deriving income
from abroad as overseas contract
workers
Alien Individuals Philippine sources only

• Resident
• Non-resident engaged in trade
or business
• Non-resident not engaged in 25% Gross
trade or business Income

Compensation for labor or personal services rendered in the Philippines is considered Philippine-sourced.

26 DOING BUSINESS IN THE PHILIPPINES 27

 Nevertheless, under the tax treaties entered into by
the Philippines with other jurisdictions, a tax treaty
exemption may be available under certain conditions for
remuneration or income derived by a foreign individual
for personal (including professional) services performed
in the Philippines.
Employers are considered withholding agents required
to withhold taxes on compensation and other benefits
paid to employees.
Multinational companies investing in the Philippines
may have global mobility programs and policies. These
should be reviewed for Philippine tax and immigration
implications affecting employees assigned in the
Philippines.

VALUE-ADDED TAX
The VAT is imposed on any person who, in the course
of trade or business, sells, barters, exchanges, leases A withholding of a 5% VAT shall be made in the case
goods or properties or renders services and on any of payments by the government or any of its political
person who imports goods. subdivisions, instrumentalities, or agencies, including
government-owned or -controlled corporations on
The VAT is an indirect tax and the amount of tax may be account of each purchase of goods or services which
shifted and passed on to the buyer. are subject to VAT. Effective 01 January 2021, the
5% withholding VAT has shifted from a final VAT to a
The phrase “in the course of trade or business” means creditable VAT.
the regular conduct or pursuit of a commercial or an
economic activity including transactions incidental The rules for claiming input VAT credits are aligned with
thereto by any person regardless of whether or not the the rules on when output VAT liability arises. Input VAT
person engaged therein is a nonstock, nonprofit private should also be properly substantiated as follows:
organization (irrespective of the disposition of its net
income and whether or not it sells. Notwithstanding the • For domestic purchases of goods and
rule of regularity, services rendered in the Philippines
by nonresident foreign persons shall be considered as properties — VAT invoice
being rendered in the course of trade or business.
• For domestic purchases of services — VAT
In general, the VAT rate is 12%. In certain instances, official receipt
the VAT rate may be 0% or the transaction may be
VAT-exempt. Taxpayers subject to 12% or 0% must be • For the importation of goods – import entry
registered with the BIR as VAT persons. They may use or other equivalent document showing
the VAT paid/incurred on their purchases (the input VAT)
as credits against the output VAT due. Or if they have actual payment of VAT on the imported
zero-rated sales, they can apply within the required goods.
period for the refund of the input VAT attributable to
zero-rated sales. In contrast, taxpayers that qualify for • Input tax from payments made to non-
a VAT exemption are registered with the BIR as non-VAT residents (such as for services, rentals and
persons and should treat the 12% VAT paid/incurred on royalties) - a copy of the “Monthly Remittance
their purchases as part of their cost/expenses. They Return of Value Added Tax Withheld (BIR
are not allowed to file an application for refund of the
input VAT. Form 1600)” filed by the resident payor
on behalf of the non-resident evidencing
The 12% VAT is based on the gross selling price in the remittance of VAT due which was withheld
case of sale of goods and on the gross receipts in the
case of sale of services. In the case of importation, the by the payor.
12% VAT is based on the total value used by the BOC in
determining tariff and customs duties plus customs Special rules apply on the claiming of input VAT paid/
duties, excise tax (if any) and other charges. If the incurred on purchases of capital goods which are
customs duties are determined on the basis of the depreciable assets for income tax purposes. Up to
quantity or volume of goods, the 12% VAT shall be based 31 December 2021, the taxpayer should amortize the
on the landed cost plus excise taxes (if any). input VAT paid/incurred on purchases of capital goods
with aggregate acquisition cost (exclusive of VAT)
In case of services rendered in the Philippines by in a calendar month exceeding Php1 Million. This is
non-residents or of payments for the lease or use of regardless of the acquisition cost of each capital good.
properties or property rights to nonresident owners, the If the aggregate acquisition cost (exclusive of VAT)
12% VAT shall be withheld at the time of payment by the during any calendar month does not exceed Php1 Million,
payor and remitted to the BIR. the total input taxes will be allowable as credit against
28 DOING BUSINESS IN THE PHILIPPINES 29
 output tax in the month of acquisition. The aggregate
acquisition cost of a depreciable asset in any calendar
the assessed value of the real property in the case of
provinces and 2% of the assessed value in the case of
TAX INCENTIVES • Financing charges associated with fixed assets
used directly and exclusively in the registered
month refers to the total price agreed upon for one or cities or municipalities within the Metropolitan Manila The CREATE Law has introduced a new tax incentive activity the amount of which were not previously
more assets acquired and not on the payments actually Area. regime. For the availment of tax incentives, a business capitalized
made during the calendar month. enterprise should register with the concerned IPA to
In addition to the basic RPT, an annual tax of 1% of engage in a project or activity included in the Strategic • Service supervision salaries
However, the amortization shall be allowed only until 31 the assessed value of the real property may be levied, Investment Priority Plan (“SIPP”). The qualifications set
December 2021. Nevertheless, taxpayers with unutilized with the proceeds exclusively accruing to the Special forth in the SIPP must be satisfied. As of this writing, • Direct materials and supplies used.
input VAT on capital goods purchased/imported shall Education Fund (“SEF”). the SIPP has not yet been issued. In the meantime, the Only export enterprises may avail of the SCIT
be allowed to apply the same as scheduled until fully 2020 Investments Priority Plan will be considered as the
CUSTOMS DUTIES after the ITH. The availment will be for ten
utilized. transitional SIP. years. However, in availing of the SCIT, export
Taxpayers should ensure compliance with the BIR’s Goods imported into the Philippines are subject to duty enteprises will not be allowed anymore to enjoy
The incentives are the following:
invoicing or substantiation requirements. Non- and tax upon importation, including goods previously the enhanced deductions (EDs). The option to
compliant invoices/official receipts could lead to exported from the Philippines, except as otherwise 1. Income tax holiday (“ITH”) avail of either SCIT or the EDs after the ITH period
disallowance by the BIR of zero-rated sales or of the provided for under the Customs Modernization and shall be exercised by the export enterprise at the
input VAT credits being claimed. Tariff Act (CMTA) or other laws. The period of availment of the ITH will depend on time of application for registration of the project
the type of registered business enterprise (i.e. / activity with the concerned IPA. Such option
LOCAL TAXES whether an export enterprise or a domestic market (SCIT or ED) shall be irrevocable for the entire
enterprise), its location, and industry. Export duration of entitlement to such incentives.
The Philippine legislature through the Local Government enterprises can enjoy an ITH for four to seven years.
Code (LGC) has granted the LGUs the power to create A domestic market enterprise can enjoy an ITH for
their sources of revenues and levy taxes, fees, and four to seven years.
charges subject to the provisions of the LGC. To
implement this, the LGUs will enact their local tax 2. Special Corporate Income Tax (SCIT) at the rate of
ordinances at rates not exceeding those provided in the 5% based on gross income earned (“GIE”) in lieu of all
LGC. The corporation or branch should check the local national and local taxes.
tax ordinances issued by the LGU having jurisdiction
over it. The enterprise must remit the tax as follows:

Cites and municipalities may impose taxes on • 3% to the National Government

businesses at a certain percentage of gross sales or 3. Enhanced deductions (EDs) in addition to the
• 2% to the treasurer’s office of the municipality or ordinary and necessary deductions
receipts. This local business tax (LBT), for example, may
be imposed on manufacturers or assemblers. In the city where the enterprise is located.
case of municipalities, under the LGC, the top LBT rate • Depreciation allowance of the assets acquired
Gross income refers to gross sales or gross
for manufacturers or assemblers is 37.5% of 1% if the revenues derived from the registered project/ for production of goods and services (10% for
manufacturers or assemblers have gross sales/receipts activity, net of sales discounts, sales returns buildings and 20% for machinery and equipment)
for the preceding calendar year in the amount of Php6.5 and allowances and minus costs of sales or
Million or more. For distributors and contractors, • 50% additional deduction on labor expense
direct costs but before any deduction is made
under the LGC, the top LBT rate to be imposed by incurred
for administrative expenses or incidental losses
municipalities is 50% of 1% if gross sales/receipts for during a given taxable year. The following are • 100% additional deduction on research and
the preceding calendar year amount to Php2 Million or considered the direct costs: development expense
more. However, in the case of cities, the LBT rates they
may impose may exceed the maximum rates allowed for • Direct salaries, wages, or labor expenses • 100% additional deduction on training expenses
municipalities by not more than 50%. incurred
• Production supervision salaries
Further, under the LGC, cities and municipalities • 50% additional deduction on domestic input
may levy a community tax on individuals and juridical • Raw materials used in the manufacture of
expense incurred
persons. In the case of the latter, the annual community products
tax is Php500.00. An annal additional tax not exceeding • 50% additional deduction on power expense
• Goods in process (intermediate goods)
Php10,000.00 may be imposed in accordance with the incurred
following schedules: • Finished goods
• Deduction for reinvestment allowance to the
• For every Php5,000.00 worth of real • Supplies and fuels used in production manufacturing industry
property in the Philippines owned by it – • Depreciation of machinery, equipment, and • Enhanced Net Operating Loss Carry-Over
Php2.00 building, directly and exclusively used in the (“NOLCO”) – The registered enterprise may carry
rendition/production of registered activity, over as deduction the net operating loss incurred
• For every Php5,000.00 of gross receipts/
and of that portion of the building owned or during the first three years from the start of
earning derived from business - Php2.00 constructed that is directly and exclusively commercial operations within the next five
related in the rendition/production of the consecutive taxable years immediately following
Moreover, a province or city or a municipality within the registered activity the year of such loss.
Metropolitan Manila Area may levy a basic real property
tax (RPT) on real property such as land, building, • Rent and utility charges associated with building, Export enterprises and domestic market enterprises
machinery, and other improvement not specifically equipment, and warehouses, or handling of are allowed to avail of the EDs after the ITH period for
exempted. The RPT rates should not exceed 1% of goods used directly and exclusively in the ten years and five years, respectively.
rendition/production of registered activity
30 DOING BUSINESS IN THE PHILIPPINES 31
 Below is a table showing the period of the enjoyment of the ITH, SCIT, and EDs: The table below shows the duration of the ITH, SCIT, and ED depending on the type of enterprise, location, and
industry:
Registered Enterprise Tax Incentive Period
Domestic Market Enterprise
Export Enterprise ITH Four to seven years Export Enterprise Activities
Activities
SCIT or ED Ten years
Domestic Market Enterprise ITH Four to seven years Location TIER I TIER II TIER III TIER I TIER II TIER III
ED Five years
4 ITH 5 ITH 6 ITH 4 ITH 5 ITH 6 ITH
NCR
+ 10 SCIT/ED + 10 SCIT/ED + 10 SCIT/ED + 5 ED + 5 ED + 5 ED

Metropolitan
Areas
or areas 5 ITH 6 ITH 7 ITH 5 ITH 6 ITH 7 ITH
contiguous + 10 SCIT/ED + 10 SCIT/ED + 10 SCIT/ED + 5 ED + 5 ED + 5 ED
or adjacent
NCR

All other 6 ITH 7 ITH 7 ITH 6 ITH 7 ITH 7 ITH

Areas + 10 SCIT/ED + 10 SCIT/ED + 10 SCIT/ED + 5 ED + 5 ED + 5 ED

The RBE should avail of the income tax-based incen- accessories directly and exclusively used in
tives from the actual start of commercial operations the registered project or activity.
and within three years from the date of registration with
the IPA. • The capital equipment, raw materials, spare
In addition to the incentives above-mentioned, projects parts, or accessories:
In determining the duration of the ITH, the location of the registered business enterprise (RBE) will be prioritized
or activities of RBEs located in areas recovering from
according to the level of development as follows: (1) National Capital Region (NCR); (2) metropolitan areas or areas – are directly and reasonably needed by
armed conflict or a major disaster shall be entitled to
contiguous and adjacent to the NCR; and (3) all other areas. the registered business enterprise
two additional years of ITH, subject to the following:
Further, the industry of the RBE will be prioritized according to the national industrial strategy specified in the SIPP. – will be used exclusively in and as part
There will be three tiers, with each tier covering the activities as shown in the table below: • Declaration of the President or his/her
authorized representatives of the existence of of the direct cost of the registered
an armed conflict or a major disaster, including project or activity of the RBE

Tier I Tier II Tier III pandemic, epidemic, super typhoon, or other – are not produced or manufactured do-
analogous circumstances; or mestically in sufficient quantity or of
activities that: activities that produce activities shall include: comparable quality and at reasonable
supplies, parts and • The issuance of a presidential directive for the
prices.
i. have high potential for job components, and vi. research and development resulting implementation of recovery programs of the
creation intermediate services that in demonstrably significant value- affected area or areas. • The approval of the IPA must be obtained prior to
are not locally produced added, higher productivity, improved the importation of the goods.
ii. take place in sectors with A registered project or activity that will completely relo-
but are critical to industrial efficiency, breakthroughs in science
market failures resulting in cate from NCR during the period of their incentives, shall 5. VAT exemption on importation and VAT zero-
development and import- and health, and high-paying jobs; be entitled to three additional years of ITH to commence rating on local purchases with respect to goods
under-provision of basic goods substituting activities,
at the completion of the relocation of operations. and services directly and exclusively used in the
and services including crude oil refining vii. generation of new knowledge and
intellectual property registered registered project or activity of export enterprises
4. Customs duty exemption on the importation of
iii. generate value creation for a maximum period of 17 years from the date of
and/or licensed in the Philippines; capital equipment, raw materials, spare parts, and
through innovation, upgrading registration
commercialization of patents, accessories for the registered activity for a maximum
or moving up the value chain period of 17 years and 12 years, respectively, for
industrial designs, copyrights and Prior to the filing of the income tax return, the RBE shall
iv. provide essential support for utility models owned or co-owned by export enterprises and domestic market enterprises, apply with the concerned IPA for the issuance of a “Cer-
a registered business enterprise counted from the date of registration. tificate of Entitlement to Tax Incentives” (CETI). Upon
sectors that are critical to
industrial development; or verification of the compliance by the RBE with the terms
viii. highly technical manufacturing; or The following conditions should be complied with:
and conditions of its registration and the payment of the
v. are emerging owing to potential corresponding fee, the CETI shall be issued by the con-
ix. are critical to the structural • The duty exemption shall apply only to capital cerned IPA and which shall be attached to the income
comparative advantage
transformation of the economy and equipment, raw materials, spare parts, or tax return filed with the BIR.
require substantial catch-up efforts.

32 DOING BUSINESS IN THE PHILIPPINES 33

 TAX FILING DEADLINES
FILING DEADLINES RELATED TO INCOME TAXES

Type of Tax Return BIR Form No. Filing Deadline

Quarterly Income Tax 1702-Q On or before the 60th day following the
Return close of each quarter for the first three
quarters of the taxable year
Annual Income Tax 1702-RT, 1702-MX, and 1702-EX, whichever On or before the 15th day of the fourth
Return is applicable month following the close of the
corporation’s taxable year
Monthly Remittance 0619-E For Non-Electronic Filing and Payment
Form for Creditable System (eFPS) taxpayers: on or before
Income Taxes Withheld the 10th day following the month in which
(Expanded) withholding was made
For eFPS taxpayers: on or before the
15th day following the month in which
withholding was made (but depending on
the industry grouping)
Monthly Remittance 0619-F For Non-eFPS taxpayers: on or before
Form of Final Income the 10th day following the month in which
Taxes Withheld withholding was made
For eFPS taxpayers: on or before the
15th day following the month in which
withholding was made (but depending on
the industry grouping)
Quarterly Remittance 1601-EQ On or before the last day of the month
Return of Creditable following the close of the quarter during
Income Taxes Withheld which the withholding was made
(Expanded)
Quarterly Remittance 1601-FQ On or before the last day of the month
Return of Final Income following the close of the quarter during
Taxes Withheld which the withholding was made
Monthly Remittance 1601-C For Non-eFPS taxpayers: on or before
Return of Income the 10th day following the month in which
Taxes Withheld on withholding was made
Compensation
For eFPS taxpayers: on or before the
15th day following the month in which
withholding was made (but depending on
the industry grouping)
Annual Information 1604-E On or before 1 March of every year
Return of Creditable
Income Taxes Withheld

Annual Information 1604-F On or before 31 January of every year

Return of Income
Payments Subjected to
Final Withholding Taxes
Annual Information 1604-C On or before 31 January of every year
Return of Income
Taxes Withheld on
Compensation

34 DOING BUSINESS IN THE PHILIPPINES 35

 The annual income tax return of an individual shall be filed on or before the 15th day of April of each year covering
income for the preceding taxable year.

OTHER BIR FILING DEADLINES

Type of Tax Return BIR Form No. Filing Deadline

Monthly VAT Declaration 2550-M For Non-eFPS taxpayers: on or before the 20th
day following the end of each month
For eFPS taxpayers: on or before the 25th day fol-
lowing the end of each month (but depending on
industry grouping)
Quarterly VAT Return 2550-Q on or before the 25th day of the month following
the close of the taxable quarter
Annual Registration Fee 0605 On or before 31 January of every year
Taxpayers should be mindful of other filing deadlines for other types of tax returns such as documentary stamp tax,
fringe benefits tax, percentage tax, or excise tax.

PAYMENT DEADLINES OF LOCAL TAXES

The local taxes shall accrue on the first day of January each year. The table below shows the payment deadlines:

Type of Tax Time of Payment

LBT within the first 20 days of January or of each subsequent
quarter, as the case may be
Community Tax not later than the last day of February of each year
RPT (basic and the additional tax for the SEF) In four equal installments:
First - on or before 31 March
Second – on or before 30 June
Third - on or before 30 September
Fourth – on or before 31 December

CUSTOMS DUTIES
Customs duties should be paid prior to the release of the imported goods from customs custody.

36 DOING BUSINESS IN THE PHILIPPINES 37

 BIR value to 2% of the amount by which the gross
income of the branch for that taxable year exceeds

GENERAL
Corporations with gross annual sales, earnings, receipts Php10,000,000.00.00. The SEC shall also require the
or output exceeding Php3,000,000.00 shall have their deposit of additional securities if the actual market
books of accounts audited and examined yearly by value of the deposited securities has decreased by at
an independent Certified Public Accountant (CPA) least 10% of their actual market value at the time they
and their income tax returns accompanied with a duly were deposited.

REPORTORIAL
accomplished Account Information Form (AIF), which
shall contain among others information lifted from LGUs
certified balance sheets, profits and loss statements,
schedules listing income-producing properties and the LGUs requires business under their jurisdiction to renew
corresponding income therefrom and other relevant annually the mayor’s permit/busines licenses on or

REQUIREMENTS
statements. before the 20th of January every year.

SEC UNDER CREATE LAW

Every corporation, whether domestic or foreign, shall RBEs availing of tax incentives shall, within 30 calendar
submit to the SEC the following: days from the statutory deadline for filing of tax returns
and payment of taxes, submit to their respective IPAs
1. Annual financial statements audited by an the following:
independent CPA - However, if the total assets
or total liabilities of the corporation are less than 1. Complete Annual Tax Incentives Report of their
Php600,000.00, the financial statements shall be income-based tax incentives, VAT exemptions and
certified under oath by the corporation’s treasurer zero-rating, customs duty exemptions, deductions,
or chief financial officer. credits or exclusions from the income tax base, and
exemptions from local taxes
2. A general information sheet.
2. Complete annual benefits report which shall include
Further, corporations vested with public interest must data such as, but not limited to, the approved
also submit the following: and actual amount of investments, approved and
actual employment level and job creation including
1. A director compensation report information on quality of jobs and hiring of foreign
and local workers, approved and actual exports and
2. A director appraisal or performance report and the imports, domestic purchases, profits and dividend
standards or criteria used to assess each director. payout, all taxes paid, withheld and foregone.
The reportorial requirements shall be submitted In addition to the above, the BIR, SEC, and other
annually and within such period as may be prescribed by government agencies may impose other reporting
the SEC. requirements.
In the case of the branch, within six months after
each taxable year, the SEC shall require the deposit
of additional securities equivalent in actual market

38 DOING BUSINESS IN THE PHILIPPINES 39

 LIST OF ACRONYMS

ABS - Asset-Backed Securities ECC - Environmental Compliance Certificate JDR - Judicial Dispute Resolution PRA – Philippine Retirement Authority
ADR Act - Alternative Dispute Resolution Act of 2004 EFTA - European Free Trade Association JVA - Joint Venture Agreements PTE - Public Telecommunications Entity
AEP - Alien Employment Permit EIA - Environmental Impact Assessment LGU – Local Government Unit RA – Republic Act
ARMM – Autonomous Region of Muslim Mindanao EIS - Environmental Impact Statement LTO – License to Operate RE Act - Renewable Energy Act of 2008
ASEAN - Association of Southeast Nations EMB - Environmental Management Bureau M&A - Mergers and Acquisitions RHQ – Regional Headquarters
BCDA - Bases Conversion and Development Authority EP – Exploration Permit MCTC - Municipal Circuit Trial Courts ROHQ - Regional Operating Headquarters
BIMP-EAGA – Brunei Darussalam-Indonesia-Malaysia- EPIRA - Electric Power Industry Reform Act of 2001 Med-Arb - Mediation-Arbitration SBMA - Subic Bay Metropolitan Authority
Philippines East ASEAN Growth Area
ERC – Energy Regulatory Commission MeTC – Metropolitan Trial Courts SEC – Securities and Exchange Commission
BIR – Bureau of Internal Revenue
FDA - Food and Drug Administration MORFXT - Manual of Regulations on Foreign Exchange SRC - Securities Regulation Code
BOC – Bureau of Customs Transactions
FIA – Foreign Investments Act of 1991 SSS - Social Security System
BOI – Board of Investments MPP - Mineral Processing Permit
FIA IRR – Foreign Investments Act Implementing Rules SFZ - Subic Freeport Zone
BOT - Build-Operate and Transfer and Regulation MPSA – Mineral Production Sharing Agreement
SIRV - Special Investor’s Resident Visa
BSP - Bangko Sentral ng Pilipinas (Central Bank of the FLSP - Financial Liquidation and Suspension of MRO - Maintenance, Repair, and Overhaul
SPE - Special Purpose Entity
Philippines) Payments
MTC – Municipal Trial Courts
SRRV – Special Resident Retiree’s Visa
CAM - Court-Annexed Mediation FRIA - Financial Rehabilitation and Insolvency Act
MTCC - Municipal Trial Courts in Cities
SSEZ - Subic Special Economic Zone
CBA - Collective Bargaining Agreement FTA – Free Trade Agreement
NGCP - National Grid Corporation of the Philippines
SWP - Special Work Permit
CDC - Clark Development Corporation FTAA - Financial or Technical Assistance Agreement
NPC - National Privacy Commission
TRANSCO - National Transmission Corporation
CIAC - Construction Industry Arbitration Commission GDRP - General Data Protection Regulation
NREB - National Renewable Energy Board
TRIPS - Trade Related Aspects of Intellectual Property
CPE – Customer Premises Equipment GSP+ - Generalized System of Preferences Plus
NTC - National Telecommunications Commission Rights
CRO - Contract Research Organizations HDMF - Home Development Mutual Fund
OCRA - Out-of-Court Restructuring Agreements TTA - technology transfer arrangement
CSEZ - Clark Special Economic Zone IB – Inclusive Business models
OIC - Omnibus Investments Code UITF – Unit Investment Trust Fund
DENR - Department of Environment and Natural IC - Insurance Commission
PA – Provisional Authority UNCITRAL - United Nations Commission on
Resources
IC – Integrated Circuits International Trade Law
PCA - Philippine Competition Act
DOE – Department of Energy
IEE - Initial Environmental Examination VAS – Value Added Services
PCBA – Philippine Contractors Accreditation Board
DOJ - Department of Justice
IP Code - Intellectual Property Code of the Philippines VAT – Value Added Tax
PCC - Philippine Competition Commission
DOLE – Department of Labor and Employment
IPO - Intellectual Property Office VoIP – Voice-Over Internet Protocol
PD – Presidential Decree
DPA - Data Privacy Act
IPP - Investments Priorities Plan
PDRCI - Philippine Dispute Resolution Center, Inc.
DTI - Department of Trade and Industry
IRR – Implementing Rules and Regulations
PEZA - Philippine Economic Zone Authority
EC - Employees’ Compensation
IT – Information Technology
PhilHealth - Philippine Health Insurance Corporation
PHP – Philippine Peso
PHREB - Philippine Health Research Ethics Board
PNHRS - Philippine National Health Research System
PPP – Public Private Partnership

40 DOING BUSINESS IN THE PHILIPPINES 41

DIRECTORY
OF PARTNERS

43
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complex business and regulatory issues. stands out among the rest.
For more details on Haptic PR’s services, please visit https://www.haptic.
ph/, e-mail [email protected], call 0917 624 4416 | (02) 8288 1440, or follow
ADDRESS: Haptic.PH on Facebook and Instagram.
Manila – Head Office
9th Floor KPMG Center, 6787 Ayala Avenue, Makati City
ADDRESS:
Penthouse, 9th Floor 833 Dominion Bldg., Antonio. Amaiz Avenue Makati City,
CONTACT INFORMATION: Metro Manila Philippines 1228
Tel: +63 (2) 8885 7000
Email: [email protected] CONTACT INFORMATION:
Tel: (02) 8288 1440 | 0917 624 4416
Website: home.kpmg/ph
E-mail: [email protected]
Website: https://www.haptic.ph/

44 DOING BUSINESS IN THE PHILIPPINES 45

 COMPANY PROFILE: COMPANY PROFILE:
Du-Baladad and Associates (BDB Law) is a premier tax law firm in the country At PwC, our purpose is to build trust in society and solve important problems.
that offers services around 3 major areas of practice – TAX, LEGAL and We’re a network of firms in 156 countries with over 295,000 people who are
CONSULTING. committed to delivering quality in assurance, advisory and tax services.
For more than a decade, BDB Law is consistently ranked as an outstanding Isla Lipana & Co. is the Philippine member firm of PwC, rendering professional
and highly recommended firm in the field of taxation by international services in the country for 99 years. Other PwC Philippines member firms
awarding bodies such as International Tax Review, Chambers and Partners, are Cabrera and Company, PricewaterhouseCoopers Consulting Services
AsiaLaw Profiles among others. These are affirmations of the consistent Philippines Co. Ltd., and PricewaterhouseCoopers Business Services
quality and high-value services the firm provides to its clients. Philippines Co. Ltd.
BDB Law is an exclusive member firm of WTS Global, a European TIER 1 We have 34 partners and principals, and all above-mentioned firms have over
global tax network represented in over 100 countries. 1,800 professional and support staff.
ADDRESS: ADDRESS:
20 Flr. Chatham House, Rufino cor. Valero Sts. Salcedo Village, Makati City,
th
29th Floor Philamlife Tower, 8767 Paseo de Roxas, 1226 Makati City,
1227, Philippines Philippines
CONTACT INFORMATION: CONTACT INFORMATION:
Tel: 8403 – 2001 Tel: +63 (2) 8845 2728
Fax: 8403 – 2001 loc. 130 Fax: +63 (2) 8845 2806
Email: [email protected] Email: [email protected]
Website: www.pwc.com/ph

COMPANY PROFILE: COMPANY PROFILE:

HSBC has been operating in the Philippines for 146 years and is a leading JEG Development Corporation is a homegrown real estate commercial
international bank in the country. It serves its customers through three and residential developer in Cebu City. JDC is regarded to be one of the
global businesses: Wholesale Banking, Global Banking and Markets, and frontrunners of sustainability and green real estate in the Philippines. With
Wealth and Personal Banking. The Bank has a network of 8-strong branches its impressive portfolio of sustainable developments, the company has
located in Metro Manila, Cebu and Davao, including those of the locally become one of the pioneers of renewable energy in the Visayan region.
incorporated HSBC Savings Bank, and a Global Service Centre servicing local ADDRESS:
and international HSBC markets.
Room 211, TPE Building, Gov. M. Cuenco Ave, Cebu City, Philippines 6000
ADDRESS: CONTACT INFORMATION:
3058 Fifth Avenue West Bonifacio Global City, Taguig City 1634 Tel: (+63) 917-565-3547
CONTACT INFORMATION: Website: www.jegtower.com
Website: https://www.hsbc.com.ph/ Facebook: www.facebook.com/jegtoweratoneacacia

46 DOING BUSINESS IN THE PHILIPPINES 47

 COMPANY PROFILE: COMPANY PROFILE:
Mazars is a leading international audit, tax and advisory firm. Operating as TMF Group in the Philippines has a strong team of specialists in accounting,
a united partnership, we work as one integrated team, leveraging expertise, corporate secretarial services, tax, HR & payroll, servicing clients locally and
scale, and cultural understanding to deliver exceptional and tailored services. internationally. We provide a full range of corporate services to help reduce
risks, improve compliance, better control costs and simplify operations.
Founded in Europe, we have grown into a global, connected partnership
of over 42,000 professionals with a presence in over 90 countries and We have helped many companies set up operations locally as well as helping
territories. We have the skills and the scale to serve clients of all sizes, across them expand operations globally. We build strong partnerships with clients,
all industries, while remaining agile, personal, and distinct in our approach. working closely together to achieve growth and expansion objectives.
In the Philippines, Mazars specializes in audit and assurance, tax compliance,
accounting, business registration, corporate secretarial, and payroll
outsourcing. ADDRESS:
24th Floor Philam Life Tower, 8767 Paseo de Roxas Avenue, Makati City 1226
ADDRESS: PHILIPPINES
12th Flr., Makati Sky Plaza 6788 Ayala Ave., Makati City, 1223 Philippines CONTACT INFORMATION:
CONTACT INFORMATION: Janis Maghinay - Managing Director
Tel: +63 2 8864 0896 Mobile: +63 9176351601
E-mail: [email protected] Email: [email protected]
Website: www.mazars.ph Website: tmf-group.com

COMPANY PROFILE:
Pacific Cross is a leading provider of Medical, Travel, HMO, and Personal
Accident Insurance in the Philippines, and we are #HereForYou to help protect
what is most precious to you. Pacific Cross Medical Plans offer a wide range
of health benefits such as coverage for hospital confinement, out-patient
treatment, emergencies, and viral illnesses including COVID-19, among
many others. Since 1949, we remain to be relevant and adaptive to answer
the insurance needs of our clients amidst changing times. 2018 Insurance
Commission (IC) rankings showed Pacific Cross as the industry leader in non-
life health insurance with more than half of the premiums earned. 2019 IC
rankings put Pacific Cross in the top 5 out of 58 non-life insurance companies
in terms of Premiums Earned and Net Premiums Written – proof that Pacific
Cross brings value and peace of mind to our clients.
For more details on Pacific Cross products and services, please visit www.
pacificcross.com.ph, e-mail [email protected], call +63 2 8230-
8511 or follow PacificCrossPH on Facebook and @pacificcrossphofficial on
Instagram.
ADDRESS:
18th Floor, 8 Rockwell Building, Hidalgo Drive, Makati City, Metro Manila,
Philippines
CONTACT INFORMATION:
Tel: +63 2 8230-8511
E-mail: [email protected]
Website: www.pacificcross.com.ph

48 DOING BUSINESS IN THE PHILIPPINES 49

 MAKATI OFFICE SPACES FOR LEASE
European Chamber of Commerce of the Philippines
19th Floor Philippine AXA Life Centre

Co nt ac t i nfo r mat i o n:
Ca ren Va len to s
i n fo @ ecc p.co m
P: (+ 6 3 2 ) 884 5. 1 3 23 • (+ 6 3 2 ) 8856 .0 4 23