How are the corporate forms in the Philippines
Now let's analyze the most common forms of corporate forms for doing business in the Philippines:
–Individual businesses (sole proprietorship) it is possible for individuals to run and manage their own business. Typically used for small franchises or for running a small business.
Recommended for an investor who is thinking of opening a restaurant or bar and is a Filipino citizen. The sole proprietorship does not protect against personal liability for the enterprise and in the case of a foreigner a payment of USD 200,000 is required. The positive side is that the bureaucracy with government offices is very easy and can be done fairly quickly.
–The partnership is an association of small businesses. The partnership requirements are similar to that of the sole proprietorship, but limited liability can be established in the social pacts. Again, the minimum capital requirement is $ 200,000 for foreigners, which can be used primarily for joint ventures between foreign and Philippine companies.
-The Corporation, or Stock Corporation as we have already seen here, is the most common type of corporate structure. At least 5 people are required for this corporate form. The corporation may be 100% foreign, but in this case the minimum capitalization required is USD 200,000. Instead, it is possible to maintain the famous 60% -40% ratio also through a lawyer or by appointing your employees as appointed directors. This is usually the safest way, but there are a few problems that are better to be aware of which I will tell you about in another post. The advantage is that the minimum paid-up capital can be reduced starting from 100,000 Php (less than 2000 Euro, the SEC generally does not approve companies with less than 100 thousand Php). A Filipino majority Corporation is in all respects a Filipino entity, therefore it is able to acquire land and participate in any commercial activity.
–A Representative Office can be useful for companies looking to expand their presence in the Philippines market. It is not a Filipino entity, and is subject to the laws of the country of origin. Bureaucratically simple, they cannot have direct revenues in the Philippines, as the business must remain with the parent company.
How are the facts and figures that will interest you as an investor / entrepreneur in the Philippines
If you are a Filipino expatriate (expatriate) who wants to start a business in the Philippines or a foreigner who wants to invest in a business in the Philippines, there are few things you need to know about the commercial laws and regulations in the Philippines. Make sure you take these things to save yourself from headaches and lawsuits that may result from ignoring them. Here are some points you need to consider:
1. A foreigner cannot set up an exclusive property company in the Philippines without a heavy investment (for a company, you are looking at $ 200,000).
2. A foreigner can have up to 40% ownership in a company's minimum capital to start a company is only 5,000 pesos (approximately $ 1,000 USD).
3. The best way to do business in the Philippines is to marry a Filipina woman who owns the property or form a company with a Filipino spouse with you who owns 40% and she owns 60%.
4. You also enter a 40% owned company with a Filipino girlfriend or a Filipino friend, but consider the huge risk of having no control over your majority shareholders.
5. Depending on the purpose of the company (such as buying land or a real estate home), it may still make sense that when the property is sold you would be entitled to your share of the proceeds.
6. There is an exception whereby you CAN become a 100% owner of a company and that is if the company is formed to buy land or if your other shareholder is the spouse and dies. Under this agreement, as an heir to your deceased spouse, you are able to retain 100% ownership of the property.
How are the tax system in the Philippines
The Philippine tax system is a combination of global and coupon taxation systems, where national and resident taxpayers are taxed based on their global income and non-resident taxpayers are taxed on national income only. While a company is taxed at a flat rate, a progressive rate is applied to individuals. Local government units (LGUs) have the power to impose local taxes, tax exemptions and the granting of incentives for commercial activities in their respective areas of competence. The main taxes collected include: income taxes and capital gains taxes, transaction taxes and property taxes. Income and profit taxes include income and capital gains tax on the disposal of shares and real estate. Transaction taxes include value added tax (VAT), excise duties, percentage tax on labor not subject to VAT and customs duties. Let's see in detail how the tax system in the Philippines works. Taxpayers are classified as companies, individuals and trustees. The companies are divided into national companies, resident foreign companies and non-resident foreign companies, whose income is derived from sources located in the Philippines. Individuals are Filipino citizens, both resident and non-resident, and resident foreigners, non-residents engaged in professional activities in the Philippines and non-residents not engaged in commercial or industrial activities, but whose income derives from sources within the Philippines.
National companies are taxed on the basis of their global income, while resident foreign companies are generally taxed in the same way as national companies, i.e. at a rate of 35% of net profit. A flat rate of 35% is applied to foreign companies not engaged in business in the Philippines, but whose sources of income come from the Philippines. In addition, the interest margin on foreign loans earned is subject to 20% of taxes.
46 Witholding tax Corporate taxable income is subject to "Witholdin tax"; in addition, a tax is imposed on natural persons and one on legal persons, including international and foreign ones. We also find groups of belonging that determine a special economic zones. Tax legislation provides for facilities, exemptions and reductions, making this country an excellent base for economic investments. L ike other countries, it facilitated the Philippine tax system meant that the country's economy was launched towards global growth.
Tips
Never forget:
• If you are a company and you plan to invest abroad, the Filipinos constitute, thanks to the tax system, an excellent territory
Why invest in the Philippines ..?
The response from the Farnesina
1. Low labor costs, cultural and linguistic advantages and affinities
2. High propensity to consume
3. Strong growth economy and excellent economic indicators
4. A country rich in resources, human but not only
5. Produce to export to Asia and the world