- Who are qualified to invest in the Philippines?
Anyone, regardless of their nationality, is welcome to do business and invest in the country, in almost areas of economic activities.
- Is it possible for foreigners to invest up to 100% capital in a domestic entity?
- Under the Foreign Investments Act of 1991 (Republic Act 70142 as amended by RA 8179), foreign investors are allowed to invest 100% equity if the proposed activity he intends to venture in is not among those listed in the FINL (Foreign Investments Negative List).
The FINL is a shortlist of investment areas and activities which may be opened to foreign investors and/or reserved Filipino nationals.
- If the paid-up capital domestic market enterprise is at least US $ 200, 000.00 which may be lowered to US $ 100,000.00 if the following conditions are met:
- Introduction of advanced technology;
Concerned Agency: Department of Science and Technology
Address: DOST-NCR Bldg, DOST
Compound, Gen. Santos Ave., Bicutan, Taguig City, Philippines
Number: (+632) 837-2071
- Employment of at least 50 direct employees;
Concerned Agency: Department of Labor and Employment
Address: Regional office where business is located
Number: (+632) 527-8000
- What are the business entry options in the Philippines?
The Options for Business Entry in the Philippines are the following:
A business entity formed by an individual who has full control/authority.
A business entity formed by two or more persons (indefinite number) who bind themselves with the intention of dividing profits among themselves.
A stock or non-stock corporation organized under Philippine laws with no minimum number of incorporators ( may be a One-Person Corporation)
A corporation at least 51% owned by the parent company, and organized under Philippine Laws.
It undertakes activities such as information dissemination and promotion, as well as quality control of products for export.
A business entity licensed to do business in the Philippines organized under foreign laws.
An office which undertakes activities that shall be limited to acting as supervisory, communication and coordinating center for its subsidiaries, affiliates and branches in Asia-Pacific Region other foreign markets.
Regional Operating Headquarters
A multinational company engaged in international trading.
- What are the possible incentives schemes available for an investor?
- Incentives offered under the Omnibus Investments Code of 1987 (E. O. 226) Projects outside of the economic zones can register with Board of Investments (BOI) to qualify for the incentives below:
- Income Tax Holiday (ITH)
- Six (6) years for projects with pioneer status and for projects located in a Less Developed Area (LDA);
- Four (4) years for new projects with non-pioneer status;
- Three (3) years for expansion/ modernization projects
- Duty exemption on imported capital equipment, spare parts, and accessories;
- Exemption from wharfage dues and any export tax, duty impost and fees;
- Tax exemption on breeding stocks and genetic materials;
- Tax credits on imported raw materials;
- Tax and duty-free importation of consigned equipment;
- Additional deduction for labor expense;
- Employment of foreign nationals;
- Simplification of customs procedures;
- Access to bonded manufacturing warehouse.
- Other Incentives offered under Special Laws:
Renewable Energy Act of 2008 (R.A. No. 9513)
- Income tax holiday (7 years);
- Duty-free importation of RE machinery, equipment and materials;
- Net Operating Loss Carry-Over (NOLCO);
- Corporate tax rate of 10% after ITH;
- Accelerated depreciation;
- VAT-zero rate on sale of fuel or power generated;
- Cash incentive for missionary electrification;
- Tax exemption of carbon credits;
- Tax credit on domestic capital equipment and services.
Philippine Mining Act of 1995 (R.A. No. 7942)
- Exemption from real property tax and other taxes or assessments of pollution control devices;
- Income tax-carry forward of losses;
- Income tax-accelerated depreciation
Downstream Oil Industry Deregulation Act of 1998 (R.A. No. 8479)
- Income Tax Holiday (5 years);
- Additional deduction for labor expenses;
- Minimum tax and duty of three percent (3%) and value-added tax (VAT) on imported capital equipment;
- Tax credit on domestic capital equipment;
- Exemption from contractor’s tax;
- Unrestricted use of consigned equipment;
- Exemption from the real property tax on production equipment or machineries;
- Exemption from taxes and duties on imported spare parts.
- Such other applicable incentives under Article 39 of Executive Order No. 226
Revised Forestry Reform Code of the of the Philippines (P.D. No. 705)
Book Publishing Industry Development Act (R.A. No. 8047)
Magna Carta for Disabled Persons (R.A. No. 7277)
Tourism Act of 2009 (R.A. No. 9593)
- What are the protections to investments available to investors?
- According to Section 4 of the Republic Act No. 5186, all investors are entitled to the basic rights and guaranteed provided in the Constitution. Among the other rights recognized by the Government of the Philippines are the following:
- Repatriation of Investment
Foreign investors have the right to repatriate the entire proceed of the liquidation of the investment in the currency in which the investment was originally made at the exchange rate prevailing at the time of repatriation as long as it is registered with Bangko Sentral ng Pilipinas (BSP).
Bangko Sentral ng Pilipinas
A Mabini St. cor. P. Ocampo St.,
Malate Manila, Philippines
Landline: (+632) 8708-7701
- Remittance of Earnings
In the case of foreign investments, investor has the right to remit earnings from the investments in the currency in which the investment was originally made and the exchange rate prevailing at the time of remittance.
- Foreign Loans and Contracts
Foreign investors have the right to remit, at the exchange rate prevailing at the time of remittance, such sums as may be necessary to meet the payment of interest and the principal on foreign loans and foreign obligations arising from technological assistance contracts.
- Freedom from Expropriation
There shall be no expropriation by the government of the property represented by the investments or of the property of enterprises except for public use or in the interest on national welfare and defense and upon payment of just compensation, In such cases, foreign investors or registered enterprises shall have the right to remit sums received as compensation the expropriated property in the currency in which the investment was originally made and at the exchange rate prevailing at the time of remittance.
- Right to Requisition of Investment
There shall be no requisition of the property presented by the investment or of the property of enterprises, except in the event of war or national emergency and only for the duration. Just compensation for the requisitioned property may be remitted in the currency in which the investment was originally made and the exchange rate prevailing at the time of remittance
- In addition, under the ASEAN Comprehensive Investment Agreement with other countries, investors are accorded the following, among others:
- Free Transaction of Capital
The Philippine allows all transfers to investment to be made freely and without delay into and out of its territory, subject to compliance with certain requirements imposed by laws and regulations.
- National Treatment
The Philippines treats all investments equally whether made by foreign or local investors to the extent allowed by Philippine laws.
- Fair and Equitable Treatments
The Philippines affords to investments fair and equitable treatment and full protection and security accordance with customary international law.