How to Set Up a Representative Office in the Philippines: A Guide for Foreign Investors

A Representative Office in the Philippines serves as a non-commercial entity that allows foreign companies to establish a presence in the country without engaging in direct sales or revenue-generating activities. This structure is ideal for market research, supplier coordination, and quality control while maintaining full reliance on funding from the parent company.

Unlike a branch or subsidiary, a Representative Office does not have a separate legal identity from its parent entity and cannot enter into contracts that generate income. However, it serves as a strategic entry point for companies assessing market conditions before committing to a larger investment.

Key advantages and considerations

Establishing a Representative Office can be beneficial for companies seeking to explore the Philippine market while avoiding the complexities of commercial licensing and taxation. Some of the main advantages include:

• Market exploration without commercial risks – Companies can conduct feasibility studies, gather industry insights, and build business relationships before making a full-scale investment.
• Tax exemptions – Since a Representative Office does not engage in profit-generating activities, it is typically exempt from corporate income tax in the Philippines.
• Lower regulatory burden – The setup process is relatively straightforward compared to subsidiaries or branches, with fewer ongoing compliance requirements.

However, businesses must also consider the limitations, such as the prohibition on revenue-generating activities and the requirement for full funding from the parent company.

Preparing for establishment: Eligibility and requirements

Before initiating the registration process, foreign companies must assess their eligibility and meet the necessary qualifications. The Philippine government imposes the following criteria:

• The parent company must be legally established in its home country and have an operational history of at least three years.
• A minimum inward remittance of US$ 30,000 is required to cover operational expenses.
• The parent company must provide proof of financial stability to sustain operations in the Philippines.
• Certain industries may have additional regulatory requirements or restrictions.

Financial and capital considerations

Since a Representative Office does not generate income locally, its funding is entirely sourced from the parent company. Businesses should plan for:

• Initial capitalization – The minimum inward remittance of US$ 30,000 proves financial capability.
• Ongoing funding requirements – The parent company must remit at least US$ 30,000 annually to cover operational expenses.
• Banking and remittance processes – Funds must be transferred through an authorized Philippine bank, with proper documentation for compliance.
• Tax implications – While a Representative Office is exempt from corporate income tax, it is still subject to payroll taxes and other regulatory fees.

Registration requirements and step-by-step process

To set up a Representative Office, follow these steps to obtain a License to Do Business from the Securities and Exchange Commission (SEC):

1. Prepare the Required Documents: Gather the necessary paperwork, including:
   • SEC Application Form No. F-104 – Application of a Foreign Corporation to Establish a Representative Office in the Philippines.
   • Board Resolution – Notarized and apostilled certified copy authorizing the formation of the Representative Office and designating a Philippine resident or foreign national to receive summons and attend legal proceedings.
   • Financial Statements – Notarized and apostilled copy of the most recent audited financial statements of the parent company certified by a CPA.
   • Articles of Incorporation – Notarized and apostilled certified copies of the parent company’s Articles of Incorporation.
   • Bank Deposit Certificate – Certificate of Bank Deposit or Certificate of Inward Remittance of the US$ 30,000 to cover operational costs.
2. Reserve a Business Name: Choose a unique name for the Representative Office and reserve it with the SEC.
3. Appoint a Local Representative: Designate a resident agent or representative in the Philippines.
4. Submit Required Documents: Provide all necessary paperwork, including the application form, board resolution, financial statements, articles of incorporation, and bank deposit certificate, to the SEC.
5. Obtain a License to Do Business: Once approved, the SEC issues the license allowing the Representative Office to operate in the Philippines.

6. Register with the Bureau of Internal Revenue (BIR) – While exempt from corporate taxes, the office must obtain a Taxpayer Identification Number (TIN).
7. Secure Local Business Permits – Obtain necessary clearances from the local government unit where the office will be based.
8. Acquire Special Permits if Required – Some industries may require additional sector-specific approvals.

Appointing a resident agent

A Resident Agent acts as the official representative of a Representative Office in the Philippines, managing legal correspondence and regulatory interactions. Companies must carefully choose between appointing a foreign representative or a local agent, depending on legal and operational requirements.

The Resident Agent is responsible for handling legal documents, representing the Representative Office in administrative matters, and ensuring compliance with local regulations. If a foreign representative is selected, visa and work permit requirements must also be considered.

Employment and staffing considerations

A Representative Office in the Philippines can hire local employees but must comply with the country’s labor laws. This includes enrolling employees in mandatory social security programs such as the Social Security System (SSS), PhilHealth, and the Home Development Mutual Fund (Pag-IBIG). Companies must also decide between directly hiring staff or outsourcing administrative functions. Additionally, if the Representative Office requires expatriate staff, proper visas and work permits must be obtained to ensure legal compliance.

Compliance and ongoing obligations

Maintaining a Representative Office in the Philippines requires adherence to regulatory obligations, including:

• Annual reporting to the SEC
• Tax filings and payroll compliance with the BIR
• Renewal of business permits with the local government
• Submission of audited financial statements to relevant authorities
• Compliance with foreign investment reporting regulations

Failure to comply with these obligations may result in penalties or revocation of business registration.

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