The Philippines is a strategically located archipelago in Southeast Asia, comprising over 7,000 islands with a population exceeding 110 million people. As one of the fastest-growing economies in Asia, the Philippines offers significant opportunities for businesses seeking to establish operations in the region. The country boasts a large English-speaking workforce, competitive labor costs, and strong government support for foreign investment. Key growth sectors include business process outsourcing (BPO), information technology, manufacturing, tourism, and renewable energy. The Philippines has implemented numerous reforms to improve its business environment and is actively pursuing deeper integration with ASEAN and global markets.
Unlock growth opportunities in the Philippines with Cerity Global as your trusted partner. We offer end-to-end support for establishing your legal entity, navigating Philippines’s often complex regulatory landscape with clarity and efficiency.
From company registration to ongoing back-office support, including HR, payroll, benefits, accounting, tax and compliance, Cerity Global simplifies the process so you can focus on growing your business.
Need to hire quickly before your entity is set up? We offer interim EOR services in the Philippines, enabling you to onboard talent fast. Once your entity is established, we ensure a smooth transition of your employees from the EOR Structure to your own legal entity, without disrupting payroll or compliance.
Our experts stay ahead of regulatory changes to keep your operations aligned with the Philippines employment and tax laws, helping you scale confidently and compliantly.
The most popular choice for foreign investors, a Domestic Corporation offers limited liability protection and allows up to 40% foreign ownership in most sectors (100% in certain industries). It requires 2 to 15 incorporators, with the majority being Philippine residents. The minimum authorized capital stock is PHP 1,000,000, though only 25% needs to be paid-up upon incorporation. This entity type is suitable for businesses planning long-term operations and significant investment.
Introduced under the Revised Corporation Code, an OPC allows a single individual to incorporate a business entity with limited liability protection. The sole incorporator serves as the director, president, and stockholder. This structure is ideal for small businesses, freelancers, and entrepreneurs who want corporate benefits without multiple shareholders. Foreign nationals can establish an OPC in sectors that allow 100% foreign ownership.
A partnership involves two or more persons who agree to contribute money, property, or industry to a common fund for profit. General partnerships have unlimited liability, while limited partnerships allow limited partners to have liability only up to their capital contribution. Partnerships are suitable for professional services and smaller business ventures.
A representative office allows foreign companies to conduct liaison activities, market research, and promotional work without engaging in income-generating activities. It cannot derive revenue in the Philippines and serves primarily as a communication link between the foreign parent company and local clients or suppliers.
A branch office is an extension of a foreign corporation that can conduct business activities in the Philippines. It operates under the parent company’s name and is fully liable for its obligations. Branch offices are subject to the same foreign ownership restrictions as domestic corporations and require significant capitalization.
An RHQ serves as a supervisory, communications, and coordinating center for subsidiaries, affiliates, or branches in the Asia-Pacific region. It cannot engage in income-generating activities in the Philippines. An AHQ provides services to affiliates, branches, or subsidiaries in the region and can generate income from these activities.
Most directors must be Philippine residents. Directors must be natural people, at least 18 years old, and own at least one share of stock capital. Foreign directors must obtain appropriate visas and work permits.
The single incorporator must be a natural person who can be a Philippine resident or foreign national (subject to foreign ownership restrictions in the relevant sector).
Partners can be natural persons or juridical entities. General partners must have unlimited liability, while limited partners’ liability is restricted to their capital contribution.
Must have a resident agent who is a Philippine citizen or a domestic corporation authorized to act as agent.
Bank account setup in the Philippines follows specific procedures depending on the entity type and timing:
Bank Account Setup in the Philippines: Process and Requirements
Before Incorporation:
After Incorporation:
Note:
Philippine banks strictly apply BSP KYC and AML rules. Expect enhanced due diligence for foreign-owned entities and ultimate beneficial owner (UBO) disclosure. Some banks require in-person verification of signatories, a local tax number (TIN) for signatories, a minimum balance and proof of economic substance (e.g., contracts, invoices). Processing timelines and specific document lists vary significantly by bank — engaging early with two or more banks and preparing certified translations for foreign documents will usually speed onboarding. For regulated activities (financial services, remittance), additional licensing and AML checks apply.
Required Documents are SEC Certificate of Incorporation and Articles of Incorporation, General Information Sheet (GIS), board resolution authorizing bank account opening, identification documents of authorized signatories and beneficial owners, proof of business address, and Tax Identification Number (TIN) from BIR.
Cerity Global supports companies in their global expansion plans and helps in legal entity setup, registration and ongoing support services. With us, you can quickly set up a legal entity, operate compliantly, and expand globally. The process typically takes a few days to a week, depending on the bank.
Employment in the Philippines is primarily governed by the Labor Code of the Philippines and related legislation:
Employment contracts must be in writing for definite-period employment and are recommended for all employment relationships.
Some of the standard details mentioned in the written contract include:
The different types of employment relationships are: Regular Employment
The most common form where employees are hired to perform activities that are necessary or desirable in the usual business of the employer. Regular employees enjoy security of tenure and full benefits under the law.
Probationary Employment
New employees may be placed under probationary status for up to 6 months to determine their fitness and qualifications for regular employment.
Fixed-Term/Project Employment
Employment with a specific duration or for a particular project. The contract terminates automatically upon expiration of the term or completion of the project.
Casual Employment
Employment for work that is not necessary or desirable in the usual business of the employer, typically lasting less than one year.
Seasonal Employment
Employment during specific seasons or periods of the year, typically in agriculture or tourism-related businesses.
In the Philippines, the probationary period cannot exceed 6 months for most positions. During this period, employees may be terminated for just cause or failure to meet employment standards.
The standard working hours in the Philippines are 8 hours per day and 48 hours per week, with at least one rest day per week. Certain industries and positions may have different arrangements subject to Department of Labor and Employment (DOLE) regulations.
Overtime
Overtime work must be compensated at 125% of the regular hourly rate for work on regular days and 130% for work on rest days and special holidays. Premium rates apply for work on regular holidays.
Notice periods in the Philippines vary based on the type of termination:
Severance pay is required for termination due to authorized causes (redundancy, retrenchment, disease, etc.) equivalent to one-half month pay for every year of service or one month pay, whichever is higher.
Foreign nationals can live and work in the Philippines by securing appropriate work authorization. With a valid job offer and employer sponsorship, qualified individuals may be eligible for various work visa categories.
Work Visa & Permit Options in Philippines
9(g) Pre-Arranged Employee Visa
For foreign nationals with pre-arranged employment in the Philippines.
Alien Employment Permit (AEP)
Required for all foreign nationals seeking employment in the Philippines.
Special Resident Retiree’s Visa (SRRV)
For retirees who wish to reside permanently and potentially engage in business.
Special Investor’s Resident Visa (SIRV)
For foreign investors making substantial investments in the Philippines.
Treaty Trader/Investor Visa
For nationals of countries with bilateral trade agreements with the Philippines.
Key Requirements:
The Philippines continues to streamline visa processes for qualified foreign workers, particularly in priority sectors like IT, healthcare, and manufacturing. Processing times may vary based on visa type and completeness of requirements.
All employees who have rendered at least one year of service are entitled to a yearly service incentive leave of five days with pay. Employees in the government and those already enjoying vacation leave with pay of at least five days are not entitled to this benefit.
Female employees are entitled to 105 days of paid maternity leave, which can be extended by an additional 30 days without pay upon approval. Solo mothers are entitled to an additional 15 days of paid leave.
Male employees are entitled to 7 days of paid paternity leave for the first four deliveries of their legitimate spouse.
Solo parents are entitled to 7 days of paid leave annually.
While not mandated by law for private sector employees, sick leave is commonly provided and may be required under collective bargaining agreements.
Employees may be granted leave for emergency situations, typically unpaid unless provided for in company policy.
The following statutory national holidays are observed in the Philippines:
Additional special non-working holidays may be declared by the President.
The most common pay frequency is twice monthly (every 15th and 30th of the month), though monthly payments are also acceptable for certain employee categories.
Payslips are mandatory and must include detailed breakdown of gross pay, deductions, and net pay.
The 13th month pay is mandatory in the Philippines, equivalent to 1/12 of the total basic salary earned during the calendar year, and must be paid not later than December 24.
The Philippines has a comprehensive social security system with mandatory contributions:
Social Security System (SSS)
PhilHealth (Philippine Health Insurance Corporation)
Pag-IBIG Fund (Home Development Mutual Fund)
13th Month Pay
Accounting standards in the Philippines follow Philippine Financial Reporting Standards (PFRS), which are based on International Financial Reporting Standards (IFRS), and Philippine Standards on Auditing (PSA).
Companies in the Philippines must file various reports with different government agencies:
Statutory audit is required for:
External audits must be conducted by Certified Public Accountants (CPAs) accredited by the SEC.
The standard corporate income tax rate is 25% of net taxable income. Small corporations may qualify for reduced rates under certain conditions.
The Philippines levies VAT at a standard rate of 12% on most goods and services. VAT registration is mandatory for businesses with annual gross sales/receipts exceeding PHP 3 million.
Penalties for late filing and tax non-compliance can include fines 25% of the tax due, interest charges of 12% per annum and potential criminal liability for serious violations.
The Philippines has comprehensive transfer pricing regulations requiring arm’s length pricing for related party transactions:
Documentation required for transactions with related parties
The Philippines has implemented CbC reporting requirements for multinational groups:
The Philippines follows OECD transfer pricing documentation standards:
Master File
Local File
The Philippines has enacted the Data Privacy Act of 2012, which is administered by the National Privacy Commission (NPC). The law governs the processing of personal data and establishes comprehensive data protection principles similar to international standards.
The Philippines’ AML framework is governed by the Anti-Money Laundering Act (AMLA) as amended and its implementing rules and regulations:
Obligated entities: Banks, financial institutions, quasi banks, insurance companies, securities dealers and brokers, foreign exchange dealers, anbd money service businesses
Key requirements:
Penalties: Significant administrative and criminal penalties for non-compliance, including imprisonment of 7 to 14 years and fines ranging from PHP 3 million to PHP 15 million.
Reasons you should setup legal entity in the Philippines:
Cerity Global ensures your business expansion in the Philippines is fast, compliant, and future-ready, so you can focus on growth while we manage the back-office tasks.
Economic figures are subject to change based on quarterly reports and market conditions.
Cerity Global combines deep local knowledge with proven expertise to make your Philippines business establishment effortless and compliant. Whether you’re looking for legal entity setup and registration or ongoing support, we’re your trusted partner for sustainable global expansion in the Philippines..
Disclaimer – The information provided is for informational purposes only and does not constitute legal, business, or tax advice. Entity setup requirements, tax rates, and economic data are subject to change and may vary by location.
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