A foreign company enters the Philippines in one of four ways: a foreign-owned domestic corporation (a subsidiary), a branch office, a representative office, or a regional headquarters. The choice between a foreign-owned domestic corporation and a branch office matters most, because those are the two that can sell to Philippine customers. A subsidiary is a new Philippine company with its own liability; a branch is the foreign company itself, licensed to do business here. A representative office and a regional headquarters cannot sell in the Philippines at all. An employer of record is not a fifth route: it employs people for you and gives your company no presence of its own.
Key Takeaways
- Only a subsidiary or a branch can earn income from Philippine customers. A representative office and a regional headquarters (RHQ) earn no Philippine income; a regional operating headquarters (ROHQ) earns income only from its own group.
- A subsidiary or branch selling to the domestic market needs US$200,000 of paid-in capital, or US$100,000 in three cases. An exporter of 60% or more of its output is exempt from both.
- A branch posts a ₱500,000 securities deposit with the SEC and pays 15% branch profit remittance tax when it sends profit home. A subsidiary does neither, but its dividends to a foreign parent carry a final withholding tax.
- A representative office brings in US$30,000 every year; an RHQ US$50,000 every year; an ROHQ US$200,000 once.
- A domestic corporation owned by individuals is the most common route and the quickest. A company as shareholder, or a branch, representative office or regional headquarters, adds apostilled parent documents and weeks.
- An employer of record employs staff on your behalf. It does not register your company in the Philippines.
The four routes at a glance
| Route | What it is | Philippine income | Capital or remittance | Income tax |
|---|---|---|---|---|
| Foreign-owned domestic corporation | A Philippine company, more than 40% foreign-owned | Yes | US$200,000 paid-in for the domestic market; US$100,000 in three cases; none for an exporter | 25%, or 20% for a small company |
| Branch office | The foreign company, licensed to do business here | Yes | Same as a subsidiary, plus a ₱500,000 securities deposit | 25%, plus 15% on profit remitted to head office |
| Representative office | A liaison office funded by head office | No | US$30,000 every year | None on income it does not earn |
| RHQ / ROHQ | A supervisory center (RHQ) or a service center for the group (ROHQ) | RHQ no; ROHQ from affiliates only | RHQ US$50,000 a year; ROHQ US$200,000 once | RHQ exempt; ROHQ 25% since 1 January 2022 |
Subsidiary and branch capital is from the Foreign Investments Act as amended by Republic Act No. 11647 (2022) and its rules, the branch deposit from the Revised Corporation Code, RHQ and ROHQ remittances from Republic Act No. 8756, and the representative office's US$30,000 from the SEC's minimum capital list. Tax rates are from the Tax Code as amended by CREATE, Republic Act No. 11534.
The most straightforward route, and what adds time
In Korp's filings, a domestic corporation whose shareholders are individuals is the most common route and the most straightforward. The founders sign online through the SEC's eSAP system, and the SEC certificate takes about 10 working days through Korp.
Two things add documents, review and time:
- A company as shareholder. When a foreign company holds the shares, it supplies its certificate of incorporation, its articles or equivalent constitutional documents, its latest general information sheet or equivalent, and a board resolution authorizing the investment and naming its representative. Each is apostilled where it was issued or signed, or legalized at a Philippine embassy or consulate where the Apostille Convention does not apply, and the SEC reviews them with the filing. Through Korp, the SEC stage then takes about four to six weeks, most of it the apostille. Setting up a Philippine subsidiary with a foreign parent company covers the documents and who signs.
- A branch, representative office or regional headquarters. Each is a license granted to the foreign company itself, so each starts from the parent's own documents, apostilled in the same way: its constitutional documents, its audited financial statements and a board resolution. Each takes longer than a domestic corporation; a representative office's license takes about eight weeks through Korp.
Foreign-owned domestic corporation
A foreign-owned domestic corporation is incorporated under the Revised Corporation Code like any Philippine company, with foreigners holding more than 40% of it. It has a personality separate from its shareholders: its debts are its own, and a shareholder answers for them only up to any unpaid subscription.
Foreigners may own up to 100% unless the activity is restricted. The Foreign Investment Negative List closes some activities and caps others at 25%, 30% or 40%, and the Constitution reserves private land and public utilities to companies at least 60% Filipino-owned.
A foreign parent can hold almost all the shares, but not all the seats. A stock corporation needs at least two directors, each a natural person holding at least one share, and the corporate secretary must be a Filipino citizen and resident (Revised Corporation Code, Section 24). A wholly owned subsidiary therefore still has two individuals on its board, each holding one qualifying share. The board of directors article covers the other qualifications.
Capital depends on who the company sells to:
- Domestic market — US$200,000 paid-in.
- Reduced — US$100,000 paid-in with DOST advanced-technology certification, an RA 11337 startup endorsement, or a direct workforce that is majority Filipino with at least 15 Filipino employees.
- Export enterprise — no minimum, for a company exporting 60% or more of its output. The ratio is tested continuously, and a company that falls below it must cut its domestic sales to 40%.
Minimum capital for a foreign-owned company sets out each case. How to incorporate a corporation online covers the filing itself.
Branch office
A branch is not a new company. The SEC licenses the foreign corporation itself to do business in the Philippines (Revised Corporation Code, Section 140), so the branch contracts in the foreign company's own name and its obligations are the foreign company's own. It is licensed on SEC Form F-103, for a fee of 1% of the inward remittance and not less than ₱3,000, and it appoints a resident agent in the Philippines to receive notices and legal process.
The capital rule is the same as a subsidiary's. The US$200,000 threshold attaches to being a foreign-owned business selling to the domestic market, not to the legal form, so a branch is held to US$200,000, US$100,000 or no minimum on the same terms. On top of that, a branch alone:
- posts a securities deposit with the SEC of at least ₱500,000 within 60 days of its license and, within six months after each fiscal year in which its gross income exceeds ₱10,000,000, an additional deposit of 2% of the excess (Revised Corporation Code, Section 143);
- needs audited financial statements at a lower threshold, ₱1,000,000 against a domestic corporation's ₱3,000,000;
- pays 15% branch profit remittance tax on profit sent to head office, except on activities registered with the Philippine Economic Zone Authority.
A foreign company counts as a Philippine national only if Filipinos own all of it (Republic Act No. 8179, Section 3(a)), so any other branch is treated as wholly foreign and can operate only in activities open to 100% foreign ownership. Starting a branch office covers the licensing steps.
Subsidiary or branch: where they differ
| Question | Foreign-owned domestic corporation | Branch office |
|---|---|---|
| Who is liable | The Philippine company | The foreign company itself |
| Directors | At least two natural persons, each holding a share | None in the Philippines; a resident agent |
| New investors, a joint venture or a sale | Shares can be issued or sold | No Philippine shares exist; the foreign company sells the business or its own shares |
| Minimum capital | US$200,000 / US$100,000 / none | The same |
| SEC securities deposit | None | ₱500,000, plus 2% of each year's gross income above ₱10,000,000 |
| Income tax | 25%, or 20% for a small company | 25% |
| Profit sent home | Dividends to a foreign parent: final withholding of 25%, or 15% where the parent's home country grants the credit the Tax Code describes | 15% branch profit remittance tax |
| Audited statements | Above ₱3,000,000 | Above ₱1,000,000 |
The 20% rate applies to a domestic corporation with net taxable income of ₱5,000,000 or less and total assets of ₱100,000,000 or less, excluding land. A branch pays a flat 25%.
Representative office
A representative office deals with the parent's clients, promotes its products and handles quality control, but earns no income in the Philippines and is fully funded by its head office. It brings in US$30,000 at licensing and again every year. It is licensed on SEC Form F-104 and, like a branch, appoints a resident agent. A team that will do revenue-earning work belongs in a subsidiary or a branch. Representative office vs branch office compares the two in detail.
Regional headquarters and regional operating headquarters
Both are set up under Republic Act No. 8756 and licensed by the SEC on the recommendation of the Board of Investments. They serve a multinational's own group, never Philippine customers.
- Regional headquarters (RHQ). A supervisory, communications and coordinating center for the group's affiliates, subsidiaries and branches in the region. It earns no Philippine income, may not market goods or services, and remits at least US$50,000 a year. It is not subject to income tax.
- Regional operating headquarters (ROHQ). It earns income by providing qualifying services to its own affiliates, branches or subsidiaries, among them general administration, business planning, procurement, finance advisory, training, logistics, research and development, technical support and data processing. It may not solicit or market goods and services, and it remits at least US$200,000 once. Since 1 January 2022 it pays the regular corporate income tax.
Your own entity or an employer of record
An employer of record (EOR) is a third-party company that employs your staff in the Philippines on your behalf. It signs the employment contracts and runs payroll, contributions and withholding; you direct the work. It is not a way to enter: the EOR is registered here, and your company is not.
A team in the Philippines that serves the parent's clients abroad is the case where the choice usually comes up. That team can be its own subsidiary: a company exporting 60% or more of its output may be 100% foreign-owned with no minimum capital, provided the service is not on the Negative List. EOR vs own entity compares the two, and the entity vs EOR calculator shows the headcount at which they cost the same for your numbers.
Which route fits
- The Philippine operation will sell to Philippine customers — a subsidiary or a branch.
- It will sell, and may later take in a local investor, a partner or a buyer — a subsidiary, which has shares to issue or sell.
- It will only promote the parent's products and support its clients — a representative office.
- It will supervise or serve the group's companies in the region — an RHQ or an ROHQ.
- It will serve the parent's clients abroad — an export subsidiary, with no minimum capital.
Setting up a company as a foreign founder takes each route through the board, signing from abroad, tax and each registration stage.
Registering with Korp
Korp's full registration takes a foreign-owned domestic corporation with individual shareholders from SEC incorporation through BIR registration to the mayor's permit, with a corporate secretary and a registered address for the first quarter, so it is ready to open a bank account and trade. As of October 2026 it is ₱217,500, VAT included; SEC incorporation alone is ₱120,000. The price includes SEC and BIR fees up to ₱1,000,000 of capital and a ₱10,000 provision for the city's permit fees; fees beyond those are paid on top. See SEC incorporation for foreign founders and the full pricing.
A subsidiary with a company as shareholder, a branch and a representative office are quoted as custom packages, from ₱170,000, VAT included, for the SEC stage. Korp then acts as corporate secretary and, for a branch or representative office, resident agent. After the SEC stage, BIR registration, the business permit, employer registration and the bank account take about four to six weeks more.
Frequently asked questions
Can a foreign company own 100% of a Philippine corporation?
Yes, unless the activity is restricted. The Foreign Investment Negative List closes some activities and caps others at 25%, 30% or 40%, and the Constitution reserves private land and public utilities to companies at least 60% Filipino-owned. The company still needs at least two directors who are natural persons, each holding one share.
Is a branch office cheaper to set up than a subsidiary?
No. Both are held to the same minimum capital: US$200,000 paid-in for the domestic market, US$100,000 in three cases, and none for an exporter of 60% or more of its output. A branch also posts a ₱500,000 securities deposit with the SEC, which a subsidiary does not.
Can a representative office earn income in the Philippines?
No. A representative office deals with the parent's clients, promotes its products and handles quality control, and is fully funded by its head office. It brings in US$30,000 at licensing and again every year.
What is the difference between an RHQ and an ROHQ?
An RHQ supervises and coordinates the group's companies in the region, earns no Philippine income, remits at least US$50,000 a year and is not subject to income tax. An ROHQ earns income by providing qualifying services to its own affiliates, branches or subsidiaries, remits at least US$200,000 once and pays the regular corporate income tax.
Is an employer of record a way to set up in the Philippines?
No. An employer of record employs staff on your behalf and runs their payroll and contributions. Your company is not registered in the Philippines and has no presence of its own there.
This article is general information, not legal advice.
