It is a common misconception in the Philippines that foreigners can’t own a business unless they’re married to a Filipino citizen or only if they open the business with Filipino owners.
Business Restrictions for Foreigners
In reality, foreigners are allowed to own and manage a business in the Philippines. However, they have more requirements to fulfill compared with Filipino business owners.
Also, there are certain business activities or industries that are restricted to Filipino owners only. The good news is that there are also industries that can be owned by 100% foreign owners.
Here are the enterprise options for foreigners:
- Wellness Center
- Insurance adjustment companies, lending companies, and investment houses
- Training centers engaged in short-term high-level skills development
- Business-to-Business – Foreigners can own a company that provides services or sells to other businesses. The minimum investment for a business-to-business (B2B) company is from US $100,000 (Php4.8 million) to US $200,000 (Php9.6 million).
- Internet Business – Any business operating solely on the internet, except mass media, can be owned 100% by foreigners.
- Domestic Enterprises – For this type of business, foreign owners also have to invest at least US $100,000 (Php4.8 million, especially if the company has at least 50 employees and is into advanced technology. The category “domestic market enterprise” is actually broad and encompasses aspects, including rendering services to the domestic market or producing various goods for sale.
- Export Enterprises – As long as the type of business for the enterprise or company isn’t on the negative list, the company can be 100% owned by foreigners.
Businesses that Can’t Be Owned by Foreigners (0% Foreign Ownership)
The following businesses are on negative list A, with 0% or no foreign equity allowed:
- Agencies for watchmen, security guards, or private detectives
- Any business involving nuclear weapons
- Manufacturing of firecrackers/pyrotechnic devices
- Manufacturing or related activities (including distribution) of biological/chemical and radiological weapons or anti-personnel mines
- Mass media, except recording or internet business
- Operating cockpits
- Practicing any profession, except teaching in higher education levels
- Retail trade enterprises with paid-up capital of less than US$2.5 million
- Small-scale mining
- Utilization of marine resources
Documents to Prepare
These are some of the things that you need to prepare if you need to open a business in the Philippines as a foreigner:
- Articles of incorporation
- Clearance certificate from other government agencies
- Community tax certificate
- Complete employee data form
- Contract of the lease, if any
- Copy of municipality permission letter
- Fire safety and electrical inspection certificate
- Foreign investment application form (for foreign corporation subsidiaries)
- Government-issued ID
- List of members (with contributed amount) certified by the secretary
- Location and barangay clearance (of business location)
- Notarized bank certificate
- Occupancy certificate and building permit
- Payment of registration fees fixed on territorial based with documentary stamp tax
- Proposed business name registration form
- Registration fee
- Treasurer’s affidavit
- Verification slip form
- Written undertaking (if name changed for the corporate by trustee or director)
Starting a Business in the Philippines as a Foreigner
Step 1. Make sure to do thorough research in the industry or field of business you’re venturing in. Some fields allow 100% foreign ownership, others 0%! There are also fields that allow up to 25%, 30%, and 40% foreign ownership.
Step 2. Register business name. You need to do so at the following government agencies:
- DTI (Department of Trade and Industry) for sole proprietorship
- SEC (Securities and Exchange Commission) for corporation or partnership company
Step 4. Register as an employer at these government agencies:
- SSS (Social Security System)
- Pag-IBIG (also known as HDMF, Home Development Mutual Fund)
- DOLE (Department of Labor and Employment)
Step 5. Obtain all the necessary permits and licenses, including:
- Mayor’s business permit
- Building permits (if you need to construct a building for your business)
Step 6. Hire and train your workers.
Step 7. Begin operation.