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Foreign Investment in Philippines

General Information

Capital	Manila
Language	Filipino, English
Area	328,000 sq Km
Population	117.34 million
Currency	Philippine Peso (PHP)
Harbor	Manila, Cebu, Subic

　　The Philippines is one of the ten members of ASEAN, aside from electronic products, tax-free exports to the EU include garments, textiles, and footwear. The well-known special economic zones in the Philippines include: Subic Bay Special Economic Zone and Clark Special Economic Zone.

Major Types of Entity
　　The Foreign Investment Law of Philippine has no restrictions on foreign investors engaging in manufacturing in most industries. The establishment type is as follows:

1.	Representative Office: only permitted to engage in market research and business promotion, with an initial investment of US$30,000 for operating expenses.
2.	Stock corporation: requires a minimum of 2 and a maximum of 15 individuals or legal entities as directors (each director must hold at least one share). Additionally, it needs to appoint at least 3 officers: a president, Corporate Secretary, and treasurer.
3.	Branch Office: must appoint a Filipino as the resident agent, and the audited financial statements of parent company must be certified by a licensed accountant and notarized by a Notary Public.

　　The minimum capital of foreign companies is US$200,000, if it recognized as an innovation promoter under the "Innovative Startup Act", or a majority of its employees are Filipinos and employs at least 15 local employees, the capital amount can be reduced to US$100,000. For foreign investors engaged in retail business, the minimum capital has been lowered from US$2.5 million to US$500,000.

Major Taxes in Philippines
　　The corporate income tax (CIT) is 25%, but for small & medium-sized enterprises with taxable income less than 5 million pesos and total assets less than 100 million pesos, the CIT is 20%.

　　Foreign enterprises registered under the Philippine Economic Zone Authority (PEZA) are allowed 100% ownership (total 419 areas). If the products are mainly for export more than 70%, both domestic and export sales can enjoy 4-6 years of tax exemption, as well as 5-10 years of preferential treatment or CIT deductions.

Tax	Rate	Scope
CIT	25%	Standard rate
VAT	0%	Export goods/services
VAT	12%	Standard rate
PIT	0%-35%	Tax resident(183-day rule)
Excise Tax	10%-70%	Cigarettes, cigars, beer, dance hall, casinos, golf clubs
WHT	15%	Branch remittance tax
	25%	Dividends
	20%	Interest
	30%	Royalties

Employment

　　The minimum wage and social security benefits in the Philippines include:

1.	Starting from 2024, the daily minimum wage in Metro Manila is 610 pesos, which translates into a monthly salary of approximately 13,420 pesos (US$243).
2.	Social Security System (SSS) rate is 14% (employers pay 9.5%, employees 4.5%).
3.	Employees' Compensation Program (ECP) is maximum of 30 pesos (US$0.54) per month per employer.
4.	Philippine Health Insurance Corporation (PHIC) rate is 5% (employers and employees each pay 2.5%).
5.	Home Development Mutual Fund (HDMF), which provides housing loans. If monthly compensation is 5,000 pesos (US$90) or more, 150 pesos for HDMF based on their salary bracket.

Foreign Investment in Philippines

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