ROHQ Registration in the Philippines: Requirements and Step-by-Step Process

A Regional Operating Headquarters (ROHQ) is a foreign business entity licensed to operate in the Philippines and to earn income here by providing qualifying services to its own affiliates, subsidiaries, or branches in the Philippines, the Asia-Pacific Region, and other foreign markets. Under Republic Act No. 8756, which amended the Omnibus Investments Code of 1987, an ROHQ of a non-banking, non-financial institution must secure a license from the Securities and Exchange Commission (SEC) upon the favorable recommendation of the Board of Investments (BOI). ROHQs of banking and financial institutions must secure licenses from both the SEC and the Bangko Sentral ng Pilipinas (BSP), likewise upon the BOI's favorable recommendation.

What an ROHQ Is Allowed to Do

Under Article 59 of the Omnibus Investments Code, as amended by RA 8756, an ROHQ may engage in qualifying services such as general administration and planning; business planning and coordination; sourcing and procurement of raw materials and components; corporate finance advisory services; marketing control and sales promotion; training and personnel management; logistics; research and development and product development; technical support and maintenance; data processing and communication; and business development.

Two limits are strict. An ROHQ is prohibited from offering qualifying services to entities other than its own affiliates, branches, or subsidiaries as declared in its SEC registration. It also may not directly or indirectly solicit or market goods and services on behalf of its mother company, branches, affiliates, subsidiaries, or any other company.

The Core Documentary Requirements

Article 59 lists the minimum requirements a foreign entity must comply with:

• Consular or trade certification. A certification from the Philippine Consulate or Embassy, or a duly authenticated certification from the Department of Trade and Industry or its equivalent in the foreign firm's home country, stating that the foreign firm is an entity engaged in international trade with affiliates, subsidiaries, or branch offices in the Asia-Pacific Region and other foreign markets.
• Board authorization. A duly authenticated certification from the principal officer of the foreign entity confirming that its Board of Directors or governing body authorized the establishment of the ROHQ in the Philippines, specifying the qualifying services it will perform and the undertaking to notify the BOI, SEC, and BSP, as the case may be, at least fifteen (15) days before any decision to close down or suspend operations.
• Capital undertaking. An undertaking that the multinational company will initially remit into the country an amount necessary to cover its operations, but not less than Two Hundred Thousand US Dollars ($200,000) or its equivalent in other foreign currencies.

The Inward Remittance Rule and Deadline

Within thirty (30) days from receipt of the certificate of registration, the multinational company must submit to the SEC a certificate of inward remittance from a local bank showing that it has remitted at least $200,000, or its equivalent, and converted the same to Philippine currency. This is a documentary compliance step, not a capital stock requirement, and it applies specifically to ROHQs.

How the Licensing Process Runs

1. Secure the BOI's favorable recommendation. The SEC acts on the ROHQ application only upon the BOI's favorable recommendation, so the endorsement is the practical first approval to obtain.
2. File the license application with the SEC. For non-banking, non-financial ROHQs, the SEC is the licensing authority. For banking and financial institutions, a BSP license is also required.
3. Submit the consular certification, board authorization, and capital undertaking described above.
4. Receive the certificate of registration, then complete the inward remittance and submit the bank certificate of inward remittance to the SEC within thirty (30) days.

Tax Treatment to Expect

RA 8756 provides that an ROHQ is subject to a tax rate of ten percent (10%) of its taxable income as provided under the National Internal Revenue Code, and that any income derived from Philippine sources and remitted to the parent company is subject to the tax on branch profit remittances. The same law provides that an ROHQ is subject to the ten percent (10%) value-added tax, and that ROHQs are exempt from all kinds of local taxes, fees, or charges imposed by a local government unit, except real property tax on land improvements and equipment. The specific National Internal Revenue Code section numbers implementing these rates are not reproduced in the source text available here.

Frequently asked questions

How much money must an ROHQ remit to the Philippines? At least Two Hundred Thousand US Dollars ($200,000), or its equivalent in other foreign currencies, initially remitted into the country to cover operations.

Which agency issues the ROHQ license? For non-banking and non-financial institutions, the SEC issues the license upon the favorable recommendation of the BOI. ROHQs of banking and financial institutions also need a license from the BSP.

Can an ROHQ serve clients outside its own group? No. An ROHQ may perform qualifying services only for its affiliates, branches, or subsidiaries as declared in its SEC registration, and it may not solicit or market goods and services for other companies.

Practical takeaways

• Confirm early that the parent is a multinational company engaged in international trade with affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets, since the consular certification turns on this.
• Secure the BOI's favorable recommendation before expecting SEC action on the license.
• Prepare the $200,000 inward remittance and the local bank's certificate of inward remittance, which must reach the SEC within thirty (30) days from receipt of the certificate of registration.
• Keep the ROHQ's activities within the qualifying services and within the declared affiliates, branches, and subsidiaries.
• Any violation of the Code, its implementing rules, the terms of registration, or existing laws is sufficient cause for cancellation of the license or registration.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• REPUBLIC ACT NO. 11232 - AN ACT PROVIDING FOR THE REVISED CORPORATION CODE OF THE PHILIPPINES

• IRR OF REPUBLIC ACT NO. 11647 - IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT NO. 11647 OR AN ACT PROMOTING FOREIGN INVESTMENTS, AMENDING THEREBY REPUBLIC ACT NO. 7042, OTHERWISE KNOWN AS THE "FOREIGN INVESTMENTS ACT OF 1991", AS AMENDED, AND FOR OTHER PURPOSES

• REPUBLIC ACT NO. 8756 - AN ACT PROVIDING FOR THE TERMS, CONDITIONS AND LICENSING REQUIREMENTS OF REGIONAL OR AREA HEADQUARTERS, REGIONAL OPERATING HEADQUARTERS, AND REGIONAL WAREHOUSES OF MULTINATIONAL COMPANIES, AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF EXECUTIVE ORDER NO. 226, OTHERWISE KNOWN AS THE OMNIBUS INVESTMENTS CODE OF 1987

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.