Representative Office Philippines Requirements: How Foreign Firms Can Set Up

A representative office in the Philippines is a licensed branch of a foreign company that supervises, communicates with, and coordinates its affiliates, subsidiaries, or branches in the region — but does not earn income in the country. Under Republic Act No. 8756, this structure is called a Regional or Area Headquarters (RHQ). To set one up, the foreign entity secures a license from the Securities and Exchange Commission (SEC) upon the favorable recommendation of the Board of Investments (BOI), and must meet specific documentary and remittance requirements. The steps below outline the process.

What a Representative Office (RHQ) Is Under Philippine Law

Under Section 2(2) of Republic Act No. 8756, a Regional or Area Headquarters is "an office whose purpose is to act as an administrative branch of a multinational company engaged in international trade which principally serves as a supervision, communications and coordination center for its subsidiaries, branches or affiliates in the Asia-Pacific Region and other foreign markets and which does not earn or derive income in the Philippines."

The parent must be a multinational company — a foreign company or group of foreign companies with business establishments in two or more countries, as defined in Section 2(1) of the same law.

An RHQ is distinct from a Regional Operating Headquarters (ROHQ), which is allowed to derive income in the Philippines by performing qualifying services for its affiliates, subsidiaries, or branches.

Who May Establish a Representative Office

Any foreign business entity formed, organized, and existing under laws other than those of the Philippines may establish an RHQ, provided its organizational documents or a board resolution state that its purpose is to supervise, superintend, inspect, or coordinate its own affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets.

The license is issued by the SEC upon the favorable recommendation of the BOI, as provided under Article 58 of the Omnibus Investments Code of 1987, as amended by Republic Act No. 8756.

The Documentary Requirements

Article 58 sets out the minimum requirements the foreign entity must comply with:

• Consular or DTI 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, confirming that the foreign firm is engaged in international trade with affiliates, subsidiaries, or branch offices in the Asia-Pacific Region and other foreign markets.
• Authenticated board certification. A duly authenticated certification from the principal officer of the foreign entity stating that its Board of Directors or governing body authorized the establishment of the RHQ in the Philippines, and specifying the limitations below.
• Inward remittance undertaking and proof. An undertaking to remit into the country an amount necessary to cover its Philippine operations, but not less than Fifty thousand US dollars ($50,000) or its equivalent in other foreign currencies annually.

The Two Remittance Filings

The remittance obligation has two stages under Article 58(c):

1. Initial proof. Within thirty (30) days from receipt of the certificate of registration from the SEC, the multinational company submits a certificate of inward remittance from a local bank showing that it has remitted at least US$50,000 (or its equivalent) and converted the same to Philippine currency.
2. Annual proof. Every year, within thirty (30) days from the anniversary date of its registration as an RHQ with the SEC, it submits proof of inward remittance of at least US$50,000 (or its equivalent) during the past year.

What the Representative Office May and May Not Do

The board certification must specify the following limitations:

• The RHQ's activities are limited to acting as a supervisory, communications, and coordinating center for its subsidiaries, affiliates, and branches in the region.
• The RHQ will not derive any income from sources within the Philippines and will not participate in any manner in the management of any subsidiary or branch office it might have in the Philippines. It also may not solicit or market goods and services on behalf of its mother company, branches, affiliates, subsidiaries, or any other company.
• The RHQ must notify the BOI and the SEC at least fifteen (15) days before any decision to close down or suspend operations.

Because an RHQ derives no income from the Philippines, Article 64 of the Omnibus Investments Code provides that it shall not be subject to income tax. It is also exempt from value-added tax under Article 65, and from all kinds of local taxes, fees, or charges except real property tax on land improvements and equipment under Article 66.

Cancellation of the License

Under Article 58(d), any violation by the RHQ of the provisions of the Code, its implementing rules and regulations, the terms and conditions of its registration, or any provision of existing laws is a sufficient cause for cancellation of its license or registration.

Frequently asked questions

How much money must a representative office remit to the Philippines? At least Fifty thousand US dollars ($50,000), or its equivalent in other foreign currencies, annually. Proof of inward remittance and conversion to Philippine currency must be submitted to the SEC within thirty (30) days from receipt of the certificate of registration, and annually within thirty (30) days from the anniversary date of registration.

Can a representative office in the Philippines earn income? No. An RHQ does not earn or derive income in the Philippines. If the foreign entity wants to derive income in the country by performing qualifying services for its affiliates, subsidiaries, or branches, it would need to establish a Regional Operating Headquarters instead.

Which government agencies issue the license? The SEC issues the license upon the favorable recommendation of the BOI. The foreign entity must also submit a certification from the Philippine Consulate or Embassy, or a duly authenticated certification from the DTI or its equivalent in its home country.

Practical takeaways

• A representative office in the Philippines is legally an RHQ under Republic Act No. 8756 — a non-income-earning supervisory and coordinating office.
• Secure the SEC license with a favorable BOI recommendation, supported by consular or DTI certification and an authenticated board certification.
• Budget for the minimum US$50,000 annual inward remittance, with proof filed within 30 days of registration and every year thereafter.
• Keep activities strictly supervisory, communications, and coordination — no income from Philippine sources and no management of local subsidiaries or branches.
• Give the BOI and SEC at least 15 days' notice before closing or suspending operations.

Primary sources

The rules discussed above are drawn from the following primary sources. Where the firm's library holds the document as a PDF it is embedded here in full; the rest are cited by title.

Amendments to foreign exchange regulations covering foreign investmentsOpen in Law LibraryDownload PDF

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

• 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.