When picturing the Philippines, the first images that pop into one’s head might be white sand beaches, palm trees, and crystal clear water. However, the Southeast Asian country offers much more than an exotic vacation destination. The nation of 7,000 islands is also a prime location for offshore incorporation. Forming a Philippines company, that is, a Philippines corporation, offers numerous benefits to foreign nationals looking to operate from within its borders.
Philippines Company Formation: Stability and Growth
As a result of low exposure to tumultuous international securities, minimal dependence on exports, a rapidly expanding outsourcing industry, and a steady supply of remittances from roughly 10 million Filipino overseas foreign workers, the Philippines economy has been relatively resilient to global economic shocks.
Between 2011 and 2016, Philippines economic growth accelerated to an average of over 6% per year. This trend is likely to continue as the current administration works to relax restrictions on foreign ownership.
Offshore Incorporation from Home
Philippines company law does not require travel for incorporation. The law requires that companies have a minimum of five shareholders, the majority of which are Filipino. The other two shareholders, who can be foreign nationals, are not required to be present for incorporation provided that the company has a paid-up capital of US $200,000, which can be reduced to US $100,000 if the company hires more than 50 employees. However, if the company is considered a branch or wholly-owned subsidiary of an export enterprise, the US $200,000 requirement of paid-up capital does not apply. In such a case, all that is required is a reasonable amount of capital for initial corporate operations.
Special Economic Zones with Tax Incentives
According to the Philippine Economic Zone Authority (PEZA), enterprises in the tourism, medical tourism, manufacturing, information technology, agro-industrial, utilities, logistics, facilities, and retirement sectors incorporated within any of the Philippines several special economic zones may qualify for Income Tax Holidays which provide 100% exemption from corporate income tax for a period of 4-6 years. For companies operating in the manufacturing and information technology sectors, tax holidays may be extended for a period of up to 8 years provided that the corporation meets additional stipulations identified in Philippines tax code. Following the expiration of tax holidays, companies incorporated within Philippines Economic Zones are subject to just 5% gross income tax.
Additionally, PEZA-registered Economic Zone enterprises enjoy other benefits such as simplified import-export procedures, the ability to hire non-resident foreign nationals in supervisory, technical, and advisory positions, and special non-immigrant visa eligibility with multiple entry privileges.
Substantial Trade Benefits with ASEAN Countries
For offshore companies in the Philippines that do business with Southeast Asian nations, the benefits are significant. As a member of the Association of Southeast Asian Nations (ASEAN), companies of incorporated in the Philippines enjoy reduced tariffs on trade with other Southeast Asian nations and exemption from certain trade restrictions.
Low-Cost, English-Speaking Workforce
Recent years have seen an influx of call centers and BPO operations being set up in the Philippines due to the widespread availability of a low-cost, English-speaking workforce. As a former US territory, English is spoken by a majority of the population. Despite the fact that around 36% of Filipinos are college educated, median wages in the nation are low with an average of around US $7,000 per year, making the country a very attractive option for outsourcing.
With a stable economy, no travel requirement, attractive tax incentives, trade benefits, and high availability of low-cost labor, the Philippines is a fantastic option for offshore incorporation. Offshorecorporation,com provides comprehensive assistance for formation, registration, and licensing of offshore corporations in the Philippines. Contact us today to take advantage of all the wonderful benefits that starting an offshore company in the Philippines offers. As the national slogan goes, it’s more fun in the Philippines.
