Regional operating headquarters are valuable to multinational companies, as they help them organize their strategy within the region. It also helps mother companies manage their financial and operational functions for its local businesses.
If you are deciding to open a regional operating headquarters in the Philippines, here’s what you need to know. This information is especially useful when starting a business in the Philippines for foreigners.
Legal Personality
A regional operating headquarters is just an extension of the base that is organized in accordance with the foreign country’s laws. It does provide a separate legal personality from the head office.
Liabilities
Liabilities of a regional operating headquarters are considered as the liabilities of the head office.
Activities Undertaken
Regional operating headquarters are only permitted to perform specific services that have been authorized under their Philippines license. These qualifying services may include the following:
- General planning and administration
- Business planning and coordination
- Sourcing and procurement of raw materials and related components
- Corporate finance advisory services
- Marketing control
- Sales promotion
- Personnel training and management
- Logistic services
- Research and development services
- Product Development
- Technical support and maintenance
- Data processing and communications
- Business Development
Third-Party Services
As declared in its SEC registration, regional operating headquarters are not allowed to provide services to anyone other than its head office, branches, affiliates, or subsidiaries.
Selling of Goods and Services
Regional operating headquarters are not allowed to directly or indirectly solicit, market, or engage in the sale and distribution of goods and services or on behalf of its head office, affiliates, branches, subsidiaries or of any other company.
Required Capital
A regional operating headquarters is required to have an assigned capital that is equivalent to at least USD200,000 regardless if it will or will not operate as a domestic market enterprise (DME) or an export enterprise.
Income Tax Rate
A regional operating headquarters is subjected to 10 percent corporate income tax on the income coming from Philippine sources only.
Profit Remittance
Unless the regional operating headquarters is registered with the Philippine Economic Zone Authority (PEZA), it is subjected to profit remittance tax of 15 percent based on the total profits applied or reserved for remittance without any deduction for the tax component thereof.
Incorporators
A regional operating headquarters is permitted to be set up with only one person who may be chosen as the resident agent.
Registration with the Board of Investments (BOI)
A regional operating headquarters is not qualified to register with the BOI.
Registration with the Philippine Economic Zone Authority (PEZA)
Upon qualification, a regional operating headquarters is allowed to register with PEZA.
Welcome to the Philippines
Take this information into consideration when you are doing your business registration in the Philippines. There are many advantages of setting up a regional operating headquarters in the country that can help strengthen your business strategy in Asia.
Rocky Chan is a lawyer and business consultant who excels in corporate formation, immigration procedures, and client relations. In the last 7 years, he honed his craft in the field of foreign investment consultancy.
