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Frequently Asked Questions
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Doing
Business in the Philippines:
| REGISTRATION
FEES |
| Philippines
Securities and Exchange Commission |
Registration
of corporations & partnerships
(Securities
and Exchange Commission) |
Main
Fees to
be Paid (in Pesos) |
| Stock
Corporations |
| Filing
Fee |
1/5
of 1% of the Authorized Capital
Stock but not less than P1,000.00 |
| Legal Research
Fee |
1%
of the Filing Fee but not less
than P10.00 |
| By-laws (fixed) |
210.00 |
| Stock and Transfer
Book/Stamping |
320.00/100.00 |
| Non-Stock
Corporations |
| Filing Fee of
Articles of Incorporation |
210.00 |
| By-laws |
210.00 |
| Membership Book/Stamping |
320.00/50.00 |
| Partnership |
| Recording Fee
for Articles of Partnership |
1/5
of 1% of the partnership's capital
but not less than P500.00 |
| Legal Research
Fee |
1%
of the Filing Fee but not less
than P10.00 |
|
Board
of Investments |
Registration
for incentives availment
under EO 226 |
Main
Fees to be Paid
(In Pesos) |
| Filing
Fees for Application for Registration
(under Book 1): |
| |
Project
Costs not exceeding P 4 million |
1,500.00 |
| |
Project Costs
exceeding P 4 million but not over
P 20 million |
3,000.00 |
| |
Project Costs
exceeding P 20 million but not over
P 50 million |
4,500.00 |
| |
Project Costs
exceeding 50 million |
6,000.00 |
| Fee
for Certificate of Registration |
1/10
of 1% of project cost but not
less than P3,000.00 and not to
exceed P 15,000.00 |
| */
Subject to increase |
| Department
of Trade and Industry |
Registration
of Business Name - Single Proprietorship
(Bureau of
Trade Regulation and consumer Protection
-- BTRCP) |
Main
Fees to be Paid
(In Pesos) |
| Application
Fee |
|
| |
Single
Proprietorship
Corporation |
300.00
500.00 |
| Plus
P15.00 Documentary stamp for each
application |
|
| Clark
Development Corporation (CDC) One-Time
Fees |
| 1.
Registration of Enterprises |
| |
Project
Cost not exceeding P 4 million |
P
2,000.00 |
| |
Certificate
of Registration & Tax Exemptions |
P
2,000.00 |
| |
Permit to Operate
(Annually) |
P
1,000.00 |
| |
Temporary Permit
to Operate |
P
500.00 |
| 2.
Processing and issuance of Environmental
Compliance Certificate (ECC) |
P 300.00 |
| 3.
Construction |
In
accordance with the National Building
Code by CDC |
| NOTE
: Regular fees
including Clark Special Economic
Zone Locations Association shall
also be charged to cover expenses
for security, road lighting, garbage
collection, etc. |
| Philippine
Economic Zone Authority (PEZA) |
| II.
APPLICATION |
| 1.
Registration of Ecozone Enterprises |
| |
a.
Application for New Project (non-pioneer) |
P
3,600.00 |
| |
b. Application
for New Project (pioneer) |
P
6,000.00 |
| |
c. application
for any Amendments in Registration |
P
1,200.00 |
| |
d. Application
for Conversion from Non-Pioneer
to Pioneer |
P
2,400.00 |
| |
e. Application
for Expansion for Production Capacity |
P
2,400.00 |
| 2.
Registration Fees |
| |
a. Registration
for New Projects |
P
6,000.00 |
| |
b. Registration
for Expansion of Project - New Project |
P
3,600.00 |
| |
c.
Telecom Services and Other Utilities
|
P
6,000.00 + 10% of monthly gross
revenues from operations |
| |
d. All other
Services Enterprise |
P
3,600.00 |
| II.
PROCESSING FEES |
| Availment
of Incentives |
|
| |
a.
Endorsement of 5% Gross Income Tax
and of Income Tax Holiday |
P
1,200.00 |
| |
b. Extension
of ITH Entitlement Period |
P
1,200.00 |
| III.
CERTIFICATION / TRUE COPIES |
| 1.
Certificate of Registration |
P 120.00 |
| 2.
Filing approval of application |
P 120.00 |
| 3. Other Documents |
P 120.00 |
| TAX
RATES |
| 1.
Taxation in the Philippines |
| |
The
country's taxation system is governed
by the Tax Reform Act 1997, passed
into law on December 11, 1997 and
became effective on 01 January 1998.
The law was aimed at the expanding
the country's tax base and maintaining
the healthy fiscal standing of the
government. |
| 1.1
Corporate Income Taxes |
Domestic/Resident
Foreign Corporations
Regular Income Tax Rate |
32%
of net taxable income |
| Non-Resident
Corporation Regular Income Tax |
32%
of the gross amount of Philippine-source
income such as dividend, rents,
royalties, compensation, and remuneration
for technical services. |
| 1.2
Income Tax Rates as Passive Income
of Domestic/Resident Corporation
|
| Dividends received
from domestic corporations |
Not
subject to tax |
| Interest on
any currency bank deposit and yield
or other monetary benefit from deposit
substitutes and from trust fund
and similar arrangements |
20%
of final tax |
| Interest from
foreign currency deposits with foreign
currency deposit units (FCDUs) |
7
1/2% of final tax |
| gains from sale
or exchange of shares of stock not
listed and traded in the local stock
exchange |
5%
capital gains tax (CGT) on net
gains not exceeding P 100,00 and
10% on the excess. |
| Gains from sale
or exchange of land or buildings
not actually used in business and
treated as capital issue |
6%
CGT on gross selling price or
fair market value, whichever is
higher |
| Royalties |
20%
final tax |
| 1.3
New Taxes for Corporation Under
the Tax Reform Act of 1997 |
Minimum
Corporate Income Tax (MCIT)
- A 2% MCIT on gross income on an
annual basis is imposed on corporations
whose regular corporate income tax
liability is less than the MCIT
beginning the fourth taxable year
following the year they commenced
business operation. Any excess of
the MCIT over the normal tax shall
be carried forward and credited
against the normal tax for the three
(3) immediately succeeding taxable
years.
Fringe
Benefits Tax - Fringe
benefits granted to supervisory
and managerial employees are subject
to 32% tax on the grossed-up monetary
value of the fringe benefit. Fringe
benefits given by OBUs regional
operating headquarters of multinational
companies, petroleum contractors
and subcontractors to qualified
alien employees and in certain cases,
to Filipino employees, are taxed
at 15% of the grossed-up monetary
value of the fringed benefit.
Improperly Accumulated Earnings
Tax - a 10% tax is
imposed on the improperly accumulated
earnings of a corporation, except
in the case of publicly held corporations,
banks, and other non-bank financial
intermediaries and insurance companies.
When a corporation allows its earnings
or profits to accumulate beyond
its reasonable needs, it shall be
assumed that the purpose is to avoid
tax on stockholders, unless proven
to the contrary. |
| 1.4
Preferential Income Tax Rates for
Non-Resident Corporations |
| Interest
on foreign loans |
20% |
| Dividends
received form domestic corporations |
In general,
32%. This is reduced to 15% if the
recipient foreign corporation is
resident of a country which:
- Does not impose any tax on
dividends received from foreign
sources, or
- Allows a credit against the
tax due from the nonresident
foreign corporation taxes deemed
to have been paid in the Philippines
equivalent to 17%
|
| Income
derived form any foreign currency
transaction with FCDUs and OBUs |
Exempt |
| Gains
from sale of unlisted shares of
stock in a domestic corporation |
5% capital gains
tax (CGT) on net gains not exceeding
P100,000 and 10% on the excess |
| Rents
and other fees paid to nonresident
corporate lessors of aircraft, machinery
and other equipment |
7 1/2% on gross
rentals or fees |
| Rents
of charter fees paid to non-resident
corporate owners of vessels chartered
by Philippine Nationals |
4 1/2% on gross
rentals or fees |
| Fees
paid to non-resident cinematographic
film owners or lessors |
25% on gross
income |
| 1.5
Individual Taxation |
| Non-resident
aliens not engage in trade and business
flat income tax rate |
25% |
| Resident citizens/aliens
(gainfully employed) Graduated income
tax rates |
0%-35% |
| Who
Shall File: |
|
1. |
An
individual whose gross compensation
income does not exceed his total
personal and additional exemptions
; |
|
2. |
An
individual whose compensation derived
from one year employer does not
exceed P60,000 and the income tax
on which has been correctly withheld; |
|
3. |
An
individual whose income has been
subjected to final withholding tax
(alien employee as well as Filipino
employee occupying the same position
as that of the alien employee of
regional or area headquarters and
regional operating headquarters
of multinational companies, petroleum
service contractors and sub-contractors,
and offshore banking units, non-resident
alien not engaged in trade or business),
and |
|
4. |
An
individual who is exempt from income
tax. |
| Married
individuals shall file single return
for the taxable year to include
the income of both spouses, separately
computing their individual income
tax based on their respective taxable
income. Where it is impracticable
for the spouses to file one return,
each spouse may file a separate
return. |
|
TAX
TABLE |
|
If Taxable
Income is: |
Tax
Due is: |
If Taxable
Income is: |
Tax
Due is: |
| Not over P10,000 |
5% |
|
|
| Over P10,000
but not over P30,000 |
P500+10% of
the excess over P10,000 |
Over P140,000
but not over P250,000 |
P22,500+25%
of the excess over P140,000 |
| Over P30,000
but not over P70,000 |
P2,500+15% of
the excess over P30,000 |
Over P250,000
but not over P500,000 |
P50,000+30%
of the excess over P250,000 |
| Over P70,000
but not over P140,000 |
P8,500+20% of
the excess over P70,000 |
Over 500,000 |
P125,000+34%
of the excess over P500,000 |
| 1.6
Value Added Tax (VAT) |
| Sale of goods,
other properties, and services in
the Philippines, as well as importation
of goods to the Philippines, are
subject to the 10% VAT. VAT is imposed
on the gross selling price (in case
of sale of goods) and gross receipts
(in case of sale of services). |
| 1.7
Stock Transaction Tax |
| 1/2 of 1% of
gross selling price is imposed on
the sale, barter, exchange or other
disposition of shares through the
facilities of stock exchange. |
| 1.8
Percentage Tax |
|
TYPES
OF BUSINESS |
PERCENTAGE
OF TAX RATE |
| Banks - income
from lending and financial leasing
activities |
1%, 3%, or 5%
of gross receipts depending on the
maturity date of the instruments,
tax exempt if maturity period is
over seven years. |
| Life insurance
companies doing business in the
Philippines |
5% of the total
premium collected |
| Electric, water
and gas utilities |
2% of gross
receipts |
| Domestic common
carriers of passengers |
3% of gross
receipts |
| International
carriers |
3% of gross
receipts |
| Finance companies
- income from lending and financial
leasing activities |
1%, 3%, or 5%
of gross receipts depending on the
maturity date of the instruments,
tax-exempt if maturity period is
over seven years |
| Other non-VAT
registered businesses |
3% of gross
sales or gross receipts not exceeding
P550,000. |
| 1.9
Income Tax Rate for Special Corporation
Entity |
|
ENTITY |
RATe |
TAXABLE
BASE |
| International
Carriers |
2.5% |
Gross Philippine
Billings originating from the Philippines
|
| Non-resident
foreign corporation |
33%
(1999)
325 (2000) |
Gross income
from Philippine sources |
| Non-resident
owner or lessor of aircraft, machinery
and other equipment |
7.5% |
Gross retails
or fees |
| Offshore banking
units (OBUs) and foreign currency
deposit units (FCDUs) authorized
by the BSP |
10% |
Income from
foreign currency transactions with
local commercial banks, including
branches of foreign banks that maybe
authorized by the BSP to transact
business with OBUs and FCDUs, including
any interest income from foreign
currency loans granted to residents. |
| Subcontractors
engaged in Petroleum operations,
Subcontractors engaged in Petroleum
operations |
8%
final tax |
Gross income
from service contract |
| Regional operating
headquarters |
10% |
Taxable income
from authorized incentives |
SOURCE:
How to invest
in the Philippines, Joaquin Cunanan
& Co.
*
data as of April 2003 |
| 1.
COST OF INDUSTRIAL LAND AND FACTORY
BUILDING |
| 1.1 Selling
Rates of Industrial Lots |
P 2800/sqm and
above* |
| 1.2 Standard
Factory Bldg. in Export Processing
Zone |
$ 2.5/sqm and
above |
| 1.3 Lease rates
of Lots in Export Processing Zone |
$ .40/sqm. |
| SOURCE:
Philea
rates depend on the location
or site of the industrial land |
| 2.
RATES FOR OFFICE SPACE |
| LOCATION |
SELLING
RATES |
RENTAL
RATES |
| Makati |
P 70,000-10,000/sq.
m |
P 550-650/sq.m |
| Ortigas/Quezon
City |
P 45,000-60,000/
sq. m |
P 400/sq. m
and above |
SOURCE
: FPDSavills
* data as
of April 2003 |
|
Source: http://www.boi.gov.ph
For more questions on Doing Business in the Philippines,
check out http://www.dti.gov.ph/.
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