How to Invest in the Philippines

7/25/2019 How to Invest in the Philippines

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Annex G

How t oInvest in t he

P hil ippines

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Table of Contents

Message from the Chairman

Foreword

The Philippines - A Profile 1

General

1 What requirements must be complied with before a foreigncorporation can engage in business in the Philippines? 12

2 Is a foreign investor allowed to own 100% of a business entity? 1

What is the general policy of the government regarding foreign 1

! What are the ma"or incentives available to a registration enterprise? 1

# $re investment incentives transferable? 1#

Board of Investment / Philippine !onomi! "one A#thorit$

1 oes our proposed pro"ect qualify for registration with the &'I(P)*$? 1+

2 ,ow does one file an application with the &'I(P)*$? 1+

What possible obstacle would our application meet? 1-

! ,ow long will it ta.e to obtain &'I(P)*$ approval once allrequirements are complied with? 1-

# $ssuming approval is obtained/ what restrictions are ordinarilyattached? 1-

+ ,ow much time is an investor allowed to start his pro"ect? 1-

%e!#rities and &!hange Commission

1 Why is it necessary to register with the )? 1

2 an the application for registration with the &'I(P)*$ and the) be filed simultaneously/ or must we wait for &'I(P)*$approval before going to the )? 1


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,ow long after the submission of the application and all therequired documents will approval be obtained? 1

! Is there requirement that directors be residents? 1

! Is a domestic corporation sub"ect to a minimum subscription andpayment on such subscription? 1

Bang'o %entral ng Pilipinas

1 an foreign investment funds be inwardly remitted outside of theban.ing system? 13

2 Is registration of foreign investment with the &P required? 13

Is inward remittance of foreign investment required to be convertedimmediately to Philippine Pesos? 13

! What are the current regulations regarding profit remittances andrepatriation of capital? 13

(o$alties) Te!hni!al %ervi!e Agreements) t!*

1 an we charge royalties and similar fees? 20

2 $re these ta4able in the Philippines? 20

What rules govern the reimbursement of cost incurred abroad? 20

! What constitute 5technology transfer arrangements6? 21

# ,ow long does it ta.es to obtain government approval? 21

+ o we have to get the &ang.o entral approval to remit the royaltyor agreed fees to the foreign company? What documentary supportis required( 21

Ta&es

1 What are the income ta4 rates in the Philippines? 22

2 What business ta4es are we sub"ect to? 2!

What are the advantages and disadvantages of s branch vis787visa domestic subsidiary? 2+

! What effect will a ta4 treaty with my country have on the ta4 rates? 2+

!


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(egional or Area +ead,#arters (+. and (egional 0perating+ead,#arters (0+.

1 What is a 9,: and what are the activities it can engage in? 2-

2 What is a 9',: and what are the activities it can engage in? 2-

What are the funding requirements for a 9,: and a 9',;? 2

! What are the ta4es applicable and incentives availableto a 9,: ( 9',:? 2

oint 2ent#res

1 If we enter into a "oint venture with Philippine investors/ will the )allow us to hold #1% or more of its equity? 0

2 If we are registered to a !0% equity holding/ how can we obtaincontrol of the operations? 0

$re there any requirements that directors and other officers mustbe


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(#les on Borrowings

1 an we finance our pro"ect through foreign borrowings?

2 $re we sub"ect to certain debt7to7equity ratio requirements?

an a foreign company borrow from a private individual or anon7financial institution?

0thers

1 ould you give some guidelines as to prevailing7

aA alary rates for office(administrative staff? !bA 9entals for office space in Ba.ati? !cA 9entals for housing of e4patriate e4ecutives? !dA ost of acquiring and maintaining automobiles? #eA uition and school fees for children

and high school students? #

2 ,ow easily can wor. permits be obtained for e4patriatee4ecutives? #

,ow easily can e4patriate e4ecutives obtain clearances for travelabroad? #

! Bay e4patriate e4ecutives receive their compensation in foreigncurrencies? +

# Will the e4patriates be allowed to convert into foreign currencyany e4cess pesos that they may have upon termination of theirassignment? +

+ Is there any public offering of stoc. or corporate share I thePhilippines? +

3APP45IC%

I ;CP(;P and ectoral ;rowth 9ates 3

II hird 9egular


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,) P,IDIPPIC)- $ P9'


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Geograph$ and !limate he Philippines is an archipelago of appro4imately -/100islands/ located in outheast $sianF It is surrounded in henorth by Japan/ ,ong Kong/ aiwan/ outh KoreaL in thesouth by ingapore/ Balaysia and IndonesiaL and in thewest by hailandF o the east vast e4panse of the Pacific'cean/ which earned for the country the title/@ gateway ofthe west to $sia@

he total land area of the country is appro4imately00/000 square .ilometers/ about the si=e of Italy or thestate of $ri=ona in the Mnited tatesF he country has atropical climate and two seasonsL rainy/ from June toCovember/ and dry/ between ecember and BayF It isrich in natural resources such as vast arable lands/ fishinggrounds/ forest and e4tensive mineral reservesF

people power >Barch in 13+ and a democratic government wasinstalled/ with BsF ora=on $quino as presidentF

Peaceful elections held in Bay 1332 and in Bay 133ushered in the governments of Presidents


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he Bedium7erm Philippines evelopment PlanEBPPA from 13337200! essentially fleshes out the)strada $dministration6s 107point action program as itenvisions a sustainable development path anchored ongrowth and social equityF

&riefly stated/ the )strada administration6s agenda isconsistent with his campaign slogan/ iFeF/ J))P whichstands for "ustice/ environment/ economy /and peaceF

he Gisiting


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$dministration EB&$A graduates in the worldF here are10 B&$ schools in the country/ among which is the

$sian Institute of Banagement E$IBAF

+ealth he average life e4pectancy of the


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133 gross domestic output are as followsL services/!#F1%L industry/ #F!%/ and agriculture 13F#%Eee$ppendi4 1 for detailsA

Agri!#lt#re he main agricultural products of the country are rice/corn/ coconut/ and sugarF he Philippines is one of thelargest e4porter of coconut oil and sugar but thiscomparative advantage has declined over the years due tothe development of substitutes and the increase number ofother e4porter7countriesF

Mining he Philippines is rich in mineral resourcesF


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an energy self7sufficiency level of !0% over the periodwith the setting up of ma"or pro"ectsF

Transportation) he aggregate transport/ communication and storage!omm#ni!ation and sector grew by an average of +F!% from 133 to 133Fstorage espite the financial crisis/ there were still improvements

in land and water transport facilitiesF he liberali=ation ofthe local shipping and aviation industries as well as thetelecommunication industry spurred growth in the sectorF

Ban'ing and Finan!e ata gathered from the &P showed that the ban.ingsystem includes # commercial ban.s Eof which 12 areeither full branches or subsidiaries of foreign ban.sA/ 11-thrift ban.s and 23 rural ban.s Eincluding head officesand branches throughout the countryAF

he finance sector grew by % in 133/ down from % inN 133-F $ regime of high interest rates ushered in by the

currency crisis discouraged loan availments andcontracted the ban.6s income from intermediationF

,owever/ with the improving economic conditions/ thefinance sector is e4pected to grow at a higher rate by theend of 1333F

%ervi!es) in general he e4port of consultancy services is one area where thePhilippines is considered to have a competitive advantageFpecific areas are EaA information technology EIALEbAcomputer software services Ecustomi=ed softwareconsultancy/ contract programming/ training anddocumentation services/ system integration and data

entry(data processing servicesAL O consultancyengineering Einfrastructure and

industrial development pro"ect in the following

sectorsL powers/ transportation/telecommunications/ water supply/ oil/ gas andpetrochemicals/ industrial estates and processing plantsAL

and EdA contracting servicesF ignificantopportunities were created for contractors by thegovernment6s policy on privati=ation and theenactment of the &' lawF

Cost of doing b#siness he minimum wage of


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for 133F ,owever/ the peso strengthened to MF022by June 0/ 1333F

Foreign trade he Philippines6 ma"or e4port are manufactured goodsli.e semi7conductor devices and garments/ electricalmachinery minerals and metals/ and agricultural productsli.e coconut products and bananasF Its ma"or imports arecapital goods and intermediate goods li.e petroleumproductsF

While the Philippines is a net importing country/ e4portsremain a ma"or stimulus of its economic growthF Inaddition to physical goods/ the e4port of non7factorservices has largely contributed to the e4pansion of e4portover the yearsF

rade was liberali=ed through the removal of quantitativerestrictions and the simplification of the tariff tableF he$


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Growth !enter he urban centers of Betro Banila/ Betro ebu andavao ityL and the government7owned and privatespecial economic =ones are magnets of economicactivitiesF he Philippines $ssistance Program is helpingin the acceleration of regional development by sponsoringpro"ects in alabar=on Eavity/ Daguna/ &atangas/ 9i=al/:ue=on ProvincesA/ Iloilo/ amar/ the Iligan7agayan de'ro corridor and ;eneral antosF he alabar=on Pro"ecthas resulted in the proliferation of privately ownedindustrial estate to address the needs of foreign investorsF

he withdrawal of the $merican $rmed


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and P0F2#F With the deregulation of foreign e4changetransactions/ moneychangers and authori=ed agent ban.sE$$&A are allowed to sell and purchase foreigne4change without prior approval of the &P/ save for afew e4ceptionsF here is no restriction on the amount offoreign e4change that can be importedF Boreover/foreign currency may be freely bought and sold outsidethe ban.ing systemF ,owever/ the import(e4port ofPhilippine currency id limited to P10/000F $ny amounte4ceeding this will require the authori=ation of the &PF

International time he Philippine time is eight hours ahead of ;reenwichBean ime E;BA and thirteen hours ahead of MFF)astern tandard ime E)A

B#siness ho#rs ;overnment and private offices are generally open from aFmF to # pFmF/ Bondays to


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Comm#ni!ation ommunication lin. within Betro Banila and .eybusiness areas are adequateF $part from the hotelbusiness centers which service the needs of foreignbusinessmen/ private companies also offer similarservices in all urban centersF ellular phones and pagingsystem have substantially augmented e4isting landlinesF

;eneral

Foreign investment policies, requirements and

incentives

1 :hat re,#irements m#st be !omplied with before a foreign

!orporation !an engage in b#siness in the Philippines;

&efore a foreign corporation can engage in business in the Philippines/ itmust first secure the necessary licenses or registration certificates from theappropriate government agenciesF ;enerally/ the registration process startswith the ecurities and )4change ommission E)AF

If the proposed pro"ect or activity qualifies for incentives/ the foreigninvestor may file its application with the appropriate government agencydepending on the pro"ect6s location/ as followsH

Government agen!$ Pro7e!t 6o!ation

&oard if Investments E&'IA 'utside of specialeconomic =ones E)*A

Philippine )conomic $ny )* under P)*$*one $uthority EP)*$A

ubic &ay Betropolitan ubic &ay


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of a b#siness entit$;

With the liberali=ation of the foreign investment law/ 100% foreign equitymay be allowed in all areas of investment e4cept financial institutes andthose include in the third regular


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development area/ it shall generally be entitled to + years I,F


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)nterprise allowed to operate within the ubic &ay


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Board of Investment/

Philippine !onomi! "oneA#thorit$

Registration requirements, application procedures

and approval

1 5oes o#r proposed pro7e!t ,#alif$ of registration with the B0I/P"A;

o qualify for registration with the &'I for incentive purposes/ the proposedforeign investment must be made in any of the followingH

a preferred areas of investment listed in the current Investment Priorities PlanEIPPAF $ preferred area may be declared pioneer if itH E1A involves themanufacturing of processing Enot merely assembly or pac.agingA of goodsor raw materials that have not been produced in the Philippines on acommercial scaleL E2A uses a design/ formula/ scheme/ method/ process orsystem of production or transformation of any element or raw materials intoanother raw materials or finished good which is new and untriedL EAengages in agricultural activities(services essential to the achievement of thecountry6s self7sufficiency programL and E!A produce non7conventional fuelsor manufactures equipment which utili=e non7conventional sources ofenergyL provided that the final product in any of the foregoing instancesinvolves substantial use and processing of domestic raw materialsL

b enterprises engaged in preferred non7pioneer area and e4porting at least-0% of their outputL and

! pro"ects in less7developed areas provided that the activities in all of theabove cases are not reserved for the Philippine nationalsF

'n the other hand/ the pro"ect that may qualify for registration with P)*$are those that involve manufacturing for e4port and the domestic mar.et/free trade/ tourism/ utilities/ facilities enterprises including those engaged inwarehousing and trading operations in the eco=ones and development andoperations of eco=onesF


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? :hat possible obsta!le wo#ld o#r appli!ation meet;

he obstacle normally encountered in the filing of the application includenon7compliance with the criteria set by the &'I/ misinterpretation of thecoverage of activities listed in the IPP/ failure to submit the requiredsupporting documents and pro"ect feasibility study and possible oppositionfrom sectors or enterprises which might be adversely affected by theproposed pro"ectF he &'I required publication of the notice of applicationand conducts hearing if ob"ections to the application are received


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%e!#rities and &!hange

Commission

Registration requirements and approval

1 :h$ is it ne!essar$ to register with the %C;

he ) is the government agency responsible for the registration/licensing/ regulation and supervision of all corporations and partnershiporgani=ed in the Philippines/ including foreign corporations licensed toengage in business or to establish branch office in the PhilippinesF


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Bangro %entral ng Pilipinas

Inward Remittance and Registration of Foreign

Investment, Repatriation of Capital, Remittance

of Dividends

1 Can foreign investment f#nds be inwardl$ remitted o#tside of the

ban'ing s$stem;

Qes/ ,owever/ said funds cannot be registered as foreign equity investmentwith the ) and the &PF onsequently/ capital repatriation and dividend

remittances can only be serviced using foreign e4change sourced outside ofthe domestic ban.ing systemF


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(o$alties) Te!hni!al %ervi!e

Agreements) t!F

IPO Registration of Technology Transfer

greement, Ta!ation of Royalties and "ervice

Fees

1 Can we !harge ro$alties and similar fees;

9oyalties and similar fees can be charge to operations provided paymentsfor said fees are covered by a technology transfer agreement E$A certifiedby the ocumentation/ Information and echnology ransfer &ureauEI&A of the Intellectual Property 'ffice EIP'A that said technologytransfer agreement conforms with the provision of the Intellectual Propertyode EIPAF

he IP provides certain restrictions in the terns and condition of the $particularly those that will adversely affect free competition and tradeF Italso prescribes certain mandatory provision that should be included in the$F Con7conformity with any of these provision of the IP shall renderthe $ unenforceable/ sub"ect to some e4ceptionsF


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@ :hat !onstit#te te!hnolog$ transfer arrangementsD;

>echnology transfer arrangements@ refer to contacts or agreementsinvolving theH transfer of systematic .nowledge for the manufacturing of aproduct or the application of a process/ rendering of a service/ includingmanagement contractsL and the transfer/ assignment or licensing of all formsof intellectual property rights/ including licensing of computer software/e4cept computer software developed for mass mar.etF

+ow long does it ta'e to obtain government approval;

Within ten E10A days from the filing of the request for certification ofcompliance/ the I& conduct a summary evaluation of the $F If the

$ conforms with the Prohibited lauses and Bandatory Provisions of theIPS the I& issues a ertificate of omplianceF 'therwise/ the I&notifies the parties of any violation and requires them to comply with theIP if they wish to obtain a ertificate of omplianceF

5o we have to get the Bang'o %entral approval to remit the ro$alt$

or agreed fees to the foreign !ompan$; :hat do!#mentar$ s#pport is

re,#ired;

3With the liberali=ation of foreign e4change rules/ remittance of royalties/fees or similar payments to a foreign company/ net of the applicable ta4es/may be made through $$&s without need of &P approvalF

he following documents may be required by the $$&s to prove thelegitimacy of the transactionH EaA copy of the certification by I& of theIP'L and EbA proof of payment of withholding ta4F

2+


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Ta&es

Income and #usiness Ta!es

1 :hat are the in!ome ta& rates in the Philippines;

he income ta4 rates depend upon the classification of the ta4payersF

A* Individ#al ta&pa$ers

1* a4able incime from employment/ business/ trade and e4ercise ofprofessiion including casual tgains/ profit/ and pri=es of P10/000 or lessLe4cept items of income sub"ect to final ta4 and special treatment/eFgF/ capitalgains and passive income mentioned in items ! and # below/ derived byresident citi=en from all source within and without the Philippines aresub"ect to the graduated ta4 rate of #% to %F he top rate will bereduced to 2% effective 2000F

he top rate E% or 2%A applies to ta4able income in e4cess ofP#00/000F

9esident aliens and non7resident citi=ens are sub"ect to the same graduatedta4 rates but only for income derived from all sources within thePhilippinesF


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disposed to the total outstanding shares after listing of the shares of closelyheld corporationsF

apital gains on sale of real property are ta4ed at +% of gross selling priceor fair mar.et value/ whichever is higherF

* Passive income items li.e interest/ dividends/ royalties/ pri=es and otherwinning are also ta4ed at different ratesF


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* $ minimum corporate income ta4 of 2% of the gross income as of the endof the ta4able year is imposed on a corporation which is sub"ect to normalincome ta4 E%/ 2%A beginning on the fourth ta4able year immediatelyfollowing the year in which such corporation was registered with the&ureau on Internal 9evenue/ when the minimum income ta4 is greater thanthe normal income ta4 for the ta4able yearF

$ny e4cess of the minimum corporate income ta4 over the normal incometa4 as computed shall be carried forward and credited against the normalincome ta4 for the three immediately succeeding ta4able yearsF

* )very corporation formed or availed for the purposed of avoiding theincome ta4 with respect to its shareholders or the shareholders of any othercorporation by permitting earnings and profit to accumulate instead of being

divided or distributed is ta4ed at the rate of 10% for each ta4able tar on theimproperly accumulated ta4able incomeF

E* In general/ an employer E individual or corporationA shall pay a final ta4 of% E2% effective 2000A on the grossed7up monetary value of fringebenefit furnished or granted to the employee Ee4cept ran. and fileA unlessthe fringe benefit is required by nature of/ or necessary to the trade/ businessor profession of the employerF


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cF ommon passenger carriers 7 %

dF )lectric/ gas and water utilities 7 2%

eF 'thers 7 ranging from% to 0%

?* )4cise ta4 on alcohol/ tobacco/ petroleum and mineral products/cinematographic films/ automobiles/ "ewelry/ etcF at varying ratesF

B* 6o!al ta& on !ertain b#siness

1* Banufactures/ wholesalers/ e4porters and contractors are sub"ect togranted ta4es on certain amounts of sales(gross receipts and percentageta4es at minimum rates ranging from F-#% to F-#% on the amount notsub"ect to granted ta4es/ depending on the place where business isconductedF


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? :hat are the advantage and disadvantage of a bran!h vis--vis a

domesti! s#bsidiar$;

$dvantages and disadvantages from legal and ta4 viewpoint of a branchcompared to a domestic subsidiary are as followsH

EaA &ranch offices are ta4ed only on their net income from source inthe Philippines while subsidiaries are ta4ed in their worldwideincomeF In both case/ however/ a relief from double ta4ation maybe granted sub"ect to the provisions of applicable ta4 treatiesFE9efer to the questions on ta4es applicable to corporate ta4payersFA

EbA here are generally fewer formalities involved in opening a branchthan incorporating a subsidiaryF

EcA In terms of staffing/ a subsidiary normally requires a complete setof corporate officers whereas a branch is able to operate with onlya resident agent/ who may also be the general manager/ as itsofficerF

EdA ince a subsidiary has a separate "uridical personality/ a foreignparent company is protected from contractual and other liabilitiesincurred by its Philippine subsidiaryL the liabilities of the branchoffice e4tend to that of its home officeF

EeA $ branch is allowed to claimF as deduction from income ta4purposes/ allocated head office e4penses sub"ect to certain

requirements/ while a subsidiary is not allowed to claim the sameF

EfA Profit remittance by a branch registered with the P)*$ is e4emptfrom branch profit remittance ta4 while dividends remittance by asubsidiary is payableF

@ :hat effe!t will a ta& treat$ with m$ !o#ntr$ have on the ta& rates;

$ ta4 treaty is designed primarily to eliminate double ta4ation on foreigninvestors who otherwise have to pay ta4es on the Philippines and in theirhome countries on the same incomeF

Please refer to $ppendi4 IG for a list of ta4 treatiesF

1


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(egional or Area+ead,#arters (+.

and (egional 0perating

+ead,#arters (0+.

"cope of activities, Remittance

and Funding Requirements, Ta!es, Incentives

1 :hat is a (+. and what are the a!tivities it !an engage in;

9epublic $ct E9F$FA CoF -#+ Eamending the 'mnibus Investmentsode of 13-/ and approved on Covember 1333A/ defines 9,: as anoffice whose purpose is to act as an administrative branch of amultinational company engaged in international trade whichprincipally serves as a supervision/ communications and coordinationcenter for its subsidiaries/ branches or affiliates in the $sia7Pacific9egion and other foreign mar.et and which does not earn or deriveincome in the PhilippinesF

he activities of the 9,: are limited to acting as a supervisory/communications and coordinating center of its subsidiaries/ affiliatesand branches in the regionF

It is neither allowed to derive any income from sources within thePhilippines and to participate in any manner in the management ofany subsidiary or branch office it might have in the Philippines nor orsolicit or mar.et goods and services whether on behalf of its mothercompany or its branches/ affiliates/ subsidiaries or any othercompanyF


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7 echnical support and maintenanceL and7 ata processing and communication

$ 9':, is prohibited from offering qualifying services to entitiesother than its affiliates/ branches or subsidiaries as declared in itsregistration with the ecurities and )4change ommission E)AFCeither is it allowed to directly and indirectly solicit or mar.et goodsand services whether on behalf of their mother company/ branches/affiliates/ subsidiaries or any other companyF

? :hat are the f#nding re,#irements for a (+. and a (0+.;

he initial funding requirements for a 9,: of a multinationalcorporation is M#0/000F Within 0 days from receipt of the )certificate of registration/ the multinational corporation must submit acertificate if inward remittance from a local ban. showing that it hadremitted M#0/000F It must also annually remit at least M#0/000or its equivalent in other foreign currency within 0 days fromanniversary date of its registration to cover its operations in the

PhilippinesF

$ 9',: is required to initially remit the amount of M200/000 orits equivalent in other foreign currenciesF Within 0 days from receiptof its certificate of registration/ the multinational corporation mustsubmit to the ) a certificate of inward remittance from a localban. showing that it had remitted M200/000F

@ :hat are the ta&es appli!able and in!entives

available to a (+. / (0.+;

9':, are e4empt from income ta4 and G$ while their purchases ofgoods and services and lease of goods and property are =ero ratedF

'n the other hand/ 9',:s are sub"ect to 10% preferential rate onta4able income and are sub"ect to 10% G$F

9,:s and 9',:s are granted the following incentivesH

aA )4emption from all .inds of local ta4es/ fees and charges e4ceptfor real property ta4 on land improvements and equipmentL

bA a4 and duty free importation of trainingmaterials and equipmentL and

cA importation of motor vehicles sub"ect to the payment ofcorresponding ta4es and dutiesF

)4patriates if 9,:s and 9',:s are entitled to the following incentivesH

aA Bultiple entry special visa/ including those of spouses andunmarried children below age 21L

bA Withholding ta4 of 1#% on salaries/ wages/ annuities/ and otherN emoluments of e4patriatesL

cA ravel ta4 e4emptionL and


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dA a4 and duty free importation of personal and household effectsF

In addition/


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oint 2ent#res

Foreign $quity, Control, Officers and Directors,

pplica#le Ta! Policies

1 If we inter into a 7oint vent#re with Philippine investor) will the %C

allow #s to hold 1> or more of its e,#it$;

he ) will allow foreign equity in e4cess of #0% provided the area ofactivity involved is not covered by the third regular foreign investmentsnegative list under )' CoF 11F Eplease refer to $ppendi4 IIAF

e,#it$ holding) how !an we obtain !ontrol

of the operations;

In general/ control of an enterprise goes to the group which has the power todetermine its policies and the manner in which the enterprise is to be run/and such assurance of control is obtained through ma"ority ownership of thevoting capital stoc. of the corporationF here are/ however/ certainarrangement that could provide a minority group with wor.ing controlFhese arrangements includeH EaA diffusion of ma"ority ownership/ EbAlicensing agreement/ and EcA voting trust agreement among stoc.holdersF

It is also advisable that the ) be consulted in any arrangement involvingvoting rights to ascertain that no condition of the permit ti invest in theenterprise will be violatedF

? Are there an$ re,#irements that dire!tors and other offi!ers m#st be

Filipino !itien and /or residents;

he ma"ority of the directors must be residents of the Philippines and thesecretary must be a resident


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(etails Trade

Definition, prequalification criteria, capitali%ation

requirements, restrictions&

1 Can foreign investors engage in retail trade in the Philippines;

Qes/ 9epublic $ct E9$A CoF -+2 or the 9etail Diberali=ation $ct of 2000was approved on


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dF he foreign retailer6s home country offers reciprocal benefits to


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(#les on Borrowings

Foreign and Domestic Credit

1 Can we finan!e o#r pro7e!t thro#gh foreign borrowings;

he government prefers foreign equity investment to foreign borrowingsFIn general/ foreign borrowings require prior approval of and(or registrationwith the &ang.o entral ng Pilipinas in order that repayment of principal

and remittance of interest may be serviced using foreign e4changepurchased from the Philippine ban.ing systemF

Mnder present rules/ loans that may qualify for prior &ang.o entral ngPilipinas approval(registration are those intended to finance the followingtypes of pro"ectsH

aF )4port oriented pro"ectsLbF &'I7registered pro"ectsLcF Pro"ects listed in the Investment Priorities PlanLdF Pro"ects listed in the Bedium7erm Public Investment

ProgramL and other pro"ects that may be declared priorityunder the country6s socio7economic development plan bythe Cational )conomic evelopment $uthority or byongressF

$ll the above loans/ regardless of maturity/ shall e4clusively finance foreigne4change requirements of eligible pro"ects/ provided that loans of direct andindirect e4porters and public sector borrowers may finance both foreigne4change costs and local of their respective pro"ectsF


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0thers

"alaries, Rentals '(ome and Office "pace), Postal

"ervices and other information

1 Co#ld $o# give some g#idelines as to prevailing-

a salar$ rates for offi!e/administrative staff;

ecretary 7 P-/000 to P0/000 per month$ccountant 7 P12/000 to P0/000 per monthBessenger 7 P+/000 to P3/000 per monthriver 7 7 P-/000 to P12/000 per month

Bail service7 7 Post office bo4 facilities are available at a rental fee rangingfrom P!07P1/!!0 per yearF oor to door mail delivery service is alsoavailable at variable ratesF

elegram/ tele4/ telecopier and telephone services R Bany message7transmitting companies operation in the PhilippinesF Bonthly rentals varyfrom a low of about P00 to a high of P#/000F

b rentals for offi!e spa!e in Ma'ati;

'ffice spaces in Ba.ati may be rented at a low of P!#0 to a highof P00 per square meter per monthF

! rentals for ho#sing of e&patriate e&e!#tives;

,otels and Dodging 7 he room rates range from M+0 toM10 per dayF

$partments 7 Bonthly rental for a one7bedroomfurnished apartment specially in theBa.ati area varies from P0/000 toP-0/000 per month while a two(three(four bedroom apartment will costabout P#/000 to P-0/000 per monthF

,ouses in Gillage 7 he main residential areas in BetroBanila where foreigners may loo. forhouses are in Ba.ati R


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Galle Gerde/ orinthianL and in $yala$labangF

he monthly rentals for the houses on the above villages rangefrom P0/000 to P2-0/000F Bodern houses with spacious lawns andswimming pools will fall under the higher rental rangeF $ deposit isgenerally required and may range from the equivalent of si4 month to twoyears rentalF

d Cost of a!,#iring and maintaining a#tomobiles;

ost of new automobiles ranges from a low of about P!#0/000Efor subcompact carsA to a high of P!/000/000 for lu4ury carsF

he Philippines has recently deregulated the oil industry such that gasolinestations may set their own pricesF he price of gasoline vary on a dailybasis but current indicative prices Eas of 'ctober 1333A are appro4imately

P1 for premium gasoline and unleaded gasoline and P3F30 for dieselF

e T#ition and s!hool fees for !hildren and high s!hool st#dents;

he annual school fees for an equivalent M standard school start fromM10/000 appro4imatelyF

'ther schools offering high standards of education but charging lowertuition fees of around P#0/000 annually are also availableF


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every time he travelsF

@ Ma$ e&patriate e&e!#tive re!eive their !ompensation in foreign

!#rren!ies;

QesF hey may receive their compensation in foreign currenciesF ,owever/this compensation will still be include in their ta4able incomeF

:ill the e&patriates be allowed to !onvert into foreign !#rren!$ an$

e&!ess pesos that the$ ma$ have #pon termination of their assignment;

QesF hey will be allowed to convert any e4cess pesos upon termination oftheir assignment in the PhilippinesF

Is there an$ p#bli! offering of sto!' or !orporate shares in the

Philippines;

QesF stoc. trading is held in the Philippines toc. )4change from Bondaysto Income and &usiness a4es@ for ta4treatment of traded stoc.sF

!1


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Appendi!es

!2


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Appendi& 1

*+P *DP #y Industrial Origin and "ectoral *rowth Rates

'in -illion Pesos, at constant ./01 prices)

str$ 1HHE 1HH Growth > 1HHH Growth >


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*+P *DP #y Industrial Origin and "ectoral *rowth

Rates

'in -illion Pesos, at constant ./01 prices)'continuation)

Ind#str$ 1HHE 1HH Growth > 1HHH Growth >

$F ransportationommunication andtorage ##/0+- #/+!0 +F# +1/-+ #F

&F rade 1#/2+ 1/+!1 2F! 1!#/!0+ !F3

F


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Appendi& II

Third Regular Foreign Investment +egative 2ist

'$&O& +o& ..)

6ist AJ F0(IG4 0:4(%+IP I% 6IMIT5 BK MA45AT5 0F T+

C04%TIT8TI04 A4% %PCIFIC 6A:%

4o Foreign ,#it$

1A Bass media/ e4cept recording Earticle VGI/ ection II of theonstitutionL Presidential Bemorandum dated Bay !/ 133!A

2A ervices involving the practice of licensed professions save in casesprescribed by lawF $rticle VIG ection 1! of the onstitutionL ection

1 of 9epublic $ct E9$A #11X

A 9etail trade Eection 1 of 9$ 110A

!A ooperation Ehapter III/ $rticle 2+ of 9$ +3A

#A Private security agencies Eection ! of 9$ #!-A

+A mall7scale mining Eection of 9$ -0-+A

-A Mtili=ation of marine resources in archipelagic waters/ territorial ande4clusive economic =one E$rticle VIII/ ection 2 of the onstitutionA

A 'wnership/ operation and management of coc.pits ection # ofPresidential ecree EPA !!3X

3A Banufacture/ repair/ stoc.piling and(or distribution of nuclearweaponsF E$rticle II/ ection of the onstitutionA

10A Banufacture/ repair/ stoc.piling and(or distribution of biological/chemical and radiological weapons EGarious treaties to which thePhilippines is a signatory and conventions supported by thePhilippinesA

11A Banufacture if firecrac.ers and other pyrotechnic devices

Eection # of 9$ -1A

4otesJ

a Amended b$ (A 4o* E


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8p to Twent$-Five Per!ent ,#it$

12A Private recruitment/ whether for local or overseas employmentE$rticle 2- of P !!2A

1A ontracts for the construction and repair of locally funded publicwor.s e4ceptHaF infrastructure(development pro"ects covered in 9$ --1 or thebF pro"ects which are foreign funded or assisted and required to

undergo international competitive bidding ommonwealth $ctE$A #!1 as amended by P 1#3!L Detter of Instruction C'F +0Lection 2a of 9$ --1XF

8p to Thirt$ Per!ent Foreign ,#it$

1!A $dvertising E$rticle VGI/ ection 11 of the onstitutionA

8p to Fort$ Per!ent Foreign ,#it$

1#A )4ploration/ development and utili=ation of natural resources

4oteJ F#ll foreign parti!ipation is allows thro#gh finan!ial or

te!hni!al assistan!e agreement with the President

Arti!le NII) %e!tion < of the Constit#tion

1+A 'wnership of private lands E$rticle VII/ ection - of the onstitution/hapter #/ ection 22 of $ 1!1A

1-A 'peration of management of public utilities E$rticle VII/ ection 11 ofonstitutionL ection 1+ of $ 1!+A

1A 'wnership(establishment and administration of educational institutionsE$rticle VIG/ ection 2 of the onstitutionA

13A )ngaging in the rice and corn industry EP 13!A

20A ontracts for the supply of materials/ goods and commodities togovernment7owned or controlled corporation/ company/ agency ormunicipal corporation Eection 1 of 9$ #1A

21A Pro"ect proponent and facility operation of a &' pro"ect requiring apublic utilities franchise E$rticle VII/ ection 11 of the onstitutionsL

ection 2a of 9$ --1A

22A 'peration of deep sea commercial fishing vesselsEection 2- of 9$ ##0A

!+


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2A $d"ustment companiesEection 2 of P +12 as amended by P 11!A

2!A 'wnership of condominiums

Eection # of 9$ !-2+A

8p to %i&t$ Per!ent Foreign ,#it$

2#A


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+A omestic mar.et enterprises with paid7in equity capital of less than theequivalent of M200/000 E9$ -0!2/ as amended by 9$ 1-3A

-A omestic mar.et enterprises which involve advanced technology oremploy at least #0 direct employees/ with paid7in capital of less than theequivalent of M100/000 E9$ -0!2/ as amended by 9$ 1-3A

!


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Appendi& III

Income Ta! Rates for "pecial Corporations

ntit$ (ate Ta&able Base

International

2F#%

;ross Philippine &illing

originating from the Philippines

Conresident foreign orporation

% E1333A 2% Eeffective 2000A

;ross income from Philippine sources

Conresident owner

or lessor of aircraft/ machinery and other equipment

-F#% ;ross rentals or fees

Conresident owner or lessor of vessels chartered by Philippine national as approved by B$9IC$

!F#% ;ross rentals/ lease or

charter fees within the Philippine

Conresident cinematographic film owners/ lessors

or distributors

2#% ;ross income from Philippine sources

'ffshore ban.ing units E'&MsA and foreign currency deposits units E


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ntit$ (ate Ta&able Base

ubcontractors engaged in petroleum operations

9egional operating headquarters

% final ta4

10%

;ross income from service contract

a4able income from authori=ed activities

4oteJ (eins#ran!e premi#ms are e&emptL interest on foreign loan !ontra!ted on or after

A#g#st 1) 1H is ta&ed at !apital gains on disposition of shares of sto!' of

domesti! !orporation are s#b7e!t to >) or 1=> ta&) as in the !ase of ordinar$

!orporations*

#0


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Appendi& I2

P+I6IPPI4 TAN T(ATI% I4 F0(C A% 0F %PTMB(

How to Invest in the Philippines

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Transcript of How to Invest in the Philippines