Philippines Expansion Guide
Global Upside helps companies set up, hire, and operate in the Philippines. Set up a legal entity quickly and easily with our solutions for branch, subsidiary, and rep office. Looking for an alternative to permanent establishment? Hire and pay employees in the Philippines without a legal entity by using our PEO & employer of record services. Once your business is set up, our teams can support with recruitment and staffing, human resources, employee benefits, payroll, accounting, and tax.
The Philippines is an island country situated in the basin of the Pacific Ocean close to the equator. The economy of the Philippines is considered to be one of the most dynamic economies in the East Asia Pacific zone.
- The Philippines is one of the world’s largest producers of coconuts and coconut products. These are vital export supplies.
- The Philippines exports canned tuna primarily, while other commercial fishes are sardines, mackerel, anchovies, and milkfish.
- The major imports are electrical apparatus for line telephony, electronic integrated circuits, micro assemblies, motor vehicles, machinery parts, accessories, and petroleum oils.
Subsidiary is a local stock enterprise, either entirely or partially possessed (yet constrained) by a foreign company. It has a different and unique legitimate entity from its parent. It is governed by its board of directors, which practices all corporate force, manages all business, and controls all property of the firm. The directors are stockholders by investors from the investors themselves. Officers are chosen by the directors, and they perform their obligations levied on them by law and the ordinances of the organization.
Branch Office (BO) is an expansion of, and not a different and unique establishment from, the foreign company. It executes business activities of the administrative office and gets payment from the Philippines. A resident specialist is allocated to whom summons and other lawful procedures might be served for the benefit of the foreign company.
Representative Office (RO) is an extension of, and not a different and unique establishment from, a foreign company. It manages the clients of the head office in the Philippines however does not derive salary from the country and is completely sponsored by its head office. A resident specialist is assigned to whom summons and other lawful procedures might be served for the benefit of the foreign company.
Regional or Area Headquarters is a management branch of a global organization and, in this way, not a different and unmistakable legal establishment. It is incorporated to regulate, connect, and integrate the global firm’s subsidiaries, partners, and branches in the Asia-Pacific zone. It is not permitted to work together or derive salary from sources within the Philippines. Its activities must be completely financed by the method of internal settlements from its head office.
Regional Operating headquarters is a management branch of a global firm and, hence, not a different and unique legal establishment. It is set up to perform qualifying administrations to the global organization’s affiliates, subsidiaries, or branches in the Philippines, the Asia-Pacific area, and other unfamiliar markets. It is barred from offering its administrations to establishments other than the preceding. Furthermore, it is restricted directly or indirectly, to promote or market products and ventures for the global organization or any of its subsidiaries or affiliates. It is permitted to receive remuneration from sources within the Philippines.
Partnership is an establishment that has legal character discrete and unique from its accomplices. For the most part, each accomplice is considered as a specialist of the organization and their demonstrations are official, except if in any case given in the Articles of Partnership. A foreign corporation might be an accomplice in a domestic association simply after such foreign organization gets a permit to execute business in the Philippines.
It takes a minimum of 4 to 8 weeks to incorporate a legal establishment in the Philippines.
The Labor Code does not contain specific requirements for employment contracts.
Employees can be hired for a trial period of six months unless an employee is involved in an apprenticeship program and a longer period is specified. At the time of hiring, an employee must be informed of the performance standards he/she must meet to become a regular employee. The employee can be dismissed only for failing to meet those standards.
Employees are entitled to the following eight paid holidays:
- Jan. 1: New Year’s Day
- Maundy Thursday
- Good Friday
- Bravery Day
- Labor Day
- Independence Day
- Christmas Day
- Rizal Day
Additionally, the government each year announces several special holidays, which are unpaid days off and may change from year to year. These are:
In the Philippines, salaries are usually paid bi-monthly, i.e., on the 15thand the 30th of every month. Additionally, employers need to provide the employees with a pay slip which can also be issued online and all payroll records need to be kept for a minimum of 5 years.
Anti-Bribery & Anti-Corruption Law
1. Bribery of Public Officials:
For Individuals: with an intention to commit crime
i) Prision mayor for up 8 years and 1 day to 12 years’ imprisonment.
ii) A fine up to 3 times the value of the bribed gift.
iii) A penalty equivalent to the crime settled upon if a crime is committed.
For individuals: an unjust act
i) Prison correcial for up 2 years, 4 months and 1 day, to 4 years and 2 months’ imprisonment.
ii) A fine up to 2 times the value of the bribed gift.
For individuals: abstaining from an official obligation
i) Prison correcial to Prision mayor for up 4 years, 2 months and 1 day, to 10 years’ imprisonment.
ii) A fine up to 3 times the value of the bribed gift.
For legal entities:
i) The primary license will get revoked.