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This article was published by [Philippines Officially Becomes 72nd Co-Sponsor of the WTO Agreement on Electronic CommerceThis initiative is to analyze in depth the advantages of Philippine company registration, types of Philippine companies, registration process and follow-up maintenance and other dimensions, to discuss the importance of localized operations after the registration of Philippine companies.

Philippines joins WTO's E-Commerce Agreement, Southeast Asian market welcomes new opportunities

Recently.Philippines Officially Becomes 72nd Co-Sponsor of the WTO Agreement on Electronic CommerceThis key initiative not only signifies the country's determination to deeply participate in the global digital trade landscape, but also releases a strong signal to cross-border merchants that the Southeast Asian e-commerce market is accelerating towards standardization and globalization.

In December 2024, after more than five years of negotiations, 71 members, including China, the European Union and Australia, confirmed the Agreement on Electronic Commerce at the WTO.

The agreement covers four pillars of digital facilitation, digital openness, digital trust and digital inclusion, incorporating not only the main rules of digital trade, such as the framework for electronic transactions, electronic authentication and signatures, and paperless trade, but also making breakthroughs in the establishment of a long-term mechanism for the exemption of tariffs on electronic transmissions and the facilitation of e-payment and other rules, thus providing a stable, transparent and predictable rules environment for global digital trade and digital transformation.

China was the first WTO member to implement the Agreement on a trial basis, marking China's move from "leading rule-making" to "leading rule implementation".

The Ministry of Commerce, in conjunction with the Central Internet Information Office, the Ministry of Industry and Information Technology, the General Administration of Customs and the General Administration of Market Supervision, five departments selected Beijing to take the lead in piloting the agreement.

The Philippines' accession not only strengthens the international camp of the agreement, but also further aligns Southeast Asia's digital trade rules with global standards and injects institutional safeguards into the development of regional e-commerce. As one of the fastest-growing e-commerce markets in the world, the Philippines is unleashing huge business potential.

The market size has now reached $25 billion and continues to grow at a high double-digit rate. The Philippines has set an economic growth target of 5%-6% for 2026, and the e-commerce industry is a key component of this.

Meanwhile, the rise of the middle class has become a key driver. According to the World Economic Forum, the purchasing power of the Philippine middle class is expected to surpass that of Italy by 2030, and nearly 90% consumers have had online shopping experiences in the past six months, so a large-scale online customer base with a strong willingness to consume has already taken shape.

In the past, discounts were the absolute trump card to attract consumers, but the latest trend shows that Filipino consumers are rapidly maturing. But the latest trend shows that Filipino consumers are rapidly maturing. lazada data shows that consumers are no longer blindly chasing low prices, but rather value the quality of goods, the guarantee of authenticity and long-term value.

Nearly 90% of Filipino consumers prefer officially certified malls (e.g. LazMall), and 77% will adopt the rational shopping model of "offline experience, online order", with product quality, authenticity and long-term value becoming the core concerns. This shift means that simply relying on the sloppy model of low price competition has been unsustainable, focusing on brand building, quality control merchants will be more competitive.

However, there are both opportunities and challenges. Logistics costs in the Philippines are as high as 20%-30% of the order value, twice as high as in mature markets. This, coupled with the geographic distribution of 7,000 islands, results in delivery times of up to 7-14 days in remote areas, impacting consumer experience and repurchase rates.

In addition, cross-border merchants must also pay attention to compliance requirements. With the full implementation of the Internet Transactions Act, the Philippines has put in place stringent requirements for the disclosure of commodity information and seller qualifications, with violators facing hefty fines or even being "blacklisted", and the previously introduced e-commerce trustmark has also highlighted the country's determination to build a system of trust in the marketplace.

The Philippines' accession to the WTO Agreement on Electronic Commerce is both an opportunity and a test. For cross-border e-commerce practitioners, focusing on compliance needs and localization is an important foundation for opening up the Philippine and Southeast Asian markets. In the future, as more countries join the agreement, global e-commerce and digital trade will usher in a new stage of development that is more standardized and open.

01 Advantages and Challenges of Incorporating a Philippine Corporation

Advantage:

1) Preferential policies and market potential:The Philippine government has taken a number of measures to attract foreign investment in recent years, including tax reductions, tax incentives, and supportive policies for foreign-owned enterprises in specific areas (e.g., special economic zones).

In addition, the Philippines' large young population and growing consumer market provide lucrative market opportunities for foreign companies.

2) Cost advantage:Compared to other Southeast Asian countries, the Philippines has lower labor costs, especially in the areas of call centers, BPO outsourcing, IT, and manufacturing, where companies can take full advantage of local costs.

3) Flexible foreign investment policy:Although the Philippines has more restrictions on foreign investment, there are still many policy advantages that foreign investors can enjoy.

For example, foreign enterprises registered in special economic zones can enjoy more liberal shareholder structure requirements and tax breaks.

Challenge:

1) The complexity of the procedure for registering a company:Although the incorporation process in the Philippines is gradually being simplified, there are still some cumbersome procedures.

For example, for foreign companies, how to ensure compliance with local shareholders' ratio requirements during the registration process and how to choose the right type of company can pose certain challenges to business registration.

(2) The complexity of opening a bank account:The Philippine banking system is growing rapidly, but foreign firms may still face challenges in opening accounts.

In particular, foreigners who are new to the Philippines are often restricted due to their short residency history; the bank review process may also take longer when a newly established foreign company opens an account.

If you plan to register a U.S. company/Singapore company/Japanese company/Thailand company/Malaysia company/Canada company/Mexico company/Brazil company/Britain company/France company/New Zealand company/Japanese company/Singapore company/Vietnamese company/Indonesia company/Philippines company/Dubai company, etc., or plan to register a Hong Kong company/Shenzhen company/Guangzhou company/Shanghai company/Hangzhou company/Beijing company/Hainan company, etc. Shenzhen company / Guangzhou company / Shanghai company / Hangzhou company / Beijing company / Hainan company and other domestic companies registered business services, the company's annual audit audit / bookkeeping tax / payment of MPF / change of information / bank account opening / ODI record / BVI registration / tax compliance / cross-border e-commerce accompanied by running on behalf of the operation of the enterprise one-stop service, you can add my WeChat (phone with V: 13045886252) Consultation at any time ↓↓↓ 

02 Types of Incorporation in the Philippines

The Philippine company registration system is divided into several main types, each form has different application scenarios and advantages, and choosing the right type of company is crucial to the future development of your business.

1. Stock Corporation

(1) For profit, shareholders have ownership rights by subscribing for shares.

(2) The liability of the shareholder is limited to the amount of shares subscribed by him.

3) Applicable to medium and large enterprises, such as manufacturing and trading companies.

2. Non-Stock Corporation (NSC)

1) Not for profit, usually for education, religion, charity, professional associations, etc.

2) No share division, members support operations through dues or donations.

(3) Profits may not be distributed and are required to be used for public benefit purposes.

3. Sole Proprietorship

1) Owned and operated by an individual, the owner has unlimited liability for the debts of the business.

2) Simple to register, suitable for small business, but higher risk.

4. Partnerships

(1) General Partnership: All partners have unlimited joint and several liability for debts.

(2) Limited Partnership: At least one general partner (unlimited liability) and one limited partner (liability limited to the amount of capital contributed).

3) Registration with the Securities and Exchange Commission (SEC) is required.

5. Branch

If you have already registered your company in another country, you can choose to open a branch in the Philippines.

This approach is suitable for a class of businesses that wish to operate directly in the Philippine market but do not want to re-establish a new company.

Advantage: Ability to enter the market quickly without registering a new company.

Challenge: A branch office is not a separate legal entity, all liability rests with the parent company and must comply with specific Philippine government regulatory requirements.

In summary: Selecting the right corporate form requires consideration of factors such as capital size, investment objectives, shareholder composition, operational flexibility and tax optimization. When selecting the type of company, foreign companies often have to weigh the trade-offs between the ability to raise capital and operational flexibility. If you need to register a Philippine company or your existing Philippine company needs follow-up maintenance, feel free to inquire (WeChat: 13045886252)▼▼▼

03 Process of Incorporation in the Philippines

The process of registering a Philippine corporation involves several government agencies and is usually done in a sequential manner:

Step 1: Name Reservation (SEC)

Apply for a Philippine company name on the SEC website or offline and get a Notice of Name Approval.

Step 2: Preparation and notarization of documents

:: Drafting of articles of incorporation and by-laws.

:: Signing of documents by shareholders and notarization by a notary public.

Step 3: Submit Registration to the SEC

:: Submission of notarized by-laws, notification of name approval, proof of financial capacity (e.g., certificate of capital deposit issued by a bank), registration information form, etc.

● Certificate of Incorporation of the Philippine Corporation is issued after SEC audit and approval. This is the primary document for the legal existence of a Philippine corporation.

Step 4: Register with the BIR (Bureau of Internal Revenue)

:: Obtaining a BIR tax registration certificate.

:: Apply for certification of company invoices and receipts.

:: Registration for VAT or proportional tax (depending on annual income).

Step 5: Enrollment in SSS, PhilHealth, Pag-IBIG (HDMF)

Enrollment of Filipino companies and prospective employees in social security numbers, medical insurance and housing funds.

Step 6: Obtaining a local government license

:: Obtain a business license from the city/town business licensing office.

:: Obtaining community tax registration certificates from the community.

Step 7: Other Special Permits

:: If the industry is regulated (e.g., catering, construction, finance, etc.), a license will need to be obtained from the relevant professional regulatory board.

:: If engaged in importing or exporting, registration with the Customs Bureau is required.

● If you are hiring foreign workers, you need to apply for alien employment permits and visas from the Department of Labor (DOLE) and Bureau of Immigration (BI). If you are planning to incorporate a Philippine company or if your existing Philippine company needs follow-up maintenance, feel free to drop me a line (WeChat: 13045886252)▼▼▼▼

04 Bank Account Opening for Philippine Companies

Philippine companies have to open a bank account, how to open a bank company account smoothly?

Whether it is a personal account or a corporate account, there are some basic requirements for opening a bank account in the Philippines. For foreign businesses, understanding these requirements can not only help speed up the account opening process, but also ensure the smooth operation of the bank account.

1) Notes on opening a personal bank account:

For personal account opening, Philippine banks usually require valid proof of identity and proof of address.

While some international banks offer English-language services for expatriates, most local banks require applicants to be able to communicate in either Japanese or English for account opening procedures.

Special Note: If you are a foreigner who has just arrived in the Philippines, many banks will require you to have a period of residency history in the Philippines.

As a result, new immigrants may face stricter scrutiny when opening an account, especially for non-permanent foreigners, and may be required to provide additional proof of residence or documentation of the source of funds.

2) Difficulties and challenges in opening a bank account for a Philippine company:

The requirements for opening a Philippine company account are relatively strict, and banks usually require companies to provide a series of documents, including proof of company registration, identification of shareholders and directors, and tax registration certificates.

For foreign companies, banks may also require the company to be registered for at least three months to ensure the stability of the company's operations.

3) Bank Audit:

When banks examine a business, they not only look for legitimacy, but also assess the financial situation, sources of funds and business plans, and may conduct background checks to ensure that the flow of funds is legal and compliant. Banks are particularly careful in the case of foreign-owned enterprises and seek to comply with the Philippine Foreign Investment Regulation Policy.

4) Long-term management of Philippine corporate accounts:

Philippine bank account management is not complicated, but the local banking culture differs from that of international banks, and it takes time for foreign companies to adapt to local services.

Particularly in cross-border payments, foreign exchange management and capital flows, some local banks do not provide as good a service as international banks. Therefore, foreign companies may be able to operate their funds more efficiently by choosing local banks that cooperate with international banks or provide better services.

05 Follow-up maintenance of Philippine companies

1) Annual Audit of Philippine Companies

Philippine company annual audit, refers to the relevant government functions of the company's annual qualification review, the company submits shareholders, directors, legal secretary, registered address and other information information for the annual declaration, mainly involved in the scope of business operations and tax situation.

Businesses registered in the Philippines are required to renew their business licenses at the local government office where the company's registered address is located from January 1 to January 22 every year, and to complete the annual renewal of their tax unit registration with the Department of Revenue (DOR) by January 31st.

Failure to file and make timely payment with any of the above mentioned departments will result in fines, and failure to complete the company's annual audit on time may affect the renewal of the business license for the following year.

Information to be provided for the annual review:

1. Business license.

2. Articles of Incorporation.

3. Authorization documents of the Board of Directors.

4. A copy of the company's change file, including the change of shares, capital increase, name change file (if there is no relevant matters involved, you can ignore this article).

5. Photocopies of ID cards or passports of all shareholders and directors (whichever is submitted to the government).

2) Philippine Corporate Audit

Under the Revised Corporation Code of the Philippines (RCCP) and the Securities and Exchange Commission of the Philippines (SEC), annual audits are required for all registered corporations, whether they are local corporations or branches of foreign corporations in the Philippines, regardless of the size of the corporation. Audits are required for all registered companies, whether local or foreign, regardless of size.

Regardless of when the company's financial year begins and ends, the company should ensure that the annual audit is completed by April 15 of each year, with the annual audit being completed in January of the year following the company's incorporation, and that the audit report is filed with the SEC.

The information to be provided for the audit is:

1. Monthly statements of all bank accounts of Philippine companies.

2. Sales notes, such as invoices and contracts.

3. Cost bills, such as invoices and contracts.

4. Expense bills, such as wages, rent, to provide a lease contract or agreement, freight charges, etc..

5. Other related files such as by-laws, annual returns, all corporate change information (if any), fixed asset bills, investment related.

6. Management's obligation to know and authorize.

06  Why choose Enterprise Finance?

--More than bookkeeping and tax preparation, we are your "tax architect" and "risk prevention and control expert".

🏆Enterprise Finance has accompanied the growth of 300,000+ enterprises since its establishment. With the mission of "empowering every entrepreneurial dream", we focus on providing small and medium-sized enterprises (SMEs) and entrepreneurs with one-stop financial and tax solutions, including "pain point diagnosis, compliance structure, tax optimization and continuous support".

Our professionalism stems from deep industry experience and full-service support:

✅ Know business, know more about risk: we go deep into the operating scenarios of different industries, diagnose the pain points of finance and taxation from the business flow, and provide landable compliance transformation programs.

✅ Full License Qualification Guarantee: With the professional qualification of CPA firm, the team is composed of senior tax accountants and accountants to ensure the legal compliance of the program.

✅ One-stop solution: transform high-frequency pain points (e.g. lack of tickets, social security, public-to-private transfers) into standardized product modules, balancing efficiency and customization.

✅ Long-term accompanying service: not only solving the current problems, but also focusing on the financial and tax planning in the growth cycle of the enterprise, helping sustainable development.

🔍 Our service logic: from "Risk Identification" to "Architecture Reinvention".

In-depth diagnosis: not only look at the statement, more in-depth business flow, contract flow, capital flow, locate the root cause of risk.

Program Comparison: Insisting on "data speak", clearly presenting the tax burden, risk and cost under different paths to help customers make rational decisions.

Transparency in the whole process: costs, processes and cycles are proactively explained, so that customers have peace of mind and control throughout the process.

Long Term Adaptation: Provide scalable and sustainable financial and tax structuring advice according to the development stage and future planning of the enterprise.

Tax compliance is not a cost, but a "seat belt" and "gas pedal" for enterprises to move forward. Choosing a partner who understands both policy and business can help your company walk on the road of compliance with greater ease and confidence.  

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Information reference: The content of this article is synthesized from the internal materials of Enterprise Caiying and relevant public network information.

Content Editor: This article was edited and designed by the Operations Department of the Enterprise Caiying Group.

Warm reminder: The relevant policies, conditions, time limits, fees and other information described in this article may be subject to dynamic adjustments, please refer to the latest official announcements or the actual application of the specific circumstances prevail.