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Complete Guide on How to Register a Regional Operating Headquarters (ROHQ) in the Philippines
Foreign corporations that intend to set up a service center to perform income-generating business activities to their subsidiaries, branches, and affiliates around the world can set up a Regional Operating Headquarters (ROHQ) in the Philippines.
An ROHQ does not have a separate legal entity from its parent company. Hence, all its liabilities will also be incurred by the head office.
Similar to a Regional or Area Headquarters (RHQ), it can only be set up by a foreign corporation with subsidiaries, branches, and/or affiliates around the world.
Foreign corporations seeking to set up an ROHQ in the Philippines must fulfill the following:
- Appointment of a Resident Agent
- Proof of Official Business Address
Appointment of a Resident Agent
The foreign parent company is required to appoint a Resident Agent who shall receive summons and other legal proceedings served to or against the ROHQ in the Philippines. The resident agent can be an individual residing in the Philippines or a domestic corporation lawfully doing business in the country.
Proof of Official Business Address
You need to have a registered office address before starting the company registration process. You must present the Contract of Lease of your office address to the Bureau of Internal Revenue (BIR) and local government units (LGUs) to fulfill this requirement.
If you will not be able to secure your Contract of Lease during the registration process, you can rent a virtual office as your business address. You can transfer to a physical office after completing the registration process.
Minimum Capital Requirements
The parent company is required to deposit an initial inward remittance of US$200,000 as capitalization and annual support for the operating expenses of the ROHQ in the Philippines.
Subject to certain conditions, overhead expenses of the head office may be allocated to the ROHQ.
Under Philippine laws, an ROHQ is not allowed to offer qualifying services to entities other than its parent company’s affiliates, branches, and/or subsidiaries. It is also prohibited to directly or indirectly solicit or market goods and services on behalf of its parent company, branches, affiliates, subsidiaries, and/or any other associated entity.
Corporate Taxes for ROHQs in the Philippines
As income-generating entities, ROHQs are subject to a tax rate of 10% on their taxable income in the Philippines. They are also subject to 10% value-added tax (VAT).
ROHQs are also subject to 15% branch profit remittance tax on their income remittances to their parent company abroad based on the total profits applied or allocated for remittance without any deduction for the tax component. This tax rate can be reduced depending on applicable tax treaties between the Philippines and the country of residence of the parent company. Under the tax treaties of the Philippines with the Netherlands, Japan, Germany, and Austria, a preferential tax rate of 10% shall be granted.
Under applicable laws, ROHQs registered with the Philippine Economic Zone Authority (PEZA) are exempted from the tax on branch profit remittances.
However, ROHQs shall be exempt from all kinds of local taxes, fees, or charges imposed by an LGU, except real property tax on land improvements and equipment.
Available Incentives for ROHQs in the Philippines
ROHQs in the Philippines can avail of the following tax incentives:
- Tax and duty-free importation of equipment and materials not locally available for training and conferences
- Equipment disposed within 2 years after importation (subject to payment of taxes and duties)
- Importation of brand new motor vehicles (subject to payment of taxes and duties)
Tax Incentives for Foreign Personnel
- Preferential tax rate of 15% on salaries, annuities, and other types of compensation applicable for expatriates
- Travel tax exemption
- Multiple Entry Visa
- For expatriates, including their spouse and unmarried children below the age of 21
- Exemption from payment of fees except for reasonable administrative costs
- Exemption from securing Alien Certificate of Registration
- Non-immigrant visa will be processed within 72 hours upon submission of requirements to the Bureau of Immigration (BI)
- Tax and duty-free importation of used household goods and personal effects
Foreign corporations that intend to establish an ROHQ in the Philippines must submit the following documentary requirements to the agency that handles corporate registry, the Securities and Exchange Commission (SEC):
- Application Form
- Name Verification Slip
- Certification from the Philippine Consulate/Embassy or the Philippine Commercial Office or from the equivalent office of the Philippine Department of Trade of Industry (DTI) in the parent company’s country of origin verifying that said foreign corporation is engaged in international trade with subsidiaries, branches, or affiliates around the world; in case the certification is issued by an equivalent of DTI, the same shall be authenticated by the Philippine Consulate/Embassy
- Certification from the Principal Officer of the foreign corporation verifying that it was authorized to establish an ROHQ in the Philippines
- Proof of inward remittance of US$200,000 as paid-up capital and annual support for operating expenses
- Endorsement or clearance from appropriate government agencies (if applicable)
- Endorsement from the Board of Investments (BOI)
- Latest authenticated financial statements showing the financial solvency of the head office
The usual timeline for registering an ROHQ in the Philippines is 6-10 weeks, provided all required documents are submitted as early as possible and there are no processing delays from the government.