ESTABLISHING REGIONAL HEADQUARTERS IN THE PHILIPPINES
To enhance incentive package for foreign investors, the Philippines enacted in November 1999 the Republic Act No. 8756, or AN ACT FOR THE TERMS, CONDITION, AND LICENSING REQUIREMENTS OF REGIONAL HEADQUARTERS AND REGIONAL OPERATING HEADQUARTERS.
The law lays out the guidelines on the establishment and maintenance of multinational companies Regional or Area Headquarters (RHQs) and Regional Operating Headquarters(ROHQ). Any multinational company organized and existing under laws other than the Philippines with branches, affiliates and subsidiaries in the Asia-Pacific Region and other foreign markets may establish RHQ and ROHQ.
What are the incentives given to registered RHQ/ROHQ?
1. Exemption on the Payment of Corporate Income Tax
An annual information return of a tax exempt corporation shall be filed with
the Bureau of Internal Revenue
2. Exemption on the Payment of Value-Added Tax
In addition, the sale or lease of goods and property including the rendition
of services to RHQ are zero-rated
3. Other exemptions common to both RHQ and ROHQ
1. Payment of Corporate Income Tax
Income derived by the ROHQ from performing qualifying activities shall be subject
to a preferential rate of 10% on taxable income
2. Payment of Branch Profit Remittance Tax
Any income derived from the Philippines when remitted to the parent company
shall be subject to the tax on branch profit remittances
3. Payment of Value-Added Tax
ROHQ shall be subject to the ten percent (10%) value-added tax unless otherwise
provided under the National Internal Revenue Code
Exemptions common for both RHQ and ROHQ
1. Exemption on the payment of all kinds of local taxes, fees or charges
2. Tax and duty free importation of training materials and equipment
3. Entitlement to the importation of new motor vehicles
What are incentives given to expatriates of a registered RHQ/RHQ
1. Multiple entry visa valid for a period of three (3) years and can be extended
for another three (3) years
2. Withholding tax of 15% which is applied to both alien and Filipino executives holding managerial or technical positions
3. Tax and duty free importation of personal and household effects
4. Travel tax exemption issued by the Philippine Tourism Authority upon recommendation by the Board of Investments
Where to register for RHQ/RHQ?
Application for RHQ/ROHQ registration with the SEC is filed through the Registration Division of the BOI. The SEC shall issue the Certificate of Registration and License to the applicant upon submission of all required documents and a favorable endorsement from the BOI.
What are the requirements for the registration of RHQ/ROHQ?
1. Certification from the Philippine Embassy or from the equivalent office
of the Philippine Department of Trade and Industry (DTI) in the applicant's
home country stating that the said firm is an entity engaged in international
trade with affiliates, subsidiaries or branch office in the Asia Pacific region
and other foreign markets. The Philippine Embassy/Consulate in the applicants
home country should authenticate certifications issued by equivalent office
of the DTI in the said country.
2. Duly authenticated certification from the applicant's principal officer indicating the authority given by its Directors to establish a regional operating headquarters in the Philippines. For the ROHQ, the certification shall specify the qualifying services it will render.
An undertaking that the multinational company will remit to the Philippines
within 30 days from issuance of the Certificate of Registration, an amount that
is necessary to cover its operations herein and the said amount should not less
than US$50,000 for RHQ and US$200,000 for ROHQ or its equivalent in acceptable