Domestic Stock Corporation (Corporation)
Korporasyon
Company formation in Philippines
The Corporation is best suited for: BPO and outsourcing operations leveraging the Philippines' English-speaking workforce, Companies registering with PEZA for income tax holidays and economic zone incentives, Consumer goods companies targeting Southeast Asia's fifth-largest population, Tech companies and startups accessing Filipino remote talent at competitive costs, Export-oriented manufacturers qualifying for reduced foreign ownership restrictions. A Philippine domestic corporation pays corporate income tax at 25% on net taxable income (worldwide income for domestic corporations). Domestic SMEs with net taxable income not exceeding PHP 5 million and total assets not exceeding PHP 100 million (excluding land) pay 20% CIT under the CREATE Act (2021). PEZA-registered enterprises enjoy income tax holidays (ITH) of 4โ7 years, after which they pay a special 5% tax on gross income earned (GIE) in lieu of all national and local taxes. VAT is 12% on most goods and services. Minimum Corporate Income Tax (MCIT) of 1% of gross income applies from the fourth year of operations when MCIT exceeds regular CIT. Dividends paid to non-resident foreign shareholders are subject to 25% final withholding tax, reduced under double tax treaties. The Philippines applies a fringe benefit tax of 35% (based on the grossed-up monetary value) on non-cash benefits provided to managerial and supervisory employees.
- BPO and outsourcing operations leveraging the Philippines' English-speaking workforce
- Companies registering with PEZA for income tax holidays and economic zone incentives
- Consumer goods companies targeting Southeast Asia's fifth-largest population
- Tech companies and startups accessing Filipino remote talent at competitive costs
- Export-oriented manufacturers qualifying for reduced foreign ownership restrictions
Key Facts
Step-by-Step Formation Process
Verify the company name with SEC
Submit a name verification request to the Securities and Exchange Commission (SEC). The proposed name must not be identical or confusingly similar to an existing registered entity. Name verification can be done online through the SEC Company Registration System (CRS). Reserve up to three name options.
Prepare and file articles of incorporation with SEC
Draft the Articles of Incorporation (AOI) and By-Laws specifying the company name, principal office address, purpose, term of existence, capital structure, directors, and incorporators. File electronically through the SEC CRS along with the Treasurer's Affidavit confirming that at least 25% of authorised capital stock has been subscribed and at least 25% of subscribed capital has been paid up.
Obtain the SEC Certificate of Incorporation
Once approved, the SEC issues the Certificate of Incorporation. The company now has legal personality. The certificate includes the SEC registration number used for all government and banking interactions.
Register with the Bureau of Internal Revenue (BIR)
Apply to the BIR for a Tax Identification Number (TIN), register the company's books of accounts, and obtain authority to print official receipts and invoices. File BIR Form 1903 for new corporation registration. The BIR will assign the company to a Revenue District Office based on the principal office address.
Obtain local government permits
Apply for a Mayor's Permit (Business Permit) from the local government unit (LGU) where the principal office is located. This requires the SEC certificate, lease agreement, community tax certificate, and various clearances (barangay, fire, sanitary). The business permit must be renewed annually in January.
Register with SSS, PhilHealth, and Pag-IBIG
Register the company as an employer with the Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (Pag-IBIG/HDMF). These registrations are mandatory before hiring employees and require the SEC certificate and BIR registration.
Required Documents
- Articles of Incorporation and By-Laws
- Treasurer's Affidavit confirming capital subscription and payment
- SEC name verification/reservation confirmation
- Passport or government ID of all incorporators, directors, and officers
- Proof of principal office address (lease agreement or land title)
- Community Tax Certificate for each incorporator
- Bank certificate of deposit for paid-up capital
- Special Power of Attorney (if incorporators cannot appear personally)
- SEC Form F-100 (for foreign investments) if applicable
Cost Overview
Tax Treatment
A Philippine domestic corporation pays corporate income tax at 25% on net taxable income (worldwide income for domestic corporations). Domestic SMEs with net taxable income not exceeding PHP 5 million and total assets not exceeding PHP 100 million (excluding land) pay 20% CIT under the CREATE Act (2021). PEZA-registered enterprises enjoy income tax holidays (ITH) of 4โ7 years, after which they pay a special 5% tax on gross income earned (GIE) in lieu of all national and local taxes. VAT is 12% on most goods and services. Minimum Corporate Income Tax (MCIT) of 1% of gross income applies from the fourth year of operations when MCIT exceeds regular CIT. Dividends paid to non-resident foreign shareholders are subject to 25% final withholding tax, reduced under double tax treaties. The Philippines applies a fringe benefit tax of 35% (based on the grossed-up monetary value) on non-cash benefits provided to managerial and supervisory employees.
Pros & Cons
- English is an official language and spoken fluently across business, government, and the general population โ the only ASEAN country with this advantage at scale
- PEZA economic zones offer income tax holidays of 4โ7 years followed by a 5% gross income tax (in lieu of all national and local taxes)
- World's number one BPO and outsourcing destination โ proven infrastructure for services, call centres, and software development
- CREATE Act (2021) reduced standard corporate tax from 30% to 25%, with 20% for domestic SMEs
- Large young population of 110 million provides a growing consumer market and deep talent pool
- Competitive labour costs for English-speaking skilled workers, particularly in IT, finance, and customer service
- Foreign ownership is restricted to 40% in most sectors โ the Constitutional cap is a real constraint
- USD 200,000 minimum paid-in capital requirement for foreign-owned corporations is significant (reduced to USD 100,000 with advanced technology or 50+ Filipino employees)
- Bureaucratic processes are slow โ SEC registration, BIR permits, and local government licences require patience
- Infrastructure outside Metro Manila is inconsistent โ power reliability, internet speed, and logistics vary significantly
- Annual business permit renewal with the LGU involves multiple clearances and fees
- The legal system can be slow for contract enforcement and dispute resolution
Ready to form a Corporation in Philippines?
Get a personalised cost estimate and next steps.
Get StartedThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.