Philippines
25% (20% for domestic SMEs with net taxable income ≤ PHP 5 million and total assets ≤ PHP 100 million)
Corporate Tax
4–8 weeks
Setup Time
PHP 5,000 (domestic corporation); USD 200,000 (foreign-owned corporation, general rule)
Min. Capital
40% in most sectors (100% in select sectors under the Foreign Investments Act)
Foreign Ownership
#95
Ease of Business
The Philippines has three compelling business arguments: 110 million English-speaking consumers, the world's number one BPO and outsourcing destination, and PEZA economic zones that offer significant tax incentives for qualifying companies. Standard corporate tax is 25% under the CREATE Act (2021), reduced to 20% for domestic SMEs. Foreign ownership is restricted to 40% in most sectors under the Philippine Constitution, with 100% foreign ownership available in specific areas under the Foreign Investments Act or through PEZA registration. PEZA-registered companies enjoy income tax holidays of 4–7 years followed by a 5% gross income tax in lieu of all national and local taxes. For BPO operations, outsourcing, and companies that can leverage the Philippines' English-speaking talent pool, the value proposition is strong. The USD 200,000 minimum capital requirement for foreign corporations is significant but can be reduced to USD 100,000 with advanced technology or 50+ Filipino employees.
- BPO and outsourcing companies leveraging the Philippines' English-speaking workforce and established outsourcing infrastructure
- Companies registering with PEZA to access income tax holidays and economic zone incentives
- Consumer goods and retail businesses targeting Southeast Asia's fifth-largest and fastest-growing population
- Tech companies building remote development teams with competitive English-speaking talent
- Export-oriented manufacturers in PEZA zones qualifying for 100% foreign ownership and tax incentives
The 40% foreign ownership cap in most sectors is a Constitutional restriction — it cannot be waived by executive action and requires a Constitutional amendment to change. The Foreign Investments Act allows 100% foreign ownership only in sectors not on the Negative List and with minimum capital requirements. If your business falls within a restricted sector, you must either take a Filipino majority partner, qualify for PEZA registration (which can provide 100% foreign ownership for qualifying export or IT enterprises), or restructure your business activities. Do not attempt to circumvent ownership restrictions through nominee arrangements — this is illegal under the Anti-Dummy Law and carries criminal penalties.
At a Glance
Available Business Structures
Cost Snapshot
Tax Overview
Banking Reality Check
Timeline: 2–4 weeks
Philippine banks (BDO, BPI, Metrobank, Security Bank, UnionBank) offer corporate accounts for SEC-registered companies. Required documents include the SEC Certificate of Incorporation, Articles of Incorporation and By-Laws, Board Resolution authorising account opening, BIR registration (COR 2303), Mayor's Permit, and identification of authorised signatories. At least one signatory typically needs to appear in person. Foreign-owned companies may face enhanced due diligence. UnionBank and some digital banks offer more streamlined processes for tech and startup companies.
Visa & Immigration
The Philippines offers a Special Investor's Resident Visa (SIRV) for foreign nationals who invest at least USD 75,000 in qualifying Philippine investments (listed stocks, government bonds, or corporate instruments). The SIRV provides indefinite residency with multiple entry privileges. The Special Resident Retiree's Visa (SRRV) is available for retirees with qualifying deposits. Foreign employees of Philippine companies require a 9(g) pre-arranged employment visa, which is processed through the Bureau of Immigration with support from the Department of Labour and Employment (DOLE). PEZA-registered companies benefit from facilitated visa processing for foreign officers and employees. There is no dedicated digital nomad visa.
Free Zones & SEZs
74 free zones available
Common Mistakes
Ignoring the 40% foreign ownership restriction until incorporation
Fix: Check the Foreign Investment Negative List (FINL) before committing to a Philippine structure. The FINL is divided into List A (foreign ownership limited by the Constitution or specific laws) and List B (foreign ownership limited for security, defence, or SME protection reasons). If your business activity is restricted, explore PEZA registration (which can grant 100% foreign ownership for qualifying IT and export enterprises) or consider a legitimate partnership with a Filipino majority shareholder.
Not registering with PEZA before starting operations
Fix: PEZA incentives — including income tax holidays, duty-free imports, and simplified visa processing — are only available to companies that register with PEZA before commencing commercial operations. Applying retroactively is not possible. If you plan to operate in IT-BPO, manufacturing for export, or other PEZA-eligible activities, submit the PEZA application during the incorporation process, not after.
Failing to renew the Mayor's Permit annually
Fix: The local government business permit (Mayor's Permit) must be renewed every January. Late renewal incurs penalties and surcharges, and operating without a valid permit can result in closure orders from the local government unit. Calendar the renewal deadline and begin the process in December, as it requires multiple clearances (barangay, fire safety, sanitary) that take time to obtain.
Frequently Asked Questions
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This 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.