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Print articleExport Development Canada's "First 5 Calls: Philippines"
September, 2017 - Hiyasmin Lapitan
From a regulatory and legal point of view, what do Canadian companies need to know about doing business here?
The Philippines is a party to several treaties, including a tax treaty that applies to Canadian suppliers that want to sell goods to the Philippines. There are special laws for investors depending on the type of activity they plan to engage in. Manufacturers and companies in the renewable energy sector could be entitled to tax incentives. Mining operations are generally subject to nationality restrictions, requiring at least 60 per cent Filipino ownership.
Canadian investors should be mindful of the Philippine Competition Act and its implementing rules and regulations, which were recently promulgated and are primarily implemented by the Philippine Competition Commission. Depending on several factors, such as whether the value of the transaction exceeds PHP1 billion and the percentage of shares in a Philippine company that will be acquired, a merger or acquisition transaction involving the Philippines may be a covered transaction under the Act, and the parties may have to comply with the compulsory notification requirements prior to completion of the transaction.]
Foreign companies typically set up a subsidiary, branch or representative office here. What are the main requirements for these entities?
Setting up a subsidiary requires at least five individuals to act as incorporators, with at least three who are Philippine residents. The corporate secretary has to be Filipino, and at least three board members have to be Philippine residents. A branch may be easier to set up because you just need a resident agent in the Philippines who can receive notices, summonses and other communications on behalf of the company. Generally, the minimum required capital for a subsidiary or branch of a foreign corporation that will primarily sell goods or services within the Philippines is US $200,000. Registering a representative office requires initial capital of only US $30,000. However, the activities of a representative office are limited to general marketing and information dissemination, and liaising with customers.
What land or property ownership rules apply to Canadian companies that want to set up operations here?
Canadian companies cannot purchase private land in the Philippines as land ownership is restricted to Philippine nationals. However, foreign companies can buy other real property such as buildings and lease private land for up to 25 years, renewable for another 25 years. Foreign investors, such as those interested in setting up a manufacturing facility, may also be allowed a 75-year lease of private land pursuant to the Investors’ Lease Act.
SyCipLaw Partner Hiyasmin H. Lapitan was interviewed for "First 5 Calls: Philippines" by ExportWise, the online magazine of Export Development Canada. The article provides practical, on-the-ground advice from five market experts on doing business in the Philippines.
Ms. Lapitan provided legal and regulatory tips on how Canadian companies can do business in the Philippines. The other market experts featured in the article are Chia Wan Liew, EDC’s chief representative for South East Asia; Wayne Farmer, president of the Canada-ASEAN Business Council and managing partner of Islemount Limited; Jun Gil, chairman of AMROP Partnership SCRL; and Michelle Juan, business development consultant APAC of TRACE International.
Ms. Lapitans corporate work relates to investments in, and financing of projects in various industries including energy, construction, and advertising industries. She was part of the team that worked on a US$720 million project financing for the development and construction of a 2 x 300 MW coal-fired power generation facility in Bataan, Philippines. Ms. Lapitan also assisted in the issuance of US$350 million subordinated guaranteed perpetual capital securities by a Dutch subsidiary of a local listed company; and the sale of shipyard assets.
