Setting up in the Philippines means moving through several government agencies in a fixed order, not filing one form and being done. Get that sequence wrong and you can lose real weeks waiting on paperwork that depended on a step you skipped. Here's how it actually unfolds in 2026.
1. Sole proprietorship, OPC, or domestic corporation
Three structures cover most founders here, scaling from solo to investor-ready.
- Sole Proprietorship. One owner, the simplest setup available, registered with the Department of Trade and Industry (DTI). No separate legal personality and no shield against liability.
- One Person Corporation (OPC). Made possible by the 2021 Revised Corporation Code, this gives a single stockholder the limited liability of a full corporation without needing to bring in other incorporators, a practical fit for solo founders who still want corporate standing.
- Domestic Corporation. The go-to structure once you're planning to scale, hire, or bring in investors, with liability protection and formal governance, registered with the Securities and Exchange Commission (SEC).
Foreign investors can take part in most of these, though the Foreign Investment Negative List restricts or caps foreign ownership in certain sectors, public services and specific licensed activities among them.
2. Working through the registration sequence
Sole proprietorships register a business name with the DTI, and fees scale with scope: roughly ₱200 at barangay level, ₱1,000 for regional, and ₱2,000 for national coverage. Corporations and OPCs go through the SEC's modernized eSPARC and SEC ZERO online platforms instead; name verification holds for 30 days, and the SEC generally issues a Certificate of Incorporation within 2 to 3 weeks. Once that's done, you register with the local government unit (LGU) where you'll operate for a mayor's permit and barangay clearance, then with the Bureau of Internal Revenue (BIR) for your Tax Identification Number (TIN), either through the NewBizReg portal or your regional district office. Planning to hire means registering as an employer with SSS, PhilHealth, and Pag-IBIG as well.
3. Licenses, permits, and remittance rules
There's no single blanket business license across the Philippines. What you need depends on your industry and municipality, with the mayor's permit and barangay clearance standard across the board and additional sector-specific licenses layered on for regulated activities. Foreign-owned subsidiaries have their own quirks too: they need to maintain at least a 10% profit margin and typically bill their parent company in USD, and every incoming fund transfer requires a Certificate of Inward Remittance to keep VAT zero-rating intact.
4. Corporate tax and VAT in the Philippines
Corporate income tax (RCIT) sits at a standard 25% of net taxable income, dropping to 20% for domestic corporations with net taxable income under ₱5 million and total assets under ₱100 million (excluding land). A Minimum Corporate Income Tax of 2% of gross income applies from a company's fourth year onward if it comes out higher than the regularly computed tax.
VAT runs at 12% standard on goods, services, and imports, and that now covers digital services from both resident and non-resident providers as of October 2024. Exports and sales to PEZA-registered entities are zero-rated. Businesses under ₱3 million in gross annual sales aren't required to register for VAT and instead pay a 3% Percentage Tax on gross quarterly sales, unless they choose to opt into VAT voluntarily. Dividends paid to non-resident foreign corporations carry a 25% final withholding tax, which can drop to 15% or lower under specific conditions or applicable tax treaties.
5. What stays on your compliance calendar
Corporations file monthly, quarterly, and annual BIR returns, largely through the eFPS or eBIRForms electronic systems, plus an annual corporate income tax return (BIR Form 1702, with the exact variant depending on your tax profile). A General Information Sheet is due within 30 days of your annual stockholders' meeting, and Audited Financial Statements are due within 120 days of fiscal year-end. Companies registered under PEZA or BOI incentive programs can qualify for income tax holidays or a preferential 5% Gross Income Tax instead of the standard corporate rate.
Philippines business costs at a glance
| Item | Cost |
|---|---|
| Sole proprietorship (DTI, national scope) | ₱2,000 |
| Corporation/OPC registration (SEC) | ₱1,000 to ₱1,500 |
| Corporate tax, standard | 25% |
| Corporate tax, small companies (under ₱5M income) | 20% |
| Minimum Corporate Income Tax (from year 4) | 2% of gross income |
| VAT, standard rate | 12% |
| VAT registration threshold | ₱3 million gross sales |
Frequently asked questions
Can a single person own a corporation in the Philippines?
Yes, through a One Person Corporation (OPC), giving a sole stockholder limited liability without needing additional incorporators.
How much does it cost to register a corporation in the Philippines?
₱1,000 to ₱1,500 for SEC registration, with the Certificate of Incorporation typically issued within 2 to 3 weeks.
What's the corporate tax rate in the Philippines?
25% standard (RCIT), reduced to 20% for domestic corporations with net taxable income under ₱5 million and total assets under ₱100 million.
When do I need to register for VAT in the Philippines?
Once gross annual sales exceed ₱3 million. The standard VAT rate is 12%.
What government agencies do I need to register with in the Philippines?
Several in sequence: SEC or DTI for the entity itself, the local government unit for a mayor's permit and barangay clearance, and the BIR for your Tax Identification Number.
Fees and rates above are drawn from the SEC, DTI, and BIR as of 2026, and they shift over time, so verify before you file. None of this is legal or tax advice. Talk to a Philippines-qualified accountant or lawyer about your specific situation.