Investing in the Philippines: Frequently Asked Questions Part 4
What are the activities that an RHQ / ROHQ may engage in?
A. REGIONAL HEADQUARTERS (RHQ)
The activities of the RHQ are limited to acting as a supervisory, communications and coordinating center for its subsidiaries, affiliates and branches in the region.
It is neither allowed to derive any income from sources in the Philippines and to participate in any manner in the management of any subsidiary or branch office it might have in the Philippines nor to solicit or market goods and services whether on behalf of its mother company or its branches, affiliates, subsidiaries or any other company.
Incentives for RHQ:
Exemption from corporate income tax;
Exemption from branch profits remittance tax;
Exemption from value-added tax;
Sale or lease of goods and property, and services to the RHQ are zero-rated;
Exemption from all kinds of local taxes, fees or charges imposed by a local government unit, except real property tax on land improvements and equipment;
Tax and duty free importation of equipment and materials for training and conferences needed and solely used for the RHQ functions, and which are not locally available, subject to prior Board of Investments (BOI) approval;
Importation of brand new motor vehicle but subject to payment of taxes and duties.
B. REGIONAL OPERATING HEADQUARTERS (ROHQ)
The ROHQ may engage in any of the following qualifying services:
General administration and planning
Business planning and coordination
Sourcing/procurement of raw materials components
Corporate finance advisory services
Marketing control and sales promotion
Training and personnel management
Logistics services
Research and development services and product development
Technical support and maintenance
Data processing and communications
Business development
Incentives for ROHQ
Subject to preferential income tax rate of 10% on taxable income;
Exemption from all kinds of local taxes, fees or charges imposed by a local government unit, except real property tax on land improvements and equipment;
Tax and duty free importation of equipment and materials for training and conferences needed and solely used for the ROHQ functions, and which are not locally available, subject to prior BOI approval;
Importation of brand new motor vehicle but subject to payment of taxes and duties.
The ROHQ is allowed to offer qualifying services only to its affiliates, branches or subsidiaries as declared in its registration with the Securities and Exchange Commission (SEC). It is not allowed to directly and indirectly solicit or market goods and services whether on behalf of their mother company, branches, affiliates, subsidiaries or any other company.
Incentives for Expatriates:
Multiple Entry Visa:
Expatriates including their spouse and unmarried children below 21 years old will be issued this type of visa;
Non-immigrant visa will be processed within 72 hours from submission of documents to the Bureau of Immigration;
Validity period of 3 years extendible for another 3 years;
Exemption from payment of fees except reasonable administrative costs; and
Exemption from securing Alien Certificate of Registration.
2. Withholding tax of 15% on compensation income applicable to both alien and Filipino executives holding managerial and technical positions;
3. Tax and duty free importation of used household goods and personal effects;
4. Travel tax exemption
Personnel and their dependents.
Source: Board of Investments Frequently Asked Questions Booklet
This article does not constitute and is not intended to be legal advice. If you have any question or need any assistance in setting up a business in the Philippines, please feel free to send us an email at roselle.jean@nonatolaw.com.
