SMART ACCOUNT SOLUTION
Accounting, Auditing and Tax Consultancy
Philippines Business registration
This summarizes the procedures, costs and the requirements associated with setting up a business in the Philippines. ( This procedures for open new Corporation company)
Procedure 1. Obtain bank certificate of deposit of the paid-in capital
|Comment||Fees vary from bank to bank. Some banks in Manila do not charge any fee, but others charge up to PHP 105 for each certificate. GO UP|
Procedure 2. Verify the availability of the company name with the Securities and Exchange Commission (SEC)
|Comment||The availability of the proposed company name can be verified via the SEC online verification system at no charge. However, the SEC charges Php40/month upon official reservation of the company name. Within the reserved period, the company must file its application for incorporation. In the event that the reservation period expires without the company filing its application for incorporation, such reservation must be renewed/extended by paying Php40/month failure of which will prevent the company from using such reserved name. GO UP|
Procedure 3. Register incorporation with the Securities and Exchange Commission
|Cost||filing fee for articles of incorporation PHP 1,000 +issuance fees PHP 1,000+ PHP 510 bylaws fee + PHP 470 - stock and transfer book registration fee + PHP 75 - membership book registration fee|
|Comment||To register an incorporated company with the Securities and Exchange Commission (SEC), the promoters must file the following documents: the corporate name verification slip; the articles of incorporation and bylaws; the treasurer's affidavit; the bank certificate of deposit; the authority to verify the bank account; the incorporator’s tax identification number; affidavit of incorporator or director undertaking to change corporate name , officers, stockholders, and so forth. |
Through SEC i-Register, the SEC provides a Web-based, online company registration system and the option to reserve a company name. (Registration forms may be downloaded from the SEC Web site.) Although registration forms may now be downloaded from the SEC website, the registration papers must be filed and the filing fee paid at the SEC office. Applications are submitted for pre-processing evaluation prior to filing.
Whereas the company now obtains a temporary identification number (TIN), in the past, the company obtained the TIN from the Revenue District Office. To obtain the TIN, the company requires a Barangay (district) clearance, a mayor's permit, and a copy of the SEC-issued registration certificate (issued as part of this procedure). Other documents may be required (e.g., homeowner’s clearance, lease contract).
As authorized by the Bureau of Internal Revenue (BIR), the SEC now issues pre-generated TINs only if a company's application for registration or incorporation has been approved. Although the SEC issues the TIN, the company must still register with the BIR: this time, to identify applicable tax types, to pay an annual registration fee, to register and stamp the books of accounts, and to obtain sales invoices and receipts. GO UP
Procedure 4. Obtain community tax certificate (CTC)
|Comment||To obtain a Barangay clearance, a company must obtain a community tax certificate. The company is assessed a basic and an additional community tax. The basic community tax rate depends on whether the company legal form is a corporation, partnership, or association (PHP 500 or lower). The additional community tax (not to exceed PHP 10,000.00) depends on the assessed value of real property the company owns in the Philippines at the rate of Php2.00 for every Php5,000.00 and on its gross receipts, including dividends or earnings, derived from business activities in the Philippines during the preceding year, at the rate of Php2.00 for every Php5,000.00. GO UP|
Procedure 5. Apply for a Barangay (district) clearance
|Comment||No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the Barangay (district) where the business or activity is located or conducted. To obtain a business permit, the applicant submits a business transaction form (BTF) which contains vital information to process the application. the BTF is available in the Business Promotions and Development Office located at ground floor of the Manila City Hall. the accomplished BTF together with the following requirements will be submitted to the Bureau of Permits (BP): Barangay Clearance, SEC Registration, Public Liability Insurance (for restaurants, parlors, cinemas, malls etc) Authorization Letter of owner with ID, Lease Contract/Tax Declaration, SSS (Certification/Clearance) and Community Tax Certificate, The BP personnel encodes the business transaction form details and the requirements for the processing and computation of business permit fee. The BP personnel issues a computer generated Business Identification Number (BIN) slip to the applicant. The applicant proceeds to the License Division of the City Treasurer's Office for computation and assessment of Business tax and Regulatory Fees. The applicant presents the issued BIN to the licensing officer on duty. The latter then compute and generate the License and Regulatory Fees Form (LRF) which shall be given to the applicant. The applicant then proceeds to the cashier and presents the issued LRF Form. The cashier receives and records payment of the applicant and validates the LRF Form which serves as the official receipt. The applicant then goes back to the business transaction office. After verifying that payment has been made, a BP personnel generates the Business Permit and secures the approval and signature of the Dept Head of the BP. Upon approval, the BP personnel releases the Business Permit to the applicant. |
The fee charged by the Barangay depends on the company’s paid-up capital and the land area it occupies—a PHP 500 minimum plus PHP 300 for the Barangay clearance plate. GO UP
Procedure 6. Obtain mayor’s permit/municipal license to operate at the Licensing Section of the Mayor's Office
|Cost||The fees vary depending on the local government unit (city/municipality) issuing the mayor’s permit (PHP 900, sanitary permit fee + 0.2% of capital for license fee + PHP 2000, permit fee for businesses engaged in retail + PHP 2,500 garbage collection fee|
|Comment||An application for business permit begins with the filing with the Bureau of Permits, City Mayor's Office, Manila City Hall. The following documents ( original and photocopies) are required: Taxpayers identification number (TIN), BIR-issued certificate of registration (COR") and a proof of payment of annual registration fees paid to BIR. The Bureau then classifies the business and identifies the agencies/units/offices whose endorsement/approval would be required for the processing of the permit. The application would then be forwarded to the appropriate agencies involved for their approval. An inspection of the business location is also conducted. Upon completion of all necessary approvals/endorsements from the various government departments/units/agencies, the Bureau issues the Business Permit which shall then be forwarded to the Licensing Section of the City Treasurer's Office for assessment and collection of taxes and other fees (i.e. garbage fee, etc.) The Licensing Division generates a Statement of Account showing a breakdown of all applicable local (business) taxes and charges. The Business Permit and License are released upon payment of taxes and other applicable charges. GO UP|
Procedure 7. Receive inspection from the Mayor's Office
|Comment||The Mayor’s Office conducts an inspection to verify that the company will conduct the activity stated in the application for business permit. There is no need to set an appointment for this inspection. The inspection generally occurs within the first 5 days of filing the application for the operating permit. GO UP|
Procedure 8. Buy special books of account at bookstore
|Comment||To register with the Bureau of Internal Revenue, promoters must purchase special books of account, available at bookstores nationwide. One set (of four books, the cash receipts account, the disbursements account, the ledger, and the general journal) may cost about PHP 400. GO UP|
Procedure 9. Register for taxes at the Bureau of Internal Revenue (BIR)
|Cost||PHP 500 (registration fee) + PHP 15 (certification fee) and PHP 100(documentary stamp tax, in loose form to be attached to Form 2303)|
|Comment||After the taxpayer obtains the TIN, the company must pay the annual registration fee of PHP 500 at any duly accredited bank, using payment form BIR Form 0605). To register the BIR taxpayer must first accomplish BIR Form 1903 and submit the same together with the required attachments to the Revenue District Office having jurisdiction over the registered address of the business establishment. In the Philippines, companies may be assessed various taxes: VAT, a community tax, a local tax, and income tax. When a company registers as a taxpayer, it must indicate in the application the types of taxes it expects to be liable for, including VAT. GO UP|
Procedure 10. Payment of documentary stamp taxes
|Cost||PHP1 for every PHP 200 of capital|
|Comment||Section 174 of the National Internal Revenue Code, as amended, requires the payment of documentary stamp taxes on the original issuance of shares of stock at the rate of PHP1 on each PHP 200 or a fractional part thereof of the par value of the shares of stock. payment must be made the 5th of the month following the date of issuance of said registration certificate or issuance of shares. GO UP|
Procedure 11. Obtain the authority to print receipt/invoices with the Bureau of Internal Revenue (BIR)
|Cost||included in procedure 9|
|Comment||The authority to print receipts or invoices must be secured by the printer before the sales invoices or receipts may be printed. Philippine law does not require a company to print its official invoice forms at designated print shops. If a company has secured the authority to print receipts and invoices, it can ask any authorized printing company to print its official invoice forms. However, if a company wants to print its own invoice forms (as detailed in Procedure 9), the company must obtain a special permit from the Bureau of Internal Revenue.|
According to requirements stipulated by the Large Taxpayer Service, new taxpayers must submit the following documents to the Revenue District Office or the office with jurisdiction over the taxpayer's head office:
- Duly completed application for authority to print receipts and invoices (BIR Form 1906)
- Job order.
- Final and clear sample of receipts and invoices (machine-printed).
- Application for registration (BIR Forms 1901 or 1903).
- TRU form or photocopy of TIN card.
- Proof of payment of annual registration fee (BIR Form 0605). GO UP
Procedure 12. Print receipts and invoices at the print shops accredited by the BIR
|Cost ||PHP 4,000 (between PHP 3,000 and PHP 5,000)|
|Comment||The minimum print number is 25 booklets. GO UP|
Procedure 13. Submit receipts and invoices to the BIR for approval, have receipts/invoices and books of accounts stamped by BIR
|Comment||In practice, the books of accounts are presented for stamping upon filing the application. These books can be obtained from Bureau of Internal Revenue (BIR).|
To register books of account and invoices, founders must present the following documents:
- All required books of accounts.
- VAT registration certificate.
- SEC registration certificate.
- BIR Form W-5.
According to the Revenue Regulation No. 26-03 dated September 18, 2003, in lieu of the usual stamping of BIR registration on every booklet of manually-printed receipts and invoices to confirm or signify registration, the printer indicated in the BIR duly approved “Authority to Print Receipts and/or Invoices” (ATP) shall issue to the taxpayer a duly stamped BIR-registered “Printer’s Certificate of Delivery of Receipts and Invoices” (PCD) for printed receipts and invoices which shall be made available and ready for inspection anytime by duly authorized revenue personnel. The above-mentioned certificate may be issued either on a “one-time basis” for full delivery of ordered receipts/invoices or on a “piece-meal basis” in case of partial delivery, in which latter case, the corresponding PCD shall be issued to the taxpayer every time a delivery of the ordered receipts/invoices is made. Consequently, manually-printed receipts/invoices are deemed duly registered receipts or invoices as required under Section 237 of the National Internal Revenue Code of 1997 only if they are covered by a duly approved and issued “Authority to Print Receipts and/or Invoices” and BIR-registered “Printer’s Certificate of Delivery of Receipts and Invoices. No receipt or sales/commercial invoice shall be issued by a seller to any customer or client unless the former has received his copy of the duly stamped BIR-Registered “Printer’s Certificate of Delivery of Receipts and Invoices” indicating the inclusive serial numbers of the receipts/invoices printed and delivered and the due dates of submission of the copy of the PCD to the concerned BIR offices.
Within thirty (30) days from issuance of the PCD, the taxpayer or the printer, as the case may be, shall submit to the concerned BIR office that has jurisdiction over the taxpayer-user’s principal place of business the triplicate copy of the PCD, together with the certified photocopy of approved ATP and the taxpayer’s Sworn Statement enumerating responsibilities and commitments of the taxpayer-user. One copy thereof shall likewise be submitted to the BIR Revenue District Office that has jurisdiction over the principal place of business of the printer. GO UP
Procedure 14. Initial registration with the Social Security System (SSS) and
|Comment||Under the new single registration process, the employer is required to register with the SSS using the business registration form or BR-1. registration with SSS automatically causes registration with Philhealth thus the employer shall no longer be required to go to Phihealth for registration as registration with . Based on BR-1 submission, the SSS shall encode the employer details and issue the following: SSS employer number, together with the employer's copy of the processed Br-1,SSS information Brochure, employer identification card and list of employer obligations and post-registration requirements. GO UP|
Procedure 15. Complete registration with SSS and Philippines Health Insurance Company (PHIC)
|Comment||After initial registration, the employer submits within 30 days from the issuance of employer number by SSS and Philhealthh the following: |
To SSS- employment report (SS form R-1A), specimen signature card (SS form L-501), sketch of business address and validated miscellaneous payment return form (SS form R-6) or special bank receipt, showing payment for the employer registration plate, if not paid upon initial registration.
To Philhealth: member registration forms for each employee with the required supporting documents. GO UP