Business Registration in the Philippines: Expert Roadmap for Establishing a Company in Makati City, Philippines

Foreign investors are allowed 100% equity in most economic activities, provided the activity is not listed in the Foreign Investment Negative List (FINL). 

1. The Foreign Investment Negative List (FINL) Check

The 12th FINL, issued in 2022 and currently in force in 2025 , specifies sectors that are either fully restricted or subject to foreign equity caps. Activities entirely closed to foreign equity include mass media (excluding recording and internet businesses), small-scale mining, and ownership/management of cockpits. Other sectors have specific caps; for example, advertising is capped at 30% foreign equity , while some public utility-classified operations (e.g., transportation, sewerage) are capped at 40%.

2. Mandatory Minimum Paid-Up Capital (The US$200,000 Default)

Any domestic enterprise that is majority foreign-owned (i.e., greater than 40% foreign equity) and targets the domestic market (earns more than 60% of revenue locally) must demonstrate a minimum paid-up capital of US$200,000. This high barrier is a key determinant for foreign market entry strategies.

Example: If a Singaporean company wants to set up a domestic subsidiary in Makati to sell imported gourmet coffee to local customers (a domestic market enterprise), the minimum cash it must deposit in the local corporate bank account and prove to the government is US$200,000.

3. Strategic Capital Reduction (The US$100,000 Exception)

The mandatory minimum capital requirement may be strategically lowered to US$100,000 if the enterprise meets one of two specific criteria, allowing for reduced initial investment:

• The company involves the introduction of advanced technology (requires certification from the Department of Science and Technology, DOST).
• The company directly employs at least 50 Filipino employees (requires coordination with the Department of Labor and Employment, DOLE).

The decision to pursue the lowered capital requirement introduces a critical layer of regulatory complexity. A corporate entity wishing to utilize the $100,000 exception must concurrently engage with the DOST or DOLE during the SEC application process to secure the necessary certification proving advanced technology use or projected employment capacity. This parallel administrative load must be rigorously managed, as it adds significant procedural risk and time to the initial registration timeline. For startups, securing DOST certification for “advanced technology” is often deemed a more predictable and immediate task than committing to and provisioning for the salaries of 50 immediate hires. 

4. Inward Remittance and BSP Registration

Foreign capital must be evidenced by demonstrable proof of funding through inward remittance, typically shown by a Certificate of Deposit or equivalent documentation to the SEC. Registration of this capital with the Bangko Sentral ng Pilipinas (BSP), the central bank, is generally optional. However, this registration becomes mandatory if the company anticipates converting peso proceeds or earnings into foreign currency for repatriation of capital or remittance of profits, which must be purchased from local Authorized Agent Banks (AABs). Applications must be filed within the prescriptive period of one year from the date of investment.  

The structural choice carries significant liability and capital implications, summarized below:

Table 1: Comparison of Core Business Structures for Foreign Investors

Operating within Makati, the financial capital, requires rigorous adherence to the multi-layered registration process mandated by the Local Government Unit (LGU). This process culminates in the Mayor’s Permit (Business Permit), overseen by the Business Permit and Licensing Office (BPLO).

The Barangay Clearance must be secured from the specific barangay governing the business address. This initial step verifies the legitimacy of the location and activity at the grassroots level.

Required documentation generally includes a government-issued ID, proof of residency (or lease), and the recent Community Tax Certificate (Cedula). For corporate entities, the barangay will require the DTI/SEC certificate, a vicinity map, and proof of address. Due to its high concentration of service providers, Makati LGUs often apply extra scrutiny to non-traditional setups, such as those using virtual offices. In these cases, specific notarized documents—such as an Affidavit of No Client (if the business has no clients yet) and a certification from the building administrator confirming the company is not involved in restricted activities—may be required. 

Once the legal structure is determined, the company must secure its legal identity (SEC or DTI) and its status as a taxpayer (BIR), serving as the foundation for local operation.

Analogy: The SEC or DTI gives your company its Birth Certificate (legal identity). The BIR gives it a Tax ID and permission to issue official receipts. The LGU (Makati) gives it the Permission to Operate (Mayor’s Permit).

For corporations and One Person Corporations (OPCs), registration is processed through the SEC’s Electronic Simplified Processing of Application for Registration of Company (eSPARC) system. 

1. Online Processing (eSPARC Steps)

The process begins with securing a unique business name through online reservation. The applicant then proceeds to input detailed corporate information, including the primary purpose of the business, its capital structure (authorized, subscribed, and paid-up capital), corporate term (often perpetual, post-RCC ), fiscal year, and key officer details.

2. Document Preparation and Submission

The required documents, often generated by the system, include the Articles of Incorporation (AOI), By-laws, and the Treasurer’s Affidavit. These documents must be signed and notarized before being uploaded to the eSPARC system. Crucially, the company must submit proof of capital deposit or evidence of inward remittance of foreign capital to satisfy the minimum paid-up capital requirement. Corporations with foreign equity exceeding 40% are obligated to submit SEC Form F-100 as part of the application. 

3. Filing Fees

SEC fees are primarily based on the Authorized Capital Stock (ACS) of the corporation. This includes a reservation fee (Php 100), a filing fee (one-fifth of one percent (0.2%) of the ACS, but not less than Php 2,000), a legal research fee (1% of the filing fee, minimum Php 10), and fixed fees for the registration of the By-Laws (Php 1,010) and the Stock and Transfer Book (Php 470). 

Sole Proprietorships, a structure that holds the owner fully liable for business debts , register their business name exclusively with the Department of Trade and Industry (DTI) using the Business Name Registration System (BNRS). Foreign nationals are permitted to register a sole proprietorship if they meet the US$200,000 minimum capital requirement, provided the activity is not restricted by the FINL. The registration fee varies based on the territorial scope (e.g., City/Municipality – Php 500, plus an additional Php 30 Documentary Stamp Tax). It is important to note that the DTI certificate grants only a legal identity; a Mayor’s Permit from the LGU is still mandatory for the actual commencement of business operations.

Following SEC or DTI registration, the company must register with the relevant Makati Revenue District Office (RDO) to obtain its Certificate of Registration (Form 2303), which formalizes its status as a taxpayer.

1. Core Documentation and Initial Payments

Required documents include the appropriate BIR Registration Form (Form 1903 for Corporations/Partnerships, Form 1901 for Sole Proprietorships), the SEC/DTI certificate, Articles of Incorporation/Partnership, and proof of business address.   

Annual Registration Fee (ARF): A mandatory fee of Php 500 must be paid using BIR Form 0605 upon initial registration and annually thereafter by January 31st.   

• Documentary Stamp Tax (DST): DST must be paid on the capital subscription (calculated using BIR Form 2000) and on the lease contract, if applicable. The DST on capital is approximately Php 1 for every Php 200 of subscribed capital.

The requirement to pay the Documentary Stamp Tax on subscribed capital creates a critical audit checkpoint. The capital amount declared to the SEC (and supported by the Certificate of Deposit/Inward Remittance) must perfectly reconcile with the capital amount used to calculate and pay the DST to the BIR. Any discrepancy between the capital reported to the SEC for incorporation purposes and the capital reported to the BIR for DST payment could trigger an immediate audit flag, necessitating meticulous cross-agency financial reporting.

2. Operational Compliance Precursors

Before the business can commence legal transactions, several compliance steps must be completed, granting transactional legitimacy:

• Authority to Print (ATP): The company must apply for an ATP via BIR Form 1906 to secure permission to print its Official Receipts and Sales Invoices through an accredited printer. 
• Books of Accounts: New sets of books of accounts (minimum four manual books: General Journal, General Ledger, Cash Receipts, Cash Disbursements) must be registered and stamped by the RDO.
• Taxpayer Briefing: New registrants are often required to attend an initial taxpayer’s briefing conducted by the RDO to understand their rights and responsibilities.

The timeline for “going live” must account for the 5-7 business days required for these BIR steps, particularly securing the ATP and stamped books. While the SEC grants legal corporate existence, the BIR steps grant the necessary authority to legally transact and issue receipts. Operating or issuing invoices prior to the completion of these requirements is non-compliant and can result in penalties.

Any company employing staff in the Philippines is required by law to register as an employer with the three main social security agencies. Failure to comply immediately upon hiring the first employee can result in penalties. 

1. Social Security System (SSS): SSS is the national pension and retirement scheme for private sector employees. Employers must submit SSS Form R-1 (Employer Registration) and R-1A (Employment Report). New business registration is now often coordinated through the Central Business Portal (CBP), which streamlines the application process by combining data capture for various agencies.
2. Philippine Health Insurance Corporation (PhilHealth): This provides government-facilitated health insurance. Required documents include ER1 (Employer Data Record) and ER2 (Report on Employee-Members).
3. Home Development Mutual Fund (Pag-IBIG Fund): This is the mandatory national housing savings program. Employers submit the Employer’s Data Form (EDF). Notably, new employees must first secure their SSS number before they can complete registration with the Pag-IBIG Fund.

For export-oriented manufacturing and service providers, particularly those in the IT/BPO sector located in accredited zones within Makati, registration with the Philippine Economic Zone Authority (PEZA) offers substantial fiscal and non-fiscal advantages.

PEZA is tasked with promoting foreign investments by establishing economic zones. IT/BPO companies are primary beneficiaries of this program. 

1. Key Fiscal Incentives

PEZA registration provides compelling tax advantages, often resulting in significant savings:

• Income Tax Holiday (ITH): A period of exemption from Corporate Income Tax (CIT) lasting between four and seven years, depending on the industry.
• 5% Gross Income Tax (GIT): Following the expiration of the ITH, the company shifts to paying a preferential 5% tax on gross income, which is imposed in lieu of all national and local taxes.
• Customs Exemptions: Duty-free importation of raw materials and capital equipment.
• VAT Zero-Rating: Zero-rating on local purchases of goods and services.

2. Non-Fiscal Benefits

PEZA-registered enterprises benefit from a streamlined registration system (“One-Stop Shop”) and the grant of special non-immigrant visas for foreign personnel and their dependents, facilitating the employment of foreign nationals in supervisory, technical, or advisory roles.

A key administrative advantage of PEZA registration is the statutory exemption from securing a Mayor’s Permit and paying Local Business Taxes (LBT) for enterprises availing of the ITH or 5% GIT incentive.

However, the regulatory environment in Makati requires specialized attention. PEZA maintains an existing Memorandum of Agreement (MOA) with the Makati City Government. While this MOA cannot override the national exemption from LBT and the Mayor’s Permit for compliant PEZA enterprises, it establishes critical operational coordination and oversight.

Under the MOA, PEZA is obligated to provide Makati City with an annual certified list of all PEZA-registered enterprises within its jurisdiction, including information on their registered activities, addresses, and the period covered by their incentive status (ITH or 5% GIT commencement dates).

This coordination confirms that while Makati cannot mandate the Mayor’s Permit for tax-incentivized PEZA entities, the city maintains visibility and authority over local regulations. For example, the MOA confirms PEZA’s responsibility to administer the National Building Code of the Philippines (NBCP) only for PEZA-registered enterprises entitled to incentives, while remaining responsible for the issuance of related Building Permits. This means that LGU compliance for PEZA entities transitions from obtaining a permit to adhering strictly to LGU-administered physical and structural codes as defined in the MOA. Moreover, there is noted legal ambiguity concerning PEZA enterprises that revert to the standard 30% Corporate Income Tax (CIT) rate, as to whether the exemption from LBT and Mayor’s Permits still applies. Consequently, PEZA companies in Makati must prioritize legal counsel to ensure continuous compliance with the precise operational parameters of the MOA and address any local regulatory fees that may persist outside the scope of LBT exemptions.

The full process of corporate registration, from name reservation to securing the final tax certificate, typically ranges from 20 to 35 business days, provided all capital requirements are met and documentation is prepared efficiently. Complex factors, such as foreign banking approvals and multi-agency capital documentation, often extend the total timeline to two to three months.

The establishment process is sequential, with each major phase acting as a prerequisite for the next.

Table 3: Multi-Agency Registration Checklist and Estimated Timelines

Maintaining legal operation in Makati requires strict adherence to the annual reportorial requirements of both the SEC and the BIR.

1. SEC Annual Requirements

All corporations must file their Annual Financial Statements (AFS) and General Information Sheet (GIS) electronically via the SEC’s eFAST system.

• Annual Financial Statements (AFS): The AFS is due on the 15th day of the fourth month following the close of the company’s fiscal year. An annual statutory audit by an independent Certified Public Accountant (CPA) is mandatory if the company’s total assets or liabilities are PHP 600,000 or more, or if its gross annual sales exceed PHP 3 million.
• General Information Sheet (GIS): The GIS must be filed within 30 days of the company’s annual stockholders’ meeting. One Person Corporations (OPCs) are exempt from filing the GIS but must instead submit the specialized Appointment of Officers Form within 15 days of incorporation or five days after any subsequent changes.

2. BIR Tax Compliance

The Philippines operates on a “pay-as-you-file” system.

• Quarterly Income Tax Return (QITR): Due within 60 days from the close of each of the first three quarters of the taxable year.
• Annual Income Tax Return (AITR): The final return (Form 1702 series) is due on the 15th day of the fourth month following the close of the taxable year.
• Electronic Filing: The BIR mandates the use of either the Electronic Filing and Payment System (eFPS) or Electronic BIR Forms (eBIRForms). Failure to comply results in penalties, including Php 1,000 per return and a civil penalty equivalent to 25% of the tax due.

Strategic selection of the company’s fiscal year end is a critical decision. While many corporations default to the calendar year (December 31st end, leading to an April 15th AITR/AFS deadline), selecting a non-calendar year (e.g., fiscal year ending June 30th) shifts the AITR and AFS deadline to mid-October. This strategic move distributes the annual compliance workload away from the peak compliance season, optimizing internal accounting resources and mitigating administrative risk.

The synchronization of major national reporting deadlines is highly constrained: the AFS and AITR are due simultaneously, and the GIS must follow closely within 30 days. This convergence necessitates integrated coordination between the company’s legal and accounting teams to ensure that all reports are electronically submitted accurately within this tight annual reporting window.

Table 4: Mandatory Annual Corporate Compliance Schedule

Maintaining legal operation in Makati requires strict adherence to the annual reportorial requirements of both the SEC and the BIR.

1. SEC Annual Requirements

All corporations must file their Annual Financial Statements (AFS) and General Information Sheet (GIS) electronically via the SEC’s eFAST system.

• Annual Financial Statements (AFS): The AFS is due on the 15th day of the fourth month following the close of the company’s fiscal year. An annual statutory audit by an independent Certified Public Accountant (CPA) is mandatory if the company’s total assets or liabilities are PHP 600,000 or more, or if its gross annual sales exceed PHP 3 million.
• General Information Sheet (GIS): The GIS must be filed within 30 days of the company’s annual stockholders’ meeting. One Person Corporations (OPCs) are exempt from filing the GIS but must instead submit the specialized Appointment of Officers Form within 15 days of incorporation or five days after any subsequent changes.

2. BIR Tax Compliance

The Philippines operates on a “pay-as-you-file” system.

• Quarterly Income Tax Return (QITR): Due within 60 days from the close of each of the first three quarters of the taxable year.
• Annual Income Tax Return (AITR): The final return (Form 1702 series) is due on the 15th day of the fourth month following the close of the taxable year.
• Electronic Filing: The BIR mandates the use of either the Electronic Filing and Payment System (eFPS) or Electronic BIR Forms (eBIRForms). Failure to comply results in penalties, including Php 1,000 per return and a civil penalty equivalent to 25% of the tax due.

Strategic selection of the company’s fiscal year end is a critical decision. While many corporations default to the calendar year (December 31st end, leading to an April 15th AITR/AFS deadline), selecting a non-calendar year (e.g., fiscal year ending June 30th) shifts the AITR and AFS deadline to mid-October. This strategic move distributes the annual compliance workload away from the peak compliance season, optimizing internal accounting resources and mitigating administrative risk.

The synchronization of major national reporting deadlines is highly constrained: the AFS and AITR are due simultaneously, and the GIS must follow closely within 30 days. This convergence necessitates integrated coordination between the company’s legal and accounting teams to ensure that all reports are electronically submitted accurately within this tight annual reporting window.

Table 4: Mandatory Annual Corporate Compliance Schedule

Establishing a corporate presence in Makati City requires careful navigation of the Foreign Investments Act (FIA) capital requirements and the complex bureaucratic processes specific to the LGU. The structure of foreign investment dictates the financial feasibility of market entry.

For foreign investors:

1. Capital Strategy: Unless the business activity is export-oriented or qualifies for the US$100,000 advanced technology/50-employee exception, the US$200,000 minimum paid-up capital threshold is non-negotiable for foreign-majority domestic market enterprises. The simplicity of the One Person Corporation (OPC) is administratively beneficial but does not offer a loophole to bypass this capital barrier.
2. LGU Due Diligence: The requirement by Makati LGU to submit the landlord’s Mayor’s Permit imposes a critical administrative dependency on a third party. Corporate expansion teams must perform meticulous legal due diligence on the compliance status of their chosen commercial space lessor before finalizing any lease agreements.
3. Compliance Integration: Legal operation is achieved not just by SEC registration, but by the mandatory post-incorporation BIR steps (Form 2303, Authority to Print, stamped books). The registration timeline must strictly budget 5–7 business days for the completion of these prerequisites before any legal invoicing can occur.
4. Incentive Protocol: For PEZA-registered entities in Makati, while tax incentives grant exemption from local permits and taxes, the existing PEZA-Makati MOA requires strict adherence to LGU oversight protocols, particularly regarding reporting and adherence to locally administered codes, necessitating ongoing legal compliance review specific to the MOA’s operational mandates.