Doing Business and Investing in the Philippines
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www.pwc.com/ph Finding your way Doing business and investing in the Philippines An investor’s guide 2013 edition Isla Lipana & Co. Disclaimer The contents of the Doing Business and Investing in the Philippines book are summaries and compilations in general terms of selected issuances from various government agencies available as of the date of writing. They do not cover exhaustively the subjects it treats but is intended to answer some of the important, broad questions that may arise. They do not necessarily reflect the official positions of Isla Lipana & Co., the Philippine member firm of the PwC global network. Isla Lipana & Co. is not liable on any ground whatsoever for any review, retransmission, dissemination or other use of, or in respect of decisions or actions in reliance upon the contents of this Doing Business and Investing in the Philippines book which are intended for guidance only and as such should not be regarded as a substitute for professional advice. Doing Business and Investing in the Philippines (2013) This Guide has been prepared for the assistance of those interested in doing business in the Philippines. It does not cover exhaustively the subjects it treats but is intended to answer some of the important, broad questions that may arise. When specific problems occur in practice, it will often be necessary to refer to the laws, regulations, and Investment climate decisions of the country and to obtain 1 appropriate accounting, tax, and legal advice. Doing business 30 The material contained in chapters 1 to 12 of this Guide was initially assembled on 31 December 2012. The taxation material Audit and accounting 109 (chapters 13 to 24) has been revised to reflect changes introduced by tax laws and regulations which took effect as of the first Taxation 123 quarter (Q1) of 2013. Moreover, whenever available, some data in this Guide were also updated to reflect 2013 Q1 figures. Thus, Introduction to PwC 197 unless otherwise indicated, it is generally based on information available at 31 December 2012. Message from the Chairman and Senior Partner We thank you for your interest in investing This guide and two of our other in the Philippines, one of the most resilient publications, How to Invest in the Philippines and fastest-growing economies in Asia and Investment Incentives in the Philippines, today. This is the best time to explore in a are our way of bringing credible profitable venture by riding the growth of information to private sector, and an exciting and dynamic market currently supporting the government bring in the enjoying an all-time high investor much needed investments to boost the confidence. country’s economy. You can download these materials free of charge from our website www.pwc.com/ph. The Philippines offers a wide range of investment opportunities and it has become a popular destination of foreign Please feel free to contact us for any firms looking to expand their business. questions on this guide, and on how we can Among the sectors that welcome foreign further assist you in growing your business investments are BPO, mining, on Philippine soil. infrastructure, agriculture, bio-fuels and renewable energy, and tourism development. We have prepared this book on Doing Business and Investing in the Philippines with you in mind as you prepare to make that all-important strategic business move. We have included a chapter entitled “Introduction to PricewaterhouseCoopers (PwC)” which sets out the services we offer to our clients, including advice on how to start up a business in the Philippines. Alexander B. Cabrera Chairman and Senior Partner Table of contents Contents Chapter 2 .................................17 Business environment .................. 17 Chapter 1 .................................1 Investor considerations .................... 17 The Philippines – A profile ............ 1 Industrial climate ............................. 18 Investor considerations .................... 1 Framework of industry .................... 18 Geography and climate .................... 2 Aims of government policy ............. 18 History ............................................. 2 Economic development plans ...... 18 Political system ................................ 3 Trends toward nationalization/ Legal system ..................................... 4 privatization ................................. 19 Population and social patterns ........ 5 Regional/special industry Population .................................... 5 development ................................ 19 Language ..................................... 5 Special economic zones ............... 19 Religion ........................................ 5 Financial services......................... 20 Education ..................................... 6 Public/private sector cooperation .... 20 Living standards .......................... 6 Labor/management relations .......... 20 Cultural and social life ................. 7 Overseas trade relations .................. 21 The economy .................................... 7 Membership in trade blocs........... 21 General description ..................... 7 Exports ......................................... 22 Mineral and energy resources ..... 8 Chapter 3 .................................23 Agriculture, fishery, and forestry 9 Foreign investment and trade Manufacturing ............................. 10 opportunities ................................ 23 High-tech industries .................... 10 Investor considerations .................... 23 Service industries ........................ 10 Investment climate .......................... 24 Transport and communications .. 10 Government attitude toward foreign Foreign trade and balance investment ................................... 24 of payments.................................. 13 Trade policy ................................. 25 Hints for the business visitor ............ 14 Taxation policy............................. 25 Visitors’ visas ................................ 14 Local competitor attitude toward foreign Currency ...................................... 14 investment ................................... 26 International time ........................ 14 Labor attitude toward foreign Business hours ............................. 15 investment ................................... 26 Statutory holidays ........................ 15 Special investment opportunities .... 26 Weights and measures ................. 15 Planning guide for the foreign Dates and numbers ...................... 15 investor ............................................ 27 Business information services ..... 16 National and local government policy Special visas for investors and considerations .............................. 27 retirees ......................................... 39 Investment possibilities/ International financial center restrictions ................................... 27 operations ....................................... 39 Registration requirements ........... 27 Holding companies and investment Possible business structure .......... 28 vehicles ........................................ 39 Investment incentives .................. 28 Regional headquarters................. 40 Location/industries ..................... 28 Tax haven activities and offshore Finance......................................... 28 operations ....................................... 41 Repatriation of capital and profits 28 Offshore banking ......................... 41 Tax planning considerations ........ 29 Nonresidents are exempt from income tax Labor and labor costs ................... 29 on income derived from transactions with Market studies ............................. 29 OBUs. ............................................... 42 International financial center ...... 29 Export incentives ............................. 42 Information and assistance ......... 29 Incentives to invest in other Trends .......................................... 29 countries .......................................... 42 Incentives and foreign investment Chapter 4 .................................30 strategy ............................................ 42 Investment incentives ................... 30 Investor considerations .................... 30 Chapter 5 .................................44 Investment policy ............................. 31 Restrictions on foreign investment and Tax concessions ................................ 32 investors ........................................ 44 Regional incentives .......................... 32 Investor considerations .................... 44 Board of Investment incentives ....... 33 Regulatory climate ........................... 45 Investments covered .................... 33 Regulatory authorities ................. 45 Eligibility ...................................... 33 Regulatory legislation .................. 45 Tax incentives .............................. 34 Exchange controls ........................... 46 Non-tax incentives ....................... 35 Inward investment ....................... 46 Earnings ....................................... 35 Registration of foreign capital and Special economic zones technology ................................... 47 (“ecozones”) .................................... 35 Currency accounts ....................... 48 Investments covered .................... 35 Repatriation of capital, dividends, Eligibility ...................................... 36 interest ......................................... 48 Tax incentives .............................. 36 Royalties,