Top Reasons Foreigners Experience Difficulty Setting Up Their Business in The Philippines

Did you know that Filipinos have an affection when it comes to Western culture and their products? Yes, that’s the reason why foreigners have an easy time adjusting in the Philippines compared to other Southeast Asian countries. Well, what is so good about the Philippines that foreigners are setting up their business in this country? It’s also because of unlimited business opportunities, where foreigners can test out their new business ideas since the Philippines has a diverse culture that are confident consumers. Another reason is because it showed the Philippines as the top ranked spenders on a global scale, which means this country has a market for different products and services since Filipinos would most likely spend to test it out. According to, call centers are the best business for foreigners to set up in the Philippines since this industry is popular in this country and is considered as one of the fastest-growing professions. But even if there are a lot of advantages for foreigners to set up a business in the Philippines, it can also be quite difficult for them for 3 reasons. Now, let’s find that out! 

For foreigners, investing in the Philippines may be difficult for 3 reasons. Here are the top reasons foreigners experience difficulty in setting up their business in the Philippines: 

  1. There are many restrictions on foreign equity ownership of businesses in the Philippines – The percentage of foreign ownership will dictate the allowed number of foreign officers in the company. One example is the 60/40 rule, where 60% is owned by a Filipino citizen and 40% is owned by a foreigner. Now here in the Philippines, the Filipino always gets a higher share, that is why when partnering with a person when creating a business, make sure that you choose someone you trust so that you won’t have any difficulties in registering your corporation. 
  1. Local business permits – In the Philippines, when setting up a business, there are three government agencies that a foreigner must comply with their requirements. The first step is registering the business in the SEC and when this is already cleared, the second step is complying with the BIR which is considered as one of the hardest to comply with since this government agency asks for numerous requirements and it also takes approximately one month to be cleared. The last is the LGU which consists of the mayor’s permit. The Philippines is considered as one of the hardest countries to set up a business, and it all boils down to these three government agencies.    
  1. Paying government taxes – It is important for foreigners to understand business taxation in the Philippines and to pay taxes regularly, so that the BIR won’t give foreign nationals a hard time. That is why setting up a business in the Philippines can get tricky not just because of the business registration requirements but because of the taxes that foreigners need to pay. Once foreigners are not able to pay the necessary taxes, this could become a legal case filed by BIR against them. 

So you see, even though there are a lot of advantages for foreigners to set up a business in the Philippines, there are also reasons why they are having a hard time also. Foreigners are restricted based on their ownership, where Filipinos always gain an advantage compared to foreign nationals. Also, local permits are very difficult to set up for foreigners since they would need to comply with specific requirements before they are able to register their business in the Philippines. Last, is that government taxes are also the reason why it is difficult for foreigners to set up a business in the Philippines, where they are required to pay a certain amount for their corporation to function, if they are not compliant with that, they will have a complication with the process. Now the question is, are you still determined to set up a business in the Philippines even with these restrictions and difficulties? But don’t worry, even if it is difficult the opportunities are unlimited.

Luckily, there is vOffice who is available for a free consultation. Helping entrepreneurs determine the best type of registration available. Cut the bureaucracy and start doing business through vOffice business solutions.