Foreign-owned businesses in the Philippines, what's different.

The Philippines has become markedly more open to foreign investment in recent years, but open doesn't mean unrestricted. Before committing capital, investors need clear answers to a few decisive questions: how much of the business can you own, which sectors are off-limits, how much capital must you bring in, and which entity type fits your plans?

This guide answers those questions for foreign nationals and overseas companies setting up here. It focuses on what's different for foreign-owned businesses; the mechanical steps that apply to every business are covered in our business registration guide.

New to setting up here? The step-by-step process, local permits, BIR, and employer registrations, is the same for every business. See our complete Business Registration in the Philippines guide.

Equity & Negative ListCapitalEntity optionsRegistrationIncentivesComplianceFAQ

What's different for foreign-owned businesses

In most cases foreigners can own a Philippine business outright. The general rule under the Foreign Investments Act (RA 7042, as amended by RA 11647 in 2022) is that foreigners may own up to 100% of a domestic enterprise, unless the activity is restricted by the Constitution, the Foreign Investment Negative List, or a specific law.

A wave of recent reforms widened the door: the 2022 Foreign Investments Act amendments lowered capital barriers, the amended Public Service Act (RA 11659) opened sectors once treated as public utilities, and the Retail Trade Liberalization Act (RA 11595) eased entry into retail.

Two things still shape what's possible: restricted sectors (the Negative List) and minimum capital. And one hard limit never changes: foreigners cannot own land in the Philippines.

1. 01 How much can you own? Up to 100% in most sectors, unless the activity sits on the Negative List.
2. 02 Which sectors are limited? The Foreign Investment Negative List sets every equity cap.
3. 03 How much capital must you bring? Typically USD 100,000 to USD 200,000 for a domestic-market enterprise.
4. 04 Which entity fits your plans? A subsidiary, branch, representative office, or regional HQ.

Each question is answered in turn below.

01 Equity rules

Foreign equity rules and the Negative List

The Foreign Investment Negative List (FINL) is the master list of activities where foreign ownership is limited or barred. The current edition is the 13th Regular FINL (Executive Order 113, 2026), which took effect on 2 May 2026 and superseded the 12th list from 2022.

It consolidated into the Negative List the major reforms enacted since: the amended Foreign Investments Act, Public Service Act, and Retail Trade Liberalization Act. The list keeps its two-part structure.

How the list is structured

• List A: areas limited by the Constitution and specific laws.
• List B: areas limited for reasons of security, defense, public health and morals, and protection of micro, small, and medium enterprises.

Two openings that matter most

• Telecommunications: following amendments to the Public Service Act, many activities are no longer treated as constitutional public utilities, allowing up to 100% foreign ownership where reciprocity requirements are met.
• Renewable energy: projects were formally liberalized, confirming that many are no longer subject to the traditional 40% foreign-equity limit applied to natural-resource exploitation.

Other equity caps, by activity

• No foreign equity: mass media (except recording), small-scale mining, marine-resource utilization, private security agencies, cooperatives, cockpit operation, and the corporate practice of certain professions.
• Up to 30%: advertising.
• Up to 40%: public utilities (electricity distribution and transmission, water and sewerage pipelines, petroleum pipelines, seaports, and public utility vehicles), educational institutions, exploration and development of natural resources, and ownership of land.

Constitutional hard caps no executive order can change: mass media (0%), land (0%), public utilities (40%), and natural-resource exploration (40%).

If your intended activity isn't restricted by the Negative List and serves the domestic market, up to 100% foreign ownership is generally possible, subject to the capital rules below.

On property: while foreigners can't own land, they can own condominium units (up to 40% of a given project) and enter into long-term leases, which is how many foreign businesses secure premises.

02 Capitalization

Minimum capital requirements

This is where foreign-owned setups differ most sharply from purely Filipino ones, and where planning matters most.

USD 200,000Domestic market enterprise (more than 40% foreign-owned) USD 100,000Reduced threshold, if one condition below is met No high minimumExport enterprise (exports at least 60% of output) ₱ 25 millionRetail trade, paid-up capital (RA 11595)

The reduced USD 100,000 threshold applies if the enterprise meets any one of these

• It uses advanced technology, as determined by the Department of Science and Technology; or
• It is endorsed as a startup or startup enabler under the Innovative Startup Act (RA 11337); or
• A majority of its direct employees are Filipino, with no fewer than 15 Filipino employees.

Although some secondary references still mention the older 50-employee threshold, the amended Foreign Investments Act (RA 11647) specifies no fewer than 15 Filipino employees. Confirm the requirements for your specific activity before proceeding.

Two things regulators care about: the threshold refers to actual paid-in equity (not just authorized capital stock on paper), and the capital must be inwardly remitted through the banking system and evidenced by a Bangko Sentral ng Pilipinas certificate.

03 Structure

Entity options for foreign investors

Foreign investors typically choose among four structures, depending on whether they want a separate Philippine company or an extension of the parent.

• Domestic subsidiary: a Philippine corporation that happens to be foreign-owned. A separate legal entity, so the parent's liability is generally limited to its investment. It can be up to 100% foreign-owned (subject to the FINL) and can trade locally. The most common choice for a serious, long-term presence.
• Branch office: an extension of the foreign parent, not a separate entity, so the parent is liable for its obligations. It can generate revenue and is treated like a domestic market enterprise (USD 200,000 assigned capital). It must post an SEC securities deposit (initially ₱500,000, with annual top-ups tied to gross income), and remitted profits face a 15% branch profit remittance tax.
• Representative office: a liaison presence that cannot earn income in the Philippines. It's limited to marketing, information dissemination, and quality control for the parent, and requires an inward remittance of USD 30,000 per year.
• Regional headquarters (RHQ / ROHQ): for multinationals coordinating regional operations. An RHQ is purely supervisory and cannot earn income (USD 50,000 annual remittance); an ROHQ may earn income by serving its affiliates (USD 200,000 capital). ROHQ tax preferences were curtailed for new registrants under the CREATE Act.

04 Registration

How foreign-owned registration differs

Registration still runs through the SEC (via the eSPARC portal), but the path has extra layers.

• A domestic subsidiary registers much like any corporation, but its foreign equity, capital, and FINL compliance are scrutinized.
• A branch or representative office applies for a License to Do Business (SEC Form F-103), supported by the parent company's authenticated or apostilled documents, financial statements, a resident agent, and proof of inward remittance.

Once the SEC stage is done, the downstream steps are the same as for any Philippine business. You'll still secure your local government permits, complete BIR registration, and, once you hire, handle employer registrations.

Go to the DTI / SEC Registration Guide

05 BOI · PEZA · CREATE MORE

Investment incentives

Foreign investors in priority and export-oriented activities can access generous incentives, provided they register the right way.

Incentives are granted by Investment Promotion Agencies (IPAs), most commonly the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA), and overseen by the Fiscal Incentives Review Board. Your project must align with the Strategic Investment Priority Plan (SIPP) to qualify, and incentives apply only to the registered activity.

The headline menu, refined by the CREATE MORE Act (RA 12066, 2024)

• An Income Tax Holiday (ITH) of 4 to 7 years, followed by either of the next two options.
• A 5% Special Corporate Income Tax (SCIT) on gross income (for export enterprises), in lieu of most national and local taxes.
• An Enhanced Deductions Regime (EDR), taxing registered enterprises at a reduced 20% corporate income tax rate, with bonuses such as a 100% additional deduction on power expenses.
• VAT and customs-duty incentives on inputs directly tied to the registered activity.

BOI registration suits a broad range of priority and export activities (and allows flexible work-from-home arrangements), while PEZA suits export-oriented locators inside economic zones. CREATE MORE also broadened eligibility to cover both foreign and local registered business enterprises.

Because the incentive you elect is generally irrevocable for its duration, and because the VAT rules are still being refined (for example, under RR 1-2026), it's worth modeling the options carefully before registering.

06 Ongoing obligations

Compliance considerations

Foreign-owned businesses carry the same ongoing obligations as any Philippine business: annual SEC filings (GIS and AFS), BIR returns, and LGU permit renewals. A few deserve special attention.

• The Anti-Dummy Law (Commonwealth Act 108): using Filipino dummy shareholders or nominee arrangements to get around foreign-equity limits is a criminal offense. It also restricts foreign nationals from managing partly-nationalized activities. Structuring around the FINL this way is a serious risk, not a workaround.
• Maintaining capital: branches must maintain their assigned capital and securities deposit; undercapitalization can draw penalties or licence revocation.
• The land restriction: it bears repeating, foreigners cannot own land. Plan around long-term leases or condominium ownership instead.

Go to the Post-Registration Compliance Guide

07 Pitfalls to avoid

Common mistakes to avoid

A few errors come up again and again. Each is avoidable with the right structure from the start.

• Counting authorized capital instead of paid-in equity: the USD 200,000 (or USD 100,000) threshold refers to capital actually paid in and inwardly remitted, not the figure on your Articles of Incorporation.
• Mis-stating the reduced-capital employee threshold: the amended FIA (RA 11647) sets it at no fewer than 15 Filipino employees, down from the old 50, but some current sources still cite 50. Plan around 15 and confirm with counsel.
• Using nominee or dummy shareholders to bypass the Negative List: this violates the Anti-Dummy Law and carries criminal liability. If a sector is restricted, structure within the rules or choose a different activity.
• Treating a representative office as a cheap way to trade: it legally cannot earn income. If your people do revenue-generating work, you're exposed to penalties; use a subsidiary or branch instead.

Frequently asked questions

Can a foreigner own 100% of a Philippine company?

Often, yes, for domestic enterprises not restricted by the Foreign Investment Negative List, subject to the minimum capital rules. Restricted sectors cap foreign equity, frequently at 40%.

Can foreigners own land in the Philippines?

No. Land ownership is constitutionally reserved for Filipino citizens and Filipino-majority entities. Foreigners can own condominium units (up to 40% of a project) and enter long-term leases.

What is the minimum capital for a foreign-owned business?

Generally USD 200,000 for a domestic market enterprise, reducible to USD 100,000 if it uses advanced technology, is an endorsed startup, or employs at least 15 Filipinos. Export enterprises (60%+ exports) have effectively no high minimum.

Should I set up a subsidiary or a branch?

A subsidiary is a separate legal entity that limits the parent's liability; a branch is an extension of the parent, which remains liable for it. Most long-term investors choose a subsidiary.

What is the Anti-Dummy Law?

It criminalizes using Filipino front-owners to evade foreign-equity restrictions, and limits foreign participation in managing partly-nationalized activities. It's why structuring around the Negative List is a genuine legal risk.

Where to go next

This pillar stands on its own, but it connects to the full setup process. Continue here.

01

Business registration in the Philippines

The complete step-by-step setup that applies once your entity is formed.

Explore the pillar

02

DTI / SEC registration

How your entity is actually incorporated and licensed with the SEC.

Explore DTI / SEC registration

03

BIR registration

Becoming a taxpayer and invoice-ready once your entity exists.

Explore BIR registration

Setting up in the Philippines?

Foreign ownership is more accessible than ever, but the equity rules, capital thresholds, and entity choices reward getting the structure right from the start. A misstep on capitalization or sector restrictions is expensive to unwind later.

If you're planning to invest or set up an entity, our team can help you choose the right structure, meet the capital and FINL requirements, and register correctly across every agency.

Talk to our team about your PH entity