The Philippines is an attractive destination for expats looking to start their own business. It has a growing economy, a favorable business environment, and a young, skilled workforce. This article will explore how self-employment and start-ups work for expats in the Philippines, including the registration process, the digital nomad scene, and incentives for entrepreneurs.
Self-Employment for Expats in the Philippines
Expats who wish to work for themselves in the Philippines must register as self-employed individuals with the Bureau of Internal Revenue (BIR). This applies to those who are engaging in any form of business or profession, including freelance work, consulting, and contracting.
To register as self-employed, the following documents must be submitted to the BIR:
- Duly accomplished BIR Form 1901 (Application for Registration for Self-Employed and Mixed Income Individuals, Estates, and Trusts)
- Proof of payment of the annual registration fee of PHP 500
- Valid ID with a photo and signature
- Barangay Clearance
Once registered, self-employed individuals are required to pay monthly taxes and file quarterly income tax returns.
Starting a Company in the Philippines
Expats who wish to start a company in the Philippines have several options. The most common is to set up a domestic corporation, which is subject to the restrictions on foreign ownership under the Foreign Investment Act. However, certain industries are exempt from these restrictions, including export-oriented businesses and those involved in technology.
The steps to register a corporation in the Philippines are as follows:
- Reserve a company name with the Securities and Exchange Commission (SEC)
- Submit the articles of incorporation and by-laws to the SEC for approval
- Obtain a taxpayer identification number (TIN) from the BIR
- Register with the Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (Pag-IBIG)
- Apply for business permits and licenses from the local government unit (LGU)
It is important to note that the registration process can take several months, so it is advisable to seek professional assistance to ensure that all requirements are met.
Digital Nomads in the Philippines
The Philippines is becoming an increasingly popular destination for digital nomads due to its fast internet speeds, low cost of living, and vibrant culture. However, it is important to note that there is no specific visa for digital nomads in the Philippines. Most digital nomads enter the country on a tourist visa and extend their stay through visa runs or by obtaining a long-term visa, such as a work visa or a retirement visa.
There are several co-working spaces and cafes throughout the country that cater to digital nomads, particularly in cities such as Manila and Cebu. These spaces offer high-speed internet, comfortable workspaces, and networking opportunities.
Incentives for Expats Starting a Business in the Philippines
The Philippine government offers several incentives and programs to encourage expats to become self-employed or set up a company in the country. Some of these include:
The Foreign Investment Act: The Foreign Investment Act allows foreign investors to own up to 100% of a Philippine company in most industries.
Special Economic Zones: The Philippine government has designated several special economic zones (SEZs) throughout the country, offering incentives such as tax holidays, duty-free imports, and simplified customs procedures.
Philippine Economic Zone Authority: The Philippine Economic Zone Authority (PEZA) offers incentives to companies that invest in PEZA-approved economic zones, including income tax holidays, reduced corporate income tax rates, and other incentives.
Board of Investments: The Board of Investments (BOI) offers incentives to companies that invest in priority sectors such as manufacturing, tourism, and agriculture.
Philippine Retirement Authority: The Philippine Retirement Authority (PRA) offers special visas to foreigners who are over 50 years old and have a pension of at least $800 per month. This program is designed to encourage foreigners to retire in the Philippines and invest in the country.
In conclusion, the Philippines is a popular destination for expats looking to start a business or become self-employed. The process of registering a business in the Philippines is straightforward, and the government offers several incentives and programs to encourage foreign investment. With its talented workforce, strategic location, and vibrant business environment, the Philippines is an excellent place for expats to start a new business venture.