Manila, Philippines

Guide for the American Expat to Start a Business in the Philippines

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Like anything else, starting a successful business in the Philippines begins with a good business idea. Hundreds of companies have determined, backed by marketing studies, to have an opportunity in the Filipino or Asian market. Based on these studies, companies should determine beforehand that their products or services are well-positioned in terms of pricing, features and other factors.

Some of these companies have been exporting their products and services already into the local market and have a solid knowledge base about the market potential: In this case the decision is obvious! There are other successful international companies that have an appeal and a brand presence in the Philippines but no physical foothold – franchises.

Even then there are important aspects the new company needs to take into consideration and careful analysis needs to take place before you start your successful business in the Philippines. Just be aware that you are in good company: A growing number of foreign companies and entrepreneurs are playing an active and important role in the local economic life as does the Philippine Board of Investments! A key reason for this is the investor-friendly environment and the educated workforce available here.

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Business Structure

Key decision here in terms of business structure is, what legal entity to use, what types are available and what suits your business and personal objectives best. These are the basic entities available:

  • Sole proprietorship
  • Partnership
  • Corporation
  • Stock Corporation
  • Corporation (AG)

An attorney or accounting firm can help you make the right choice. There are plenty of law firms, accountants and consultants that have made international start-ups successful. Do not forget that the USA is one of the only two countries in the world that taxes its citizens who live and earn money abroad so besides your local accounting firm make sure to consult an expat tax accountant that will file your taxes in the USA as well.

A company needs to reassure itself, that its products comply with the technical and safety related standards in the Philippines.

Taxation and Accounting

Taxation and accounting issues will also require you to seek professional assistance. It is usually money well spent since it reduces your “ learning curve’ significantly and can avoid costly mistakes. Select a good accounting firm, pick a good lawyer and use a personnel consultant among others. The experts will be able to draw your attention on the different types and rates of taxation among them the VAT, capital gains tax and income tax.


Health Benefits

The different health insurance and health care practices are another area, which needs careful consideration when preparing to start up a business entity in the Philippines. As important are indigenous personnel practices, as the common practice is that termination notice periods are longer than in the US, that they are contractual and enforced by courts.


When budgeting, make sure to follow the same principle as with a personal budget and add a cushion for unforeseeable expenses as with all due preparedness, that will be needed in any developing country.

Important in the start-up process is the consideration of the many financing alternatives and investment incentives that are offered by the Philippines. Some of them depend on the site selected for your company. This might well be the most crucial decision, since it will determine your market access, logistical base and such will impact directly on your bottom line. Here, an unbiased and professional site selection professional needs to assist you early one and thoroughly.

What you have done well already is to consider the Philippines as a top choice for your company: a country that continues to be one of Asia’s fastest growing economies. It is for good reason that hundreds of international companies call the country their home away from home.

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