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Yes. Republic Act (RA) 10641, signed into law on July 15, 2014, liberalized the entry of foreign banks in the Philippines. This law grants the Bangko Sentral ng Pilipinas (BSP) Monetary Board the authority to authorize foreign banks to operate under the following modes:

• Acquisition: Foreign banks can acquire up to 100% ownership of an existing Philippine bank.
• Subsidiary Incorporation: They can invest in and own 100% of a newly established Philippine banking subsidiary.
• Branch Establishment: They can set up branches with full banking authority in the Philippines.

Benefits of Foreign Bank Entry

The entry of foreign banks can potentially bring several benefits to the Philippine banking system, including:

• Increased Competition: More competition can lead to better interest rates, a wider variety of financial products, and improved service for Filipino consumers and businesses.
• Enhanced Innovation: Foreign banks can introduce new technologies and financial practices to the Philippine market.
• Greater Access to Capital: Foreign banks may provide additional sources of financing for Philippine businesses.

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Guzman Acain LLP can assist you in navigating the process of foreign bank entry in the Philippines. Contact us today to learn more.

Setting Up Your Back-Office Support in the Philippines

The Philippines offers a compelling destination for foreign companies to establish back-office operations. To get started, you have two main options for structuring your presence:

1. Domestic Corporation:

• This is the most common and flexible option. You can establish a new Philippine company wholly owned by your foreign company (100% foreign ownership allowed).
  • One Person Corporation (OPC): Ideal for a streamlined setup with a single stockholder and director (your foreign company).
  • Regular Corporation: Offers more flexibility for multiple stockholders and directors (minimum of five).

2. Branch Office:

• Consider a branch office if you already have a substantial business abroad and want a limited Philippine presence for back-office activities.
  • Limitations: Branch offices have stricter regulations and require higher minimum capital compared to a domestic corporation.

Representative Office (Not Recommended):

• While possible, a representative office is not ideal for back-office support. It cannot directly generate income and has limited operational capabilities. This is also tax-exempt as it does not generate any income.

Choosing the Right Option:

The best structure depends on your specific needs. Consider factors like:

• Size and complexity of your back-office operations.
• Desired level of control and flexibility.
• Long-term business goals in the Philippines.

We’re Here to Help

Guzman Acain LLP can assist you with navigating the process of setting up your back-office support in the Philippines. We can help you choose the right structure, complete the necessary registrations, and ensure compliance with local regulations. Contact us today to discuss your specific requirements.

Inward Remittance Requirement: Exceptions for Back-Office Operations

While there is a generally required inward remittance of US$200,000 for foreign companies incorporating in the Philippines, there are exemptions that may apply to your back-office setup:

• Export Market Enterprise (EME) Exemption: If your back-office operations qualify as an EME under the Foreign Investment Act, you can be exempt from the inward remittance requirement. EMEs are businesses that primarily export their goods or services and generate foreign currency earnings.

  • Requirements for EME qualification: This process typically involves submitting an application with the Securities and Exchange Commission (SEC) demonstrating your company’s export-oriented nature.
  • 40% Equity Ownership: If you choose to incorporate a local subsidiary and hold an equity of not more than 40% ownership, you may not be required to meet the US$200,000 inward remittance threshold.

Important Note: Regulations and requirements can change. It’s always advisable to consult with a lawyer dealing with foreign investments to determine the most up-to-date information and confirm if your specific back-office operations qualify for these exemptions.

We’re Here to Help

Guzman Acain LLP can assist you in navigating the legal and regulatory aspects of setting up your back-office in the Philippines. We can help you understand the inward remittance requirements, explore potential exemptions, and ensure compliance with all regulations. Contact us today to discuss your specific situation.