A foreign company that wants a presence in the Philippines doesn't have just one option — it has four, and they're built for very different purposes. Pick the wrong one and you either can't do what you came to do or you've over-committed capital you didn't need to. The choice comes down to one question: do you need to earn income here, or not? Here's how the structures compare.
Start with the income question
Two of the four structures are non-income-generating — they exist to support a foreign parent, not to sell. The other two can earn. Sorting your purpose along that line narrows the field fast.
| Structure | Earns income locally? | Indicative capital |
|---|---|---|
| Representative office | No | US$30,000 / year inward remittance |
| Regional headquarters (RHQ) | No | US$50,000 / year |
| Branch office | Yes | US$200,000 assigned capital |
| Subsidiary (domestic corp) | Yes | Per the foreign-ownership rules |
Representative office
A representative office is a non-revenue presence. It handles liaison, market research, quality control, and back-office support for its foreign parent — but it cannot sell or earn income in the Philippines. It's funded by an inward remittance, generally at least US$30,000 a year, to cover its operating costs. Choose it when you want people on the ground for support work, not sales.
Tip
The representative office's defining limit is income. The moment your plan involves earning revenue locally, you've outgrown it — don't try to stretch it to cover sales.
Branch office
A branch carries the foreign parent's business into the Philippines. It can do the same revenue-generating activities as the head office, and that income is taxable here. Because it's a real operating presence, it carries the heavier capital requirement — generally US$200,000 in assigned capital for a domestic-market branch. Choose it when you want to operate and earn directly under the parent's name rather than forming a separate company.
Regional headquarters (RHQ)
An RHQ is a specialised structure for multinationals: it supervises, communicates with, and coordinates the parent's affiliates and branches across the region. It can't earn income — it's a cost centre funded from abroad, typically US$50,000 a year. A related variant, the regional operating headquarters (ROHQ), is allowed to earn from qualifying services to affiliates and carries a higher capital requirement. RHQ/ROHQ only makes sense if you're coordinating a genuine regional network.
Subsidiary: the fourth path
The fourth option isn't on the "foreign entity" list at all — it's forming a Philippine domestic corporation as a subsidiary. It's a separate legal entity, can earn freely, and limits the parent's liability. Its capital follows the foreign-ownership rules (the US$200,000 domestic-market floor, with the reductions and the export exemption). Many foreign investors choose this over a branch precisely for the liability separation.
How to decide
Work it in order: if you won't earn income locally, it's a representative office (support work) or an RHQ (regional coordination). If you will earn, it's a branch (operating under the parent) or a subsidiary (a separate Philippine company). Then let the capital figure and your appetite for liability separation settle the final call.
Key takeaways
- Representative offices and RHQs can't earn income; branches and subsidiaries can.
- A representative office runs on ~US$30,000/year; an RHQ on ~US$50,000/year.
- A branch needs ~US$200,000 assigned capital and is taxed on its local income.
- A subsidiary is a separate domestic corporation — choose it over a branch when you want liability separation.
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