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| Philippines Company Formation | ||||||||||
Philippines company formation gives international investors access to one of Asia's key emerging markets. That said, the Philippines economy is expected to enter recession in 2009 after a period of steady economic growth. Furthermore, Philippines company formation is challenging, with ever-present threats of corruption, lengthy administrative procedures and political instability. The following is a summary of the key elements of the Philippines economy and their implications for Philippines company formation.
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| 1. | The Philippines economy grew about 7.2% in 2007, its highest in over 3 decades. Growth for 2008 is projected at 4.5% and, although the Philippines government has warned that the economy may slip into recession in 2009, the World Bank says the Philippines is in a better position to weather the storm than other Asian countries, due to fiscal and other reforms in recent years.
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| 2. | Philippines company formation is challenging, as illustrated by the World Bank's Doing Business 2010 Survey, which ranks the Philippines negatively as the world's 144th-easiest place to conduct business. It is also ranked 139th by Transparency International in their 2009 Corruptions Perception Rankings, indicating that businesses internationally view the Philippines as being a difficult and corrupt place to do business.
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| 3. | Entrepreneurs choosing Philippines company formation to conduct international trade benefit from preferential trade agreements with fellow Association of South East Asian Nations (ASEAN) members, such as Singapore, Malaysia, Indonesia and Thailand.
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| 4. | The Philippines government actively attracts inward investment through a) the Board Of Investments (BoI) and b) the Philippines Investment Priorities Plan (IPP). Examples of government incentives and other benefits for international entrepreneurs include: i) Grants For Pioneer Industry– the Board of Investment (BOI) offers grants to foreign investors who invest in a 'pioneer' industry, as defined by the government. A full list of pioneer industries is identified in the Philippines Investment Priorities Plan (IPP); ii) Full Foreign Ownership – A business can be 100% foreign-owned if it is located in an Export Processing Zone or Special Economic Zone and up to 100% foreign ownership of domestic market enterprises is allowed except for specific areas listed under the Foreign Investments Negative List; iii) Tax Benefits – Foreign investors who choose Philippines company formation can take advantage of tax holidays of between three and eight years upon registration. Companies operating in special economic zones pay a corporate tax rate of just 5% on gross income. | |||||||||
| 5. | Outside the Special Economic Zones, high corporate taxes of 32%, poor levels of infrastructure and development in general and a high minimum paid-up capital of US$200,000 needed to incorporate a company result in the Philippines being a less favoured location for company formation.
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| 6. | For more detailed information on the economic, legal and regulatory background to Philippines company formation, purchase our Asia Business Setup book, contact email@healyconsultants.com or call us in Singapore at (+65) 6735 0120.
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| Other Information | ||||||||||
Refer to the following links to read more about establishing a company in the Philippines:
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