Setting up a businessin the Philippines

First of all, it’s not an option anymore. It’s mandatory.

The Philippines, with its vibrant economy and strategic regional location, hasbeen pulling significant foreign capital as well as a good number of number ofexpats in recent years.

It has proven itselfresilient in the globaleconomic slowdownand is considered anemerging marketeconomy today.

#2 GDP growth in theworld at 6.2% in 2015.

What is your business like?

Business to Business

Business to Consumer

Business to Government

How do you want to do business?

Foreign investors can enjoy the perks of doing business in the Philippines through government incentive programs.

Legal FrameworkIf a foreign corporation intends to establish a businesspresence locally, all legal aspects must be considered.

3 Dimensions of doing business in the PH:

1. Qualifications of the foreign enterprise to formally enter the economy

2. Amenability to suit of a foreign corporation3. Tax treatment of the foreign enterprise

BOI is the main agency in charge of investment promotion in the country.

You can register with the BOI if you engage in any of the activities included in the country’s priority investment areas as listed in the Investment Priorities Plan (IPP).

For non-pioneer industries, foreign ownership is limited to 40% and below, unless you can guarantee an export sales of at least 70% of total sales.

BOI Incentives:

• Income tax Holiday (ITH)• taxes and duties exemption on imported spare parts and export tax• Reduced duty rates for capital equipment, spare parts, and accessories• Tax credits on domestic breeding stocks, genetic material, raw materials, and supplies.• Additional deductions from taxable income on labor expense as well as necessary and major infrastructure work.

Option 1:

Location and eligibility of activity are the two main qualifications to be able to register with PEZA.

The location should be in designated Special Economic Zones or Ecozones. Eligible activities include export manufacturing, information technology (IT) service export, tourism, medical tourism, and agro-industrial export manufacturing among others.

PEZA Incentives:

• Income Tax Holiday (ITH) of 4 years for non-pioneer projects and 6 years for pioneer projects. After the ITH expires, a 5% Special Tax on Gross Income and exemption from all local and national taxes is applicable.• Zero taxes and duties in the importation of capital equipment, raw materials, machineries, and spare parts. An exemption on wharfage duties and export tax is applicable as well.• Zero VAT on local purchases and an exemption for all local government imposts, fees, licenses, or taxes.• Zero expanded withholding tax.

Option 2:

A foreigner cannot form a solely-owned business in the Philippines. You can only have up to 40% ownership in a corporation. You can start a corporation with a minimum capital of 5,000php.

PH Incorporated

Option 3:

Agents/Agencies

Option 4:

You can also hire an individual or a private agency to register the business for you. They can do all the work such as

Philippine Government Agencies

Once you’ve established your business, opened shop, and hired youremployees, you have to familiar yourself to these government agenciescovering employer contributions to provide employee benefits.

All employees working for private companies must apply to be SSS

members. The purpose of the system is to protect the members in case of inability to work due to sickness,

disability, maternity, old age, death, and other contingencies that result to loss or

income or financial burden.

The Bureau of Internal Revenue is responsible for assessment and

collection of all internal revenue taxes, fees, and charges. Companies should

make sure that their employees employment status is updated at the

BIR.

On behalf of the employees, employers are required to contribute to the Home Development Mutual

Fund, also known as the Pag-ibig Housing Development Program.

The agency provides the Filipino workers an opportunity to own a house and lot in easy-

payment plans with low interest, which will be directly deducted from their monthly salaries.

All employees are required to be contributors of the Philippine Health Insurance Corporation or PhilHealth, the medical insurance company of the Philippines. Contributions depends on actual employee monthly salaries. Members

and dependents are given health and hospitalization subsidies.

Business Culture

Doing business in the Philippines can be tricky for newcomers. There arecertain nuances that make some things quite complicated.

These are a few that you should bear in mind, when dealing with Filipinocolleagues. (Don’t say we didn’t warn you!)

Punctuality isn’t always one of the best traits of Filipinos, and this should notdrive you nuts.

Merienda: Filipinos love to eat, and don’t be surprised that snacking inbetween main meals is mandatory.

Nickname: most Filipinos have really long names. A second

name won’t be enough; others will have a third (and maybe a fourth!). So it’s best that you

ask how they want to be called.

Mark Angelo

Ferdinand

What’s your nickname?

Mark? Angelo? Ferdinand?

It’s Mac-Mac.

The Philippines is recognized as the TEXT capital of the world, and rightfullyso. The mobile phone is every Filipino’s main accessory, sending an averageof 2 billion SMS /day!

Filipinos use SMS for almost everything – from fax confirmation to trafficupdates. Get used to colleagues texting in a meeting and while engaged in aconversation. It’s the primary means of communication for them.

Do you love me too? <3 <3 <3

What do you do?

WRU?

Employing People

Cultural subtleties aside, Filipinos would exceed your expectations at work.

The country’s labor force is estimated at 41 million with 450,000 new graduates every year.

Flexible solutions that suit your business needs

Client: Road assistance platform

Problem: The client wanted to revamp and display a new e-learning platform for its Training Center in Brussels.

Solution: They hired a team of developers in manila to get the job done and maintain a web responsive platform as well as a new corporate website.

Business Area: Creative services & Back office

Setup: Project OutsourcingRisk: MediumCost: LowReplicability: MediumLearning Curve: Low

Case Study # 1: Project Outsourcing

Client: A global biopharma

Problem: The client has a factory in Shanghai that needs to deploy quickly a new SAP module for production. They have trained staff all over the world but in China to do so. Production manager and blue-collars only are employed in China.

Solution: Hire a project manager in the region and secure paper works based timesheets approved by purchasing dptin Brussels. An ex-UCB employee is hired in Manila and will travel back and forth to the factory with local; the rest of the time, she will work from a serviced office in Manila.

Business Area: Services & Consulting

Setup: Staff LeasingRisk: LowCost: MediumReplicability: MediumLearning Curve: High

Case Study # 2: Remote Staffing

Client: A developer and manufacturer of lifts

Problem: The Swedish bespoke lift and elevator company sees potential in Asia and deployed a first core sales force in Shanghai. From there, it wants to resell in the whole region, but every country has…tax, import and service rules. Plus, clients want an invoice in their currency from a local company.

Solution: The client hired the services of Eastcube, a Belgian import-export company that:a. recruited and hosued a sales agentb. contracted with a freelance Swedish

technician based in Manilac. contracted with a local import

agent/custom broker

Business Area: Industrial Sales

Setup: InsourcingRisk: MediumCost: MediumReplicability: HighLearning Curve: High

Case Study # 3: Industrial Reselling

Client: Management consulting firm

Problem: Client is active in PPP around Asia and sees a big growth potential in PH, especially over the last 2 years.

Solution: Lease office space in the heart of Manila’s newest CBD without the hassle of dealing with SSS, HDMF, PHIC, and BIR.

Business Area: Services & Consulting

Setup: Seat leasingRisk: LowCost: LowReplicability: HighLearning Curve: High

Case Study # 4: Hosting & Seat Leasing

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Eastvantage is a provider of bespoke, personalised outsourcedsolutions to SMEs in the areas of Business Support, Technology and e-Marketing. Operating from the heart of Southeast Asia in Manila,Philippines,

We employ over 200 employees and growing with a footprint in over 20cities across the globe, servicing clients from a diverse array ofindustries including banking, energy, advertising, food and beverage,retail and e-commerce. Learn more about our services, companyculture and our people through www.eastvantage.com.

Eastvantage Business Solutions, Inc.