phil laws on foreign investments by boi

8/8/2019 Phil Laws on Foreign Investments by BOI

1/22

DOING BUSINESSIN THE PHILIPPPINES

INVESTMENT LAWS

Ramon L. RosalesNERBAC, BOI


2/22

PHILIPPINE LAWS ON FOREIGN INVESTMENTS

Omnibus

Investments

Act (EO226)

(Administered

by BOI)

WITH

Incentives

Economic

Zones and

Freeports

WITH

Incentives

FOREIGN

INVESTMENTS

NEGATIVE LIST

"Annex A"

Doing Business

WITHOUT INCENTIVESDoing Business

WITH INCENTIVES

Representative/

Branch Office

Regional

Headquarters

(RHQ)

/Regional

Operating

Headquarters

(ROHQ)

Retail Trade

Law

Special

Investors

Resident

Visa

Special

Resident

Retirees

Visa

Special Visa for

Employment

Generation

Foreign

Investments

Act (FIA)

WITHOUT

Incentives

and NOT in

the Negative

List


3/22


4/22


Doing Business WITHOUT Incentives

FOREIGNINVESTMENTSNEGATIVE LIST

"Annex A"

60 Filipino/40Foreign:

- Paid-in capital can

be less than US$200T

Foreign Investments ActDoing Business WITHOUT Incentives

and NOT in the Negative List

More than40% Foreign

A. Domestic Market Oriented at least US$200Tpaid-in capital or US$100T if:

1. Activity involves advance technology or,2. Company employs at least 50 direct employees

B. Export OrientedA manufacturer that exports at least 60% of its output;or a trader that purchases products domestically andexport at least 60% of its purchases.

- US$ 200T paid-in, not applicable


5/22


Omnibus

Investments

Act (EO226)

(Administered

by BOI)

WITH

Incentives

Economic

Zones and

Freeports

WITH

Incentives

FOREIGN

INVESTMENTS

NEGATIVE LIST

"Annex A"

Doing Business


WITH INCENTIVES

Representative/

Branch Office

Regional

Headquarters

(RHQ)

/Regional

Operating

Headquarters

(ROHQ)

Retail Trade

Law

Special

Investor

Resident

Visa

Special

Resident

Retirees

Visa

Special Visa for

Employment

Generation

Foreign

Investments

Act (FIA)

WITHOUT

Incentives

and NOT in

the Negative

List


6/22


Doing Business WITH Incentives

Economic Zoneand Freeports

PEZA - RA 7916CDC - RA 7227SBMA -RA 7227CEZA - RA 7922PHIVIDEC - PD 538

Location - in Economic Zone and Freeports

- 100% for export regardless of ownershipand status

- Needs zone authority to sell 30% in thedomestic market but subject to taxes andduties


7/22


Doing Business WITH Incentives

Export Oriented

Whether Pioneer or Non Pioneer Status

If 60% Filipino/40% Foreign

50% for Export.

If more than40% Foreign owned

70% for Export

ForDomestic Market

- Activity is listed in the IPP

If PioneerStatus

- can be 100% owned by foreigners

If Non-PioneerStatus

-foreign equity is up to 40% only

"See IPP"

EO 226 - Registrationwith BOI


8/22


Omnibus

Investments

Act (EO226)

(Administered

by BOI)

WITH

Incentives

Economic

Zones and

Freeports

WITH

Incentives

FOREIGN

INVESTMENTS

NEGATIVE LIST

"Annex A"

Doing Business


WITH INCENTIVES

Representative/

Branch Office

Regional

Headquarters

(RHQ)

/Regional

Operating

Headquarters

(ROHQ)

Retail Trade

Law

Special

Investors

Resident

Visa

Special

Resident

Retirees

Visa

Special Visa for

Employment

Generation

Foreign

Investments

Act (FIA)

WITHOUT

Incentives

and NOT in

the Negative

List


9/22


BRANCHOFFICE

REPRESENTATIVEOFFICE

- Needs SEC Registration as a BRANCH

- Carries out business activities of parent company- Derives Income- Assigned capital from Head Office at least US$200Tcan be reduced to US$100T if :

1.Activity involves advanced technology or

2. Company employs at least 50 direct employees

- Needs SEC Registration as a REPRESENTATIVE OFFICE

- Extension of the personality of its mother company

- Activities limited only to liaison work between mothercompany and its clients

- Does not derive income

- One time remittance from mother company in the amountof at least US$ 30T to be used for its operational expenses


10/22


Omnibus

Investments

Act (EO226)

(Administered

by BOI)

WITH

Incentives

Economic

Zones and

Freeports

WITH

Incentives

FOREIGN

INVESTMENTS

NEGATIVE LIST

"Annex A"

Doing Business


WITH INCENTIVES

Representative/

Branch Office

Regional

Headquarters

(RHQ)

/Regional

Operating

Headquarters

(ROHQ)

Retail Trade

Law

Special

Investors

Resident

Visa

Special

Resident

Retirees

Visa

Special Visa for

Employment

Generation

Foreign

Investments

Act (FIA)

WITHOUT

Incentives

and NOT in

the Negative

List


11/22


Regional Headquarters (RHQ) /Regional Operating Headquarters (ROHQ)

RHQ ROHQ

- Endorsed by BOI to SEC- Needs SEC Reg.

- Annual remittance of at least US$ 50T

CONDITIONS:a.Functions

-supervisory-communication-coordination

b.Does not earn income in the Philippines

- With Incentives

- Endorsed by BOI to SEC- Needs SEC Reg.

- One time remittance of at least US$ 200T

CONDITIONS:a. Functions- RHQ functions

- Perform qualifying services to its affiliates,subsidiaries, and branches

b.Earn income from qualifying servicessubject to 10% tax

- With Incentives


12/22


Omnibus

Investments

Act (EO226)

(Administered

by BOI)

WITH

Incentives

Economic

Zones and

Freeports

WITH

Incentives

FOREIGN

INVESTMENTS

NEGATIVE LIST

"Annex A"

Doing Business


WITH INCENTIVES

Representative/

Branch Office

Regional

Headquarters

(RHQ)

/Regional

Operating

Headquarters

(ROHQ)

Special

Investors

Resident

Visa

Special

Resident

Retirees

Visa

Special Visa for

Employment

Generation

Foreign

Investments

Act (FIA)

WITHOUT

Incentives

and NOT in

the Negative

List

Retail Trade

Law


13/22


Retail Trade Law

PREQUALIFICATION REQUIREMENTS:Before a foreign retailer is allowed to establish or organize an entity that will engage in the retail business orinvest in a retail store in the Philippines, it must possess all of the following qualifications :

a) A minimum ofUS$200 million net worth of the registrant corporation forCategories B, and US50 million networth of the registrant corporation forCategory D;

b) Five (5) retailing branches or franchise anywhere around the world unless such retailer has at least one (1)store capitalized at a minimum of US$25 million;

c) Five (5) - year track record in retailing; and

d) Nationals from, or juridical entities formed or incorporated in countries which allow the entry of Filipinoretailers shall be allowed to engage in retail trade in the Philippines.

- ForCategory B, Paid up capital should be at least US2.5 million for general merchandize store and eachbranch should not be less than US$830,000

- ForCategory D, high end or luxury product, the paid up capital should not be less than US$250,000 per store

- Pre-qualified by BOI & endorsed to SEC- Needs SEC Reg.

BOI


14/22


Omnibus

Investments

Act (EO226)

(Administered

by BOI)

WITH

Incentives

Economic

Zones and

Freeports

WITH

Incentives

FOREIGN

INVESTMENTS

NEGATIVE LIST

"Annex A"

Doing Business


WITH INCENTIVES

Representative/

Branch Office

Regional

Headquarters

(RHQ)

/Regional

OperatingHeadquarters

(ROHQ)

Retail Trade

Law

Special

Resident

Retirees

Visa

Special Visa for

Employment

Generation

Foreign

Investments

Act (FIA)

WITHOUT

Incentives

and NOT in

the Negative

List

Special

Investors

Resident

Visa


15/22


Special Investors Resident Visa (SIRV)

PREQUALIFICATION REQUIREMENTS:- He has not been convicted of a crime involving moral turpitude.- He is not afflicted with any loathsome, dangerous or contagious disease- He has not been institutionalized for any mental disorder or disability

- Applicant is at least 21 years old

- Amount of investments is at least US$75,000. (This was lowered to US$50,000, for Tourism Related Projects underE.O. 63 and shall be filed with Dept. of Tourism)

- Only investments/shares of stocks in existing, new or proposed corporation shall be allowed/accepted aseligible forms of investments:- Publicly-listed companies- Co. engaged in areas listed in the Investments Priorities Plan (IPP) of the BOI- Co. engaged in the manufacturing and services sectors

- Approved by BOI

- Issuance of Visa endorsed to Bureau of Immigration

BOI


16/22


Omnibus

Investments

Act (EO226)

(Administered

by BOI)

WITH

Incentives

Economic

Zones and

Freeports

WITH

Incentives

FOREIGN

INVESTMENTS

NEGATIVE LIST

"Annex A"

Doing Business


WITH INCENTIVES

Representative/

Branch Office

Regional

Headquarters

(RHQ)

/Regional


(ROHQ)

Retail Trade

Law

Special

Investors

Resident

Visa

Special Visa for

Employment

Generation

Foreign

Investments

Act (FIA)

WITHOUT

Incentives

and NOT in

the Negative

List

Special

Resident

Retirees

Visa


17/22


Special Resident Retirees Visa (SRRV)

PREQUALIFICATION REQUIREMENTS:- At least 35 years old- Without criminal record- Meeting medical standards- Meeting the investment requirement

1. With Pension 50 years. Oldandabove therequired timedeposit is US$10, 000.00 plus a monthly pensionofUS$800.00 fora singleapplicant and US$1,000.00 forcouple

2. Without Pensiono 35 to 49 years old US$50,000.00 time deposito 50 years old and above US$20,000.00 time deposito FormerFilipino Citizens (at least 35 years old, regardless of the number of dependents US$1,500.00)o Ambassadors of foreign countries who served and retired in the Philippines, current and formerstaffmembers of

international organizations including ADB (at least 50 years old) - US$1,500.00

3. A resident retiree can bring with him, without additional deposit, his spouse and a child who is unmarried and below21 years old or ifthe spouse is not joining, two (2) children (provided they are unmarried and under 21 years of age.)Additional children with the same qualifications may also be allowed tojoin the principal retiree provided there is anadditional deposit ofUS$15,000.00 perchild. The said time deposit however, is subject the same and conditions withthat of the principal deposit. This does not apply to formerFilipino Citizens.

4. Application Fee: US$1,400 (Principal) and US$300 (Spouseanddependents)5. Approvalof SRRV : upon completionof therequirements, theapplication forSRRV is sent to BI. Approvalnormallytakes to 5 to 7 days, then PRA IDwill beissuedwhich will serveas ACR

- Approved by Phil. Retirement Authority (PRA) (www.pra.gov.ph)

- IssuanceofVisaendorsed to Bureau of Immigration

Philippine Retirement Authority (PRA)


18/22


Omnibus

Investments

Act (EO226)

(Administered

by BOI)

WITH

Incentives

Economic

Zones and

Freeports

WITH

Incentives

FOREIGN

INVESTMENTS

NEGATIVE LIST

"Annex A"

Doing Business


WITH INCENTIVES

Representative/

Branch Office

Regional

Headquarters

(RHQ)

/Regional


(ROHQ)

Retail Trade

Law

Special

Investors

Resident

Visa

Special

Resident

Retirees

Visa

Special Visa for

Employment

Generation

Foreign

Investments

Act (FIA)

WITHOUT

Incentives

and NOT in

the Negative

List


19/22


Special VisaforEmployment Generation (SVEG)

a. The foreigner shall actually, directly or exclusively engage in a viable and sustainable commercial

investment/enterprise in the Philippines, exercises/performs management acts or has the authority to hire,promote and dismiss employees;

b. He evinces a genuine intention to indefinitely remain in the Philippines;

c. He is not a risk to national security;

d. The foreigners commercial investment/enterprise must provide actual employment to at least ten (10)Filipinos in accordance with Philippine labor laws and other applicable special laws.

- The privileges under SVEG may extend to the qualified foreigners spouse and dependent unmarriedchild/children below eighteen (18) years of age whether legitimate, illegitimate or adopted.

Processing Time. Substantive Proof Needed. Control Number for Each Application. Preventing Intercalations.Non-Application of Technical Rules of Evidence and Procedure. The Commissioner of Immigration shall, uponpayment of an application fee of P2,000.00, together with payment of legal research fee, BI clearance andExpress lane fee, receive and resolve completely-accomplished SVEG applications within fifteen (15) workingdays from the date of filing

- Approved by Bureau ofImmigration (BI) (www.immigration.gov.ph)- Issuance of Probationary Visa

BUREAU OF IMMIGRATION (BI)


20/22

THANK YOU


21/22

SVEG (continuation)

Section 2. To Whom Issued (A) Subject torestrictions imposed by the Constitutionandexistinglaws on control, nationalityand/orownershipofworking capital, a SVEG shall beissued toaforeignerorforeigners with interests inanentity, firm,

partnershipor corporation that establishes, expands orrehabilitates a business activity, investment, enterpriseorindustry forevery ten (10) full-time/regular Filipinoworkers whoareactually employed by such entity, firm, partnershiporcorporationonalong-term basis in the Philippines.

(B) Foreigners exercising managerialfunctions inanentity, firm, partnershiporcorporation, that has thepower to hire, dismissandpromoteemployees provided that they arenominatedand theirapplications forSVEG areendorsed by such entity, firm,partnershipor corporation subject to theemployment requirement inparagraph (A) hereof.

Section3. Viableand Sustainable Commercial Investment/Enterprise Viableand sustainable commercialinvestment, enterpriseorindustry shall meanany business activity, investment, enterpriseorindustry in the Philippines that a SVEG under these

rules shall beissued toany foreignerorgroupofforeigners inany business activity, investment, enterpriseorindustry inaccordancewith thelaws, rules andregulations of the Philippines that:

(a) Engages in the manufacturing, processing, assembly, production, packaging, supply, delivery and/or tradingofgoods,products and/orcommodities, eitherformass consumptionorforexport includingforeigninvestors in specialeconomiczones ownedand/oradministered by the Philippine Economic Zone Authority (PEZA);

(b) Requires orutilizes, onawide-market proportion, service-intensive support in information technology, systems researchanddevelopment, education, knowledgeand business process out-sourcing, production/services/innovationoff-shoringandcalland/or transactionprocessing;

(c) Provides, ona marketableandprofitabledegree, service-oriented support in modern, alternative, indigenous, physical,therapeutic, recuperativeand health-carefacilities; or

(d) Provides trainingforlong-term andfull-time/regularemployment ofFilipinoworkers ina business activity, investment,enterpriseorindustry covered by Section 2 of these Rules.


22/22

SVEG (continuation)

Section 4. Nature of Employment of Filipino Workers. Under these Rules, the employment of at least ten (10) long-term and full-time/regular Filipino

workers shall be for managerial, executive, professional, technical, skilled or unskilled positions in a business activity, investment, enterprise or industry in

the Philippines.

Section 5. Definition of Managerial Position. - A position is managerial if these characteristics concur:

(a) The worker manages the organization or a department of the organization;

(b) The worker supervises and controls the work of other supervisory, professional or managerial employees, or manages an essential function of the

organization;

(c) The worker has the authority to hire and/or fire those persons supervised, of if none are supervised, works at a senior level within the organization; and

(d) The worker has the authority to make decisions concerning the day-to-day operations of the portion of the organization over which he or she has

authority.

Section 6. Definition of Executive Position. - A position is executive if these characteristics concur:

(a) The worker directs the management of the organization or a major part of the organization;

(b) The worker sets the goals and policies of the organization or a part of the organization;

(c) The worker has extensive decision-making authority; and

(d) The worker receives only general supervision or direction from higher level executives, a board of directors, or the stockholders of the organization.

Section 7. Definitions of Professional, Technical, Skilled and Unskilled. The term professionals shall refer to employment requiring formalized,

extensive training or education in creative and intellectually challenging work that includes, but are not necessarily limited to, researchers, computer data

and systems technicians/designers/programmers/analysts, physical/occupational therapists, nurses, medico-health specialists, medical technologists,

radiologists and electronic/graphic/digital media specialists.

The term technical shall refer to employment that requires highly-specialized scientific, agro-industrial, chemical, mechanical, electric, electronic and

similar expertise.

The term skilled shall refer to employment that requires at least two years training or experience.

The term unskilled shall refer to employment that requires less than two years training or experience. However, this term excludes housekeepers and

household workers, including domestics, nannies, cooks, guards, caretakers and the like.

Section 12. Processing Time. Substantive Proof Needed. Control Number for Each Application. Preventing Intercalations. Non-Application of Technical

Rules of Evidence and Procedure. The Commissioner of Immigration shall, upon payment of an application fee of P2,000.00, together with payment of

legal research fee, BI clearance and Express lane fee, receive and resolve completely-accomplished SVEG applications within fifteen (15) working days

from the date of filing.

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