Republic of the Philippines
Congress of the Philippines
Metro ManilaEleventh Congress
Republic Act No. 8756 November 23, 1999
AN ACT PROVIDING FOR THE TERMS, CONDITIONS AND LICENSING REQUIREMENTS OF REGIONAL OR AREA HEADQUARTERS, REGIONAL OPERATING HEADQUARTERS, AND REGIONAL WAREHOUSES OF MULTINATIONAL COMPANIES, AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF EXECUTIVE ORDER NO. 226, OTHERWISE KNOWN AS THE OMNIBUS INVESTMENTS CODE OF 1987
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
Section 1. The title of Book III of Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, is hereby amended as follows:
"BOOK III
"INCENTIVES TO MULTINATIONAL COMPANIES ESTABLISHING REGIONAL OR AREA HEADQUARTERS AND REGIONAL OPERATING HEADQUARTERS IN THE PHILIPPINES"
Section 2. Definition of Terms. - For purposes of this Act, the term:
(1) Multinational Company shall mean a foreign company or a group of foreign companies with business establishments in two or more countries;
(2) Regional or Area Headquarters (RHQ) shall mean an office whose purpose is to act...
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Republic Acts
AN ACT PROVIDING FOR THE TERMS
Republic Act No. 8756
Summary of Republic Act No. 8756
Definitions (Section 2):
- Multinational Company: A foreign company or group with business establishments in two or more countries.
- Regional or Area Headquarters (RHQ): An office that acts as an administrative branch of a multinational company engaged in international trade, serving as a supervision, communications, and coordination center for its subsidiaries, branches, or affiliates in the Asia-Pacific Region and other foreign markets, and does not earn or derive income in the Philippines.
- Regional Operating Headquarters (ROHQ): A foreign business entity allowed to derive income in the Philippines by performing qualifying services to its affiliates, subsidiaries, or branches in the Philippines, the Asia-Pacific Region, and other foreign markets.
Licensing Requirements for RHQs (Section 3):
- Foreign entities engaged in international trade with affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets may establish an RHQ in the Philippines by securing a license from the Securities and Exchange Commission (SEC) upon the favorable recommendation of the Board of Investments (BOI).
- Minimum requirements include:
- Certification from the Philippine Consulate/Embassy or Department of Trade and Industry that the foreign firm is engaged in international trade with affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets (Section 3(a)).
- Certification from the principal officer of the foreign entity that the RHQ will act as a supervisory, communications, and coordinating center, will not derive income from sources within the Philippines, and will not participate in the management of any subsidiary or branch in the Philippines (Section 3(b)).
- Undertaking to remit at least $50,000 or its equivalent annually to cover operations in the Philippines (Section 3(c)).
Licensing Requirements for ROHQs (Section 4):
- Foreign business entities may establish an ROHQ in the Philippines to service their affiliates, subsidiaries, or branches in the Philippines, the Asia-Pacific Region, and other foreign markets by securing a license from the SEC and the Bangko Sentral ng Pilipinas (BSP) upon the favorable recommendation of the BOI.
- Minimum requirements include:
- Certification from the Philippine Consulate/Embassy or Department of Trade and Industry that the foreign firm is engaged in international trade with affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets (Section 4(a)).
- Certification from the principal officer of the foreign entity that the ROHQ is authorized to engage in qualifying services, including general administration, business planning, sourcing, corporate finance advisory, marketing, training, logistics, research and development, technical support, data processing, and business development (Section 4(b)(1)).
- Undertaking to initially remit at least $200,000 or its equivalent to cover operations in the Philippines (Section 4(c)).
Incentives for Expatriates (Section 5):
- Foreign personnel of RHQs and ROHQs, their spouses, and unmarried children under 21 shall be issued a multiple entry special visa valid for 3 years, renewable for 3 years, and exempt from various fees and clearances, provided the personnel receives a salary of at least $12,000 per annum (Article 60).
- Aliens employed by RHQs and ROHQs shall be subject to a 15% tax on their gross income, with the same tax treatment for Filipinos occupying the same positions (Article 61).
- Alien executives shall enjoy tax and duty-free importation of personal and household effects (Article 62).
- Personnel and dependents shall be exempted from travel tax (Article 63).
Incentives for RHQs and ROHQs (Section 6):
- RHQs that do not earn or derive income from the Philippines shall not be subject to income tax (Article 64).
- ROHQs shall be subject to a 10% tax rate on their taxable income, and any income derived from Philippine sources and remitted to the parent company shall be subject to the tax on branch profit remittances (Article 64).
- RHQs shall be exempted from value-added tax (VAT), and the sale or lease of goods and services to RHQs shall be subject to 0% VAT (Article 65).
- ROHQs shall be subject to 10% VAT (Article 65).
- RHQs and ROHQs shall be exempt from all kinds of local taxes, fees, or charges except real property tax (Article 66).
- RHQs and ROHQs shall enjoy tax and duty-free importation of equipment and materials for training and conferences, subject to prior approval of the BOI (Article 67).
- RHQs and ROHQs shall be entitled to the importation of new motor vehicles, subject to the payment of corresponding taxes and duties (Article 67).
Regional Warehouses (Section 7):
- Multinational companies engaged in international trade and supplying spare parts, components, semi-finished products, and raw materials to distributors or markets in the Asia-Pacific area and other foreign areas may establish regional warehouses in ecozones in the Philippines after securing a license from the Philippine Economic Zone Authority (PEZA) or concerned ecozone authorities (Article 68).
- Activities of regional warehouses shall be limited to serving as a supply depot for storage, deposit, safekeeping, packing, covering, labeling, and altering to customer's specifications of spare parts, components, semi-finished products, and raw materials (Article 68(1)).
- Regional warehouses shall not directly engage in trade, solicit business, or promote sales in the Philippines, except for withdrawals for delivery to an authorized distributor in the Philippines, subject to payment of corresponding taxes, customs duties, and charges (Article 68(1)).
- Imported articles in regional warehouses destined for re-exportation to the Asia-Pacific and other foreign markets shall not be subject to customs duty, internal revenue tax, export tax, or local taxes (Article 69(a)).
- Imported articles sent, delivered, released, or taken from regional warehouses to the local market shall be subject to payment of income taxes, customs duties, taxes, and other charges (Article 69(b)).
- Articles may remain in regional warehouses for 2 years, extendable for 1 year upon payment of storage fees (Article 70).
- The BOI, PEZA, concerned ecozone authorities, and the Bureau of Customs shall issue rules and regulations on the jurisdiction, operation, and control over qualified goods in regional warehouses (Article 71).
- Willful violation of the provisions of the law or implementing guidelines by RHQs, ROHQs, or regional warehouses shall constitute sufficient cause for cancellation of their license or registration (Article 72).
Implementing Rules and Regulations (Section 9):
- The Department of Trade and Industry, in coordination with other relevant agencies, shall jointly promulgate the implementing rules and regulations for Books III and IV of the Code, which shall take effect 30 days after publication in at least two national newspapers of general circulation in the Philippines.
Definitions (Section 2):
- Multinational Company: A foreign company or group with business establishments in two or more countries.
- Regional or Area Headquarters (RHQ): An office that acts as an administrative branch of a multinational company engaged in international trade, serving as a supervision, communications, and coordination center for its subsidiaries, branches, or affiliates in the Asia-Pacific Region and other foreign markets, and does not earn or derive income in the Philippines.
- Regional Operating Headquarters (ROHQ): A foreign business entity allowed to derive income in the Philippines by performing qualifying services to its affiliates, subsidiaries, or branches in the Philippines, the Asia-Pacific Region, and other foreign markets.
Licensing Requirements for RHQs (Section 3):
- Foreign entities engaged in international trade with affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets may establish an RHQ in the Philippines by securing a license from the Securities and Exchange Commission (SEC) upon the favorable recommendation of the Board of Investments (BOI).
- Minimum requirements include:
- Certification from the Philippine Consulate/Embassy or Department of Trade and Industry that the foreign firm is engaged in international trade with affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets (Section 3(a)).
- Certification from the principal officer of the foreign entity that the RHQ will act as a supervisory, communications, and coordinating center, will not derive income from sources within the Philippines, and will not participate in the management of any subsidiary or branch in the Philippines (Section 3(b)).
- Undertaking to remit at least $50,000 or its equivalent annually to cover operations in the Philippines (Section 3(c)).
Licensing Requirements for ROHQs (Section 4):
- Foreign business entities may establish an ROHQ in the Philippines to service their affiliates, subsidiaries, or branches in the Philippines, the Asia-Pacific Region, and other foreign markets by securing a license from the SEC and the Bangko Sentral ng Pilipinas (BSP) upon the favorable recommendation of the BOI.
- Minimum requirements include:
- Certification from the Philippine Consulate/Embassy or Department of Trade and Industry that the foreign firm is engaged in international trade with affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets (Section 4(a)).
- Certification from the principal officer of the foreign entity that the ROHQ is authorized to engage in qualifying services, including general administration, business planning, sourcing, corporate finance advisory, marketing, training, logistics, research and development, technical support, data processing, and business development (Section 4(b)(1)).
- Undertaking to initially remit at least $200,000 or its equivalent to cover operations in the Philippines (Section 4(c)).
Incentives for Expatriates (Section 5):
- Foreign personnel of RHQs and ROHQs, their spouses, and unmarried children under 21 shall be issued a multiple entry special visa valid for 3 years, renewable for 3 years, and exempt from various fees and clearances, provided the personnel receives a salary of at least $12,000 per annum (Article 60).
- Aliens employed by RHQs and ROHQs shall be subject to a 15% tax on their gross income, with the same tax treatment for Filipinos occupying the same positions (Article 61).
- Alien executives shall enjoy tax and duty-free importation of personal and household effects (Article 62).
- Personnel and dependents shall be exempted from travel tax (Article 63).
Incentives for RHQs and ROHQs (Section 6):
- RHQs that do not earn or derive income from the Philippines shall not be subject to income tax (Article 64).
- ROHQs shall be subject to a 10% tax rate on their taxable income, and any income derived from Philippine sources and remitted to the parent company shall be subject to the tax on branch profit remittances (Article 64).
- RHQs shall be exempted from value-added tax (VAT), and the sale or lease of goods and services to RHQs shall be subject to 0% VAT (Article 65).
- ROHQs shall be subject to 10% VAT (Article 65).
- RHQs and ROHQs shall be exempt from all kinds of local taxes, fees, or charges except real property tax (Article 66).
- RHQs and ROHQs shall enjoy tax and duty-free importation of equipment and materials for training and conferences, subject to prior approval of the BOI (Article 67).
- RHQs and ROHQs shall be entitled to the importation of new motor vehicles, subject to the payment of corresponding taxes and duties (Article 67).
Regional Warehouses (Section 7):
- Multinational companies engaged in international trade and supplying spare parts, components, semi-finished products, and raw materials to distributors or markets in the Asia-Pacific area and other foreign areas may establish regional warehouses in ecozones in the Philippines after securing a license from the Philippine Economic Zone Authority (PEZA) or concerned ecozone authorities (Article 68).
- Activities of regional warehouses shall be limited to serving as a supply depot for storage, deposit, safekeeping, packing, covering, labeling, and altering to customer's specifications of spare parts, components, semi-finished products, and raw materials (Article 68(1)).
- Regional warehouses shall not directly engage in trade, solicit business, or promote sales in the Philippines, except for withdrawals for delivery to an authorized distributor in the Philippines, subject to payment of corresponding taxes, customs duties, and charges (Article 68(1)).
- Imported articles in regional warehouses destined for re-exportation to the Asia-Pacific and other foreign markets shall not be subject to customs duty, internal revenue tax, export tax, or local taxes (Article 69(a)).
- Imported articles sent, delivered, released, or taken from regional warehouses to the local market shall be subject to payment of income taxes, customs duties, taxes, and other charges (Article 69(b)).
- Articles may remain in regional warehouses for 2 years, extendable for 1 year upon payment of storage fees (Article 70).
- The BOI, PEZA, concerned ecozone authorities, and the Bureau of Customs shall issue rules and regulations on the jurisdiction, operation, and control over qualified goods in regional warehouses (Article 71).
- Willful violation of the provisions of the law or implementing guidelines by RHQs, ROHQs, or regional warehouses shall constitute sufficient cause for cancellation of their license or registration (Article 72).
Implementing Rules and Regulations (Section 9):
- The Department of Trade and Industry, in coordination with other relevant agencies, shall jointly promulgate the implementing rules and regulations for Books III and IV of the Code, which shall take effect 30 days after publication in at least two national newspapers of general circulation in the Philippines.