SETTING UP A BUSINESS IN ANGELES CITY
DOING BUSINESS - AC STYLE |
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| Staff your business |
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| Maintaining a Healthy Business |
- A business is only as good as the people who run it. If you want to run a business in the Philippines, it’s important to know the people who work with you and for you—the Filipino.
- It is always good practice to pay your taxes, bills, and any loans for your business on time. For more information on taxes you should pay for your business, scroll down to the next section: Some Important Business Taxes.
- Effective communication is necessary to make a business run as smoothly as possible. Some foreigners who maintain their businesses in the Philippines from their home countries hire domestic intermediary firms which shoulder some or even most of the owner’s mundane obligations to his/her business, and/or utilize targeted Internet-savvy software to facilitate communication, reinforce the chain of command, and promote an environment of transparent and trust-building work relationships between a long-distance employer and employees.
- One good way to build rapport with your Filipino business partners, employees, and clientele is to learn the local language. To help you get started, visit the AC Easy Language Handbook—Tourist Edition.
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| Some important business taxes |
(Information c/o BIR website)
Income Tax
A tax on all yearly profits arising from property, profession, trades or offices or as a tax on a person’s income, emoluments, profits and the like.
Sole Proprietorship
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For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession |
| Amount of Net Taxable Income |
Rate |
| Over |
But Not Over |
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P10,000 |
5% |
| P10,000 |
P30,000 |
P500 + 10% of the excess over P10,000 |
| P30,000 |
P70,000 |
P2,500 + 15% of the excess over P30,000 |
| P70,000 |
P140,000 |
P8,500 + 20% of the excess over P70,000 |
| P140,000 |
P250,000 |
P22,500 + 25% of the excess over P140,000 |
| P250,000 |
P500,000 |
P50,000 + 30% of the excess over P25,000 |
| P500,000 |
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P125,000 + 32% of the excess over P500,000 |
Corporation & Partnerships
TAX RATE = 30% of net taxable income from all sources
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| Some important points of Filipino culture |
POSITIVE POINTS |
NEGATIVE POINTS |
Filipinos are known for their easy charm and friendliness. |
Many, though not all, Filipinos lack rigid discipline as compared with, say, the Japanese or the Germans. |
They are also known for their creativity and natural aptitude in a variety of high skills and specializations. This has led to Filipinos being generally recognized in many industries (such as engineering, culinary, etc) for the superior quality of their work. |
The “Filipino time” is a rather politic phrasing of many Filipinos’ penchant for tardiness. This can be quite a deterrent in business dealings where time is of the essence. |
English is spoken and/or understood well by a great majority of Filipinos. This world language is practically adopted in all media and all legal and government documents. |
A “bad habit” that is, allegedly, intrinsic to Filipino culture is that Filipinos may view rules (anything from company policies to traffic laws) as “guidelines” rather than laws which should be strictly observed. This may be quite a deterrent to foreigners unprepared to deal with Filipinos and their culture, although some may find a number of ways to “get around” rather than break this bad habit. One way is to set bonuses for exceptional work and deductions for bad performance. |
Filipinos have a highly Westernized culture, which is reflected in their personal tastes in fashion, food, and other lifestyle activities. The influence of the USA on Philippine culture has extended far beyond the country’s history as an American colony. Even now, in all of Asia, Filipinos are the most eager to emulate the West, and particularly, the Americans. |
Filipinos uphold their personal loyalties above anything else (i.e. work, society). Chief of said loyalties is the loyalty to family and/or loved ones. A keen employer would be wise to gear policies and directives towards his/her employees’ personal interests, specifically, the well-being and happiness of their families. One may further appreciate Filipino culture by understanding the deep significance of national holidays, local fiestas, and other celebrations that are of personal interest to their employees. |
Business culture among Filipinos
- Transacting any type of business with Filipinos begins with appealing to them on a personal level.
- Among Filipinos, “kutob” (hunch) is a strong, if rather superstitious, element in dealing with people in any level, whether for personal or professional reasons.
- Having a Filipino intermediary in business dealings may ease your transactions, but ALWAYS REMEMBER TO KEEP YOURSELF IN THE LOOP.
- Filipinos are big on “body language” and are quite sensitive to the manner, tone, and volume of your speech. A look or a twitch of shoulder may signal a private meeting of minds in a business transaction, and all this may fly over your head if you don’t practice constant vigilance.
- That said, openness (e.g. a certain gregariousness) may ease the atmosphere in a conversation with Filipinos. Your Filipino partners will definitely appreciate light jokes. They can be quite empathetic to your mood and can easily use someone’s foul mood as an excuse to postpone “serious business.”
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| Pointers on Philippine Real Estate & Foreign Investment Laws |
BUYING PROPERTY IN THE PHILIPPINES (For Foreigners)
The ownership of property in the Philippines is restricted to natural-born Filipinos. There are other avenues, however, apart from simply owning land in the Philippines, such as the following:
* Applies to businesses NOT under Negative List A and List B of RA 8179.
- SRRV – Special Resident Retiree Visa
Under this special visa, foreign nationals can own 100% of a condominium unit or townhouse in the Philippines, but NOT more than 40% of the entire condominium project.
For more information, visit the PRA page.
As was explained earlier, a domestic corporation may own property in the Philippines. This extends to corporations with 40% foreign equity. This is another alternative to owning land in the Philippines, too, especially if you are a foreign investor interested in embarking in real estate in the Philippines.
SOME FACTS FOR THE EAGER INVESTOR…
It is advisable to review the following legislation regarding foreign
investments in the Philippines:
- Foreign Investments Act of 1991 (RA 7042)
Note: Setting up a domestic corporation in the Philippines is one way foreign nationals can “own” land in the country. Although foreign ownership is restricted to 40% of the corporation, the corporation itself, being a local entity, can own 100% of property on Philippine soil.
- Negative List A & List B (RA 8179 Amendment)
Below is an excerpt from Negative List B, emphasizing the particular legislation which supersedes privileges given to businesses which fall under the IPP:
FOREIGN OWNERSHIP IS LIMITED
FOR REASONS OF SECURITY, DEFENSE, RISK TO HEALTH AND MORALS
AND PROTECTION OF SMALL AND MEDIUM-SCALE ENTERPRISES
Up to Forty Percent (40%) Foreign Equity
Excerpt:
4. Sauna and steam bathhouses, massage clinics and other like activities regulated by law because of risks posed to public health and morals (R.A. 7042 as amended by R.A. 8179)
5. All forms of gambling, e.g. race track operation (R.A. 7042 as amended by R.A. 8179)
6. Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000 (R.A. 7042 as amended by R.A. 8179)
7. Domestic market enterprises which involve advanced technology or employ at least fifty (50) direct employees with paid-in-equity capital of less than the equivalent of US$100,000 (R.A. 7042 as amended by R.A. 8179)
- Deed of Assignment
This is an important document that will safeguard a foreign national’s investments in the Philippines under a domestic corporation.
As defined by the SEC, a deed of assignment may be used to apply for an Increase of Foreign Equity (for corporations qualified to register under the Foreign Investment Act, in which Filipino stockholdings (a total of 60% of the capital) shall be assigned to non-Philippine nationals.
This document, however, can also be used by foreign nationals with domestic corporations in the Philippines who wish to take a more proactive control of the corporation’s business endeavors. Through this document, majority stakeholders of the company may even bestow complete authority over the business activities of the corporation to a minority stakeholder.
View a sample of a Deed of Assignment.
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| Tax incentives and Investor perks |
BOI TAX INCENTIVES
A business registered with the BOI (Board of Investments) can apply for eligibility for an Income Tax Holiday (e.g. tax exemption for 3-8 years), provided that the business falls under the IPP (Investment Priorities Plan).
TOURISM TAX INCENTIVES (under SIRV as granted by BOI)
Tourism represents the biggest industry in Angeles City, with the proximity of the Diosdado Macapagal International Airport and Clark Freeport Zone continually raising the stakes for the city’s booming tourism and entertainment district.
The Philippine government grants numerous tax exemptions for business which fall under its IPP, among which are businesses in line with tourism, such as tourist accommodation facilities, resorts, retirement villages, and medical tourism (healthcare and wellness products and services).
For more information, read the Tourism Investment Laws and Incentives.
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| Putting up a Building in Angeles City |
(This applies to New Constructions)
For foreign nationals who wish to put up a new building (anything from a deli shop to a high-rise condominium), you’d have to secure the following before venturing into any construction project:
- Philippine visa
- Alien Registration Certificate i-Card
- Driver’s License (thru LTO) and/or Postal ID (thru Philpost)
- Peso or USD account at a local bank
- Barangay Clearance (for residency)
- Community Tax Certificate (CTC)
Refer to the Essential Requirements section for going into business for details on each required identification.
The following are Initial Requirements prior to any construction project:
- Contract of Lease
- Make sure that the plot you are leasing is not illegal.
- Detailed building plan, with:
- Structural plan
- Architectural plan
- Plumbing plan
- Electrical plan
- Sanitary plan
- Barangay Clearance (for new construction) **
- Height Clearance – Air Transportation Office (ATO) * **
- Environmental Compliance Certificate (ECC) – thru DENR * **
For inquiries, contact:
PENRO (Pampanga) – Tel. no. (045) 455-0236
CENRO (Pampanga) – Tel. no. (045) 961-1853
* ECC and Height Clearance are not required for 4-storey (and below) structures
** ECC, Height Clearance, Barangay Clearance are not required for 2-storey (and below) structures
Once you have obtained all the initial requirements, you can now apply for a Building Permit. These are the necessary documents that you should have when filing your application:
- Soil Test Analysis – thru Bureau of Soil and Water Management (BSWM) **
- Detailed building plan signed by diff. registered engineers:
- Structural plan
- Architectural plan
- Plumbing plan
- Electrical plan
- Sanitary plan
** STA is not required for 2-storey (and below) structure
With these necessary documents, you can proceed to City Hall for payment of fees. Upon evaluation, City Hall shall issue you a building permit.
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| Starting up a Bar / Restaurant / Café |
This site gives a decent rundown of the basics of putting up a bar:
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| Career Expos and Exhibits |
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