If I Dont Want to Continue My Business What Should I Do Philippines
What to Consider Before Doing Business in the Philippines
Business in the Philippines has remained strong and resilient over the years, making the country one of the fastest-growing economies in the ASEAN region. Despite the rise of the COVID-19 pandemic in 2020, several industries remained unaffected and continued to prosper into 2021.
Industries such as finance and insurance, public administration and defense, and agriculture are the top three industries that showed positive growth during the pandemic.
The Economic Performance of the Philippines
According to the Asian Development Bank report, the Philippines is predicted to gain a 6.5% GDP growth in 2021, leading in front of Vietnam (6.3%), Myanmar (6%), and Cambodia (5.9%). The Philippine government is determined to restore the country's economic performance in 2021 with measures such as the updated Philippine Development Plan (PDP) 2017-2022.
Additionally, the country currently ranks 95th on the Doing Business Report in 2020 , jumping from 124th place in the previous year.
According to the report, the Philippines has improved three areas in its business sector:
- Starting a Business
- Processing of Business Permits
- Protection of Minor Investors
This was made possible with the government's effort in revising the Corporation Code in February 2019, which highlights the introduction of a One Person Corporation and the elimination of the minimum capital requirement when starting a business. Streamlining the process of securing government business permits also enabled companies to establish much quicker in comparison to past years.
The Business Setting in the Philippines
As an entrepreneur, an investor, or a legal entity seeking to establish a business in the Philippines, it is imperative to know the best practices and government regulations of business setup in the country.
Recently, the government has been making efforts to make the country more attractive for foreign investors, with initiatives like Build-Operate-Transfer (BOT) investment scheme and the Revised Corporation Code, to make starting a business easier.
As a foreign investor, there are many reasons why starting a business in the Philippines is a wise choice. Among them are the following:
- Quality Manpower. The country's priority in education puts it at an advantage by having a high functional literacy rate of 91.6% . English is also taught in schools and is widely spoken throughout the country, eliminating the complication of language barriers.
- Developing Infrastructure. The Philippine economy is open to innovations and ideas by improving various areas for investors. The government's " Build, Build, Build " program aims to cover areas such as disaster mitigation, social and tourism, industry and trade, highways, and transportation to help drive its infrastructure to the future.
- Confidence of Filipino Consumers. Filipinos love to spend their money on new items such as clothing, vacations (local and international), investments, and more.
- Strategic Location. Being at the heart of Asia, it's located close to its major financial hubs like Hong Kong, Singapore, Taipei, Tokyo, Bangkok, etc.
Depending on the type of business you want to establish, it is best to have these factors in mind and use them to your advantage.
The Approval of the CREATE Bill
In November 2020, the proposed amendments from President Duterte's economic team regarding the former Corporate Tax and Incentives Reform Act (CITIRA) was approved by the Senate and the bill is now known as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. Once the bill is enacted into law, the corporate income tax (CIT) rate will be lowered to 25% from the current 30%.
Additionally, the bill also aims to support micro, small, and medium enterprises (MSMEs) by providing a tax cut from 30% to 20%. The bill states that domestic corporations with total assets of ₱5 million or less will enjoy an immediate 10% reduction of the CIT rate.
The bill addresses the current struggle of many foreign and local businesses in the Philippines due to the COVID-19 pandemic. At present, the bill has been approved by both the Senate and the Congress for signing during their bicameral conference committee meeting on January 31 this year.
Starting Your Business in the Philippines
The first step you have to do is identify the kind of business you will venture into and the business structure to go along with it. In the Philippines, there are three kinds of business structures that you can register your company under, namely, Sole Proprietorship , Partnership, and Corporation .
Before undergoing the business registration process, you have to make sure that your company's internal papers, such as Articles of Incorporation and by-laws, Treasurer's Affidavit, Contract of Lease, and other documents are prepared beforehand to avoid any delays. If you have documents signed abroad, you must have them apostilled, consularized, or authenticated ahead of time.
The Business Registration Process in the Philippines
The business registration process in the Philippines usually takes around six weeks to three months, depending on how long it will take the government to process your application. Here's a 5-step guide on how you can register your business:
- Register your business name with the Securities and Exchange Commission (SEC) personally through their office or register online through SEC's Company Registration System (CRS) page
- Prepare your documents for submission to SEC
- Secure the following from the Local Government Unit (LGU) of your business address:
- Barangay Clearance
- Mayor's Permit (or Business Permit)
- Process your corporate tax number with the Bureau of Internal Revenue
- Register as an employer with the following government agencies:
- Social Security System (SSS)
- Philippine Health Insurance Corporation (PhilHealth)
- Home Development Mutual Fund (Pag-IBIG Fund)
Business Digitization in the Philippines During the COVID-19 Pandemic
In March 2020, the national government placed the Philippines on lockdown to prevent the spread of COVID-19, forcing many businesses to adopt the work-from-home arrangement and shift to digitization to continue their operations.
The government strictly implemented health safety protocols for businesses nationwide along with the mandatory wearing of face shields and face masks for citizens who travel outside their homes. It also mandated local government units (LGUs) to impose local travel bans and curfew hours to further prevent the spread of COVID-19.
The Philippine government applied measures to secure "no-contact" transactions through delivery services, such as Grab and FoodPanda, following the examples of countries such as China and New Zealand.
Industries such as food, agriculture, banking, and IT-BPO, to name a few, have adopted the work-from-home arrangement and digitization on their operations.
Start Your Business in the Philippines in 2021
Doing business in the Philippines has improved over the years, with efforts from both public and private sectors to help ease the process of business registration and relax border restrictions to attract foreign investors through tax incentives and encourage local entrepreneurs through government grants and business loans.
Source: https://kittelsoncarpo.com/doing-business-in-the-philippines/
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