Post-Registration Compliances in Philippines- An Overview
After the successful registration of a company in the Philippines, the newly incorporated entity has to confirm with certain basic post-registration compliances in Philippines. Additionally, the company has to fulfil certain licensing requirements with various government agencies. The major post-registration compliances in the Philippines include obtaining commencement-of-operations permits, employee welfare-related registrations, tax registrations etc.
Apart from these common registrations that are applicable across all sectors, there are certain additional registrations and compliance requirements that need to be undertaken in certain industries that are highly regulated by the government in the Philippines. The businesses operating under these regulated industries are subject to special licensing and registration requirements, with the appropriate government agencies having jurisdiction over such industries.
Enterslice offers advice and assistance in the preparation of a compliance calendar that records all the important steps and procedures to be met by your Filipino company to ensure that your company is always on the right side of the law.
Post-Registration Compliances in Philippines immediately after incorporation
Some of the major post-registration compliances in Philippines that are supposed to be met immediately after the incorporation of a limited company are as follows:
- Obtaining the Mayor’s or Business Permit
Every registered company in the Philippines has to secure a business permit in order to commence or continue its business operations in the Philippines. Following are the documents required by every company in the Philippines to obtain a business permit:
- Location Clearance
- SEC Registration, By-laws and Articles of Incorporation
- Barangay Clearance
- Lease Contract.
Location Clearance: to secure location clearance, every company has to provide the following documents:
- Lease contract
- Occupancy Permit (Building/Unit)
- Location Map
- SEC Registration Documents
- Barangay Clearance
- Business Permit Application Form
Barangay Clearance: As the name suggests, this clearance is obtained by the company from the respective Barangay where the company/business is located, seeking permission to carry out business in that Barangay. The fees for obtaining the barangay clearance depend on the company’s paid-up capital and additional amounts such as taxes, fees and other charges varying from Barangay to Barangay. The main document required for obtaining a barangay clearance is the notarized lease contract between the company and the lessor of its registered office.
- Registration with the Bureau of Internal Revenue (BIR)
After getting itself registered with the Securities and Exchange Commission (SEC), a Philippines registered company is supposed to get itself registered with the Bureau of Internal Revenue (BIR) to obtain its taxpayer identification number (TIN) for the registration of its books of accounts and apply for authority to print official receipts from the BIR, which is the national taxing authority in the Philippines.
- Registration of the company with the Social Security System (SSS)
All the companies registered in the Philippines are under an obligation to get themselves registered with the Social Security System (SSS) in order to obtain their employer number, which can be used as a reference for monthly contributions. In order to get registered with the SSS, the following documents are supposed to be submitted:
- Employer Report Form (R-1A)
- Employer Registration Form (R-1)
- SEC Registration, By-laws and Articles of Incorporation.
- Registration with the PhilHealth
PhilHealth is a medical health insurance program which is administered by the Philippine Health Insurance Corporation (PHIC). All the employers of a company are supposed to get their employees registered with this agency as per the New National Health Insurance Act. For the registration of a company with PhilHealth, the following documents are required by every company:
- SEC Registration, By-laws and Articles of Incorporation
- Employer Data Record (ER1)
- Report of Employee Members (ER2)
- Registration of the company with the Pag-IBIG
The Home Development Mutual Fund in the Philippines is commonly referred to as Pag-IBIG Fund, which is a Filipino government-owned and controlled corporation responsible for the administration of the national savings program and affordable shelter financing for Filipinos. This fund provides housing loans for all employees covered by the Social Security System (SSS). This fund also provides loans for other types of loans too. Every company, as an employer, needs to register itself with the Pag-IBIG fund.
Annual Post-Registration Compliances in Philippines for limited companies
To keep a Filipino company up and running, without inviting any trouble from the government authorities, it is always advised that companies comply with the laws and regulations of the land. Following are the annual compliances that every company needs to follow in the Philippines:
- Renewal of business permits
Unless a company has been exempted, all the companies in the Philippines are required to renew their business permits every year. It is imperative for a company to keep its business permits up to date in order to avoid penalties and possible closure of its business. Renewal of the business license allows smooth sailing of the business entity.
For the renewal of business permits in the Philippines, a company has to approach a number of government departments, such as the local government unit (LGU), City Hall and the BIR, where the business of the company is located.
The process of renewal of business permits for a Filipino company is as follows:
- Renewal of Barangay Permit
The first step in the renewal of the business permit is securing the renewal of the barangay permit from the Barangay where the business of the company is located. Without obtaining the barangay renewal certificate, a company cannot proceed towards obtaining the other certificates. Following are the requirements for obtaining the renewal of a barangay permit:
- Copies of the Renewal application form
- Original copy and photocopy of the last year’s Barangay Permit
- Original copy and photocopy of the last year’s Official Receipt
- Other requirements as mentioned in the Renewal Application Form
- Renewal of the Mayor’s Permit
After obtaining the Barangay permit, the next step is the renewal of the mayor’s permit from the business permit licensing office (BPLO) of the municipality where the company conducts its business. The time taken in the renewal of the mayor’s permit is 1-3 weeks. The major requirements for obtaining the Mayor’s permit are as follows:
- Original mayor’s permit of the last year
- New barangay Permit
- Original Official receipt from the last year
- Contract of lease of the last year
- Income statement of the company for the last year
- Community Tax Certificate (CTC/ Cedula)
- Local insurance (either from a private insurance company or from the City Hall)
- Renewal of BIR business registration
The last step in the renewal of business permits in the Philippines is the renewal of the BIR business registration certificate. This renewal allows the company to continue with the printing of official receipts, the payment of business-related taxes, giving TIN to the employees and registering the books of accounts. The main requirements for the renewal of BIR business registration are the BIR Payment Form 0605 and the Payment of a Registration fee of P500.
- Conducting Annual General Meeting of the shareholders
According to the provisions of the Revised Corporation Code, every company is supposed to conduct its annual shareholders’ meeting on the date mentioned in the by-laws of the company. Where the by-laws have not assigned a specific date for holding the annual general meeting, then the date shall be any date after 15th April of every year as determined by the Board of Directors of the company. For holding such a meeting, a written notice has to be sent to the company along with the Agenda at least 21 days prior to the regular meeting, and in the case of a special meeting, the prior notice should be given at least one week before the meeting.
- Submission of the Annual Returns of the company to the SEC
There are certain annual reportorial requirements that are supposed to be met by every company. These annual reporting requirements are as follows:
- Submission of Audited Financial Statements (AFS)
Companies that have an annual turnover of more than PhP 150,000 in gross revenue per quarter are supposed to get their accounts' financial statements audited. A copy of such audited financial statements shall be marked “received” by the BIR.
- Submission of the General Information Sheet (GIS)
Additionally, all the corporations and other business entities in the Philippines have to submit a General Information Sheet (GIS) to the SEC within a period of 30 days from the date of the annual meeting of the company.
- Submission of General Form Financial Statements (GFFS).
General Form Financial Statements (GFFS) or also known as Special Form Financial Statements (SFFS), have to be reported to the SEC in both hard copy and soft copy formats where the company earns more than Php 10 million per year.
- Submission of the Annual Returns of the company to the BIR
The maximum number of annual reporting requirements have to be made to the BIR on a monthly, quarterly and annual basis. The reporting requirements are as follows:
- Annual reporting
- Audited Financial Statements along with the Statement of Management Responsibility
- Annual Registration Fee
- Books of Accounts Registration
- Income Tax (IT) Returns
- Inventory lists
- Alphalist of Expanded Withholding Taxes
- Alphalist of Employees and Withholding Tax on Compensation
- Quarterly reporting
- Value Added Tax (VAT) Returns
- Income Tax (IT) Returns
- Summary List of Purchases
- Summary List of Sales
- Summary List of Importations
- Summary of Alphalist of Withholding Agents subjected to Tax Withheld at source (SAWT)
- Fringe Benefits Tax returns, if applicable
- Monthly reporting
- Withholding tax on Compensation Returns
- Expanded Withholding Tax Returns
- Monthly Alphalist of Payees (MAP)
- Summary of Alphalist of Withholding Agents subjected to Tax Withheld at source (SAWT), if applicable
- Final Tax Returns, if applicable
- Appointment of the Resident Agent
A company that is not incorporated under the law of the Philippines but still engages in business activities in the Philippines is required to appoint a person in the Philippines as the Resident Agent for the company. Such a Resident Agent shall reside in the Philippines. The role of the Resident Agent is to become an authorised person on behalf of the foreign company for correspondence purposes such as receiving legal notices.
Often, the responsibility of a Resident Agent is taken by a domestic corporation acting as a Resident Agent on behalf of a foreign company. For a domestic corporation to become a Resident Agent of a foreign entity, the domestic corporation has to demonstrate that it is of sound financial standing and must also show proof that it is in good standing as certified by the SEC.
- Filing of Annual Tax Returns
The law also makes it mandatory for the companies to file annual income tax returns not just for the companies but also for the branch offices, subsidiaries, partnerships and regional operating headquarters.
Further, in the case of regional headquarters and representative offices, annual income tax returns have to be filed. However, the income to be declared in such forms shall be 0. The Philippines has adopted the self-assessment tax system, and the accounting period comprises 12 months which normally ends on 31st of December. The Tax returns are supposed to be filed on the 15th day of the fourth month from the closing of the taxable year of the company. A company in the Philippines has the option of changing the accounting period of the company with the prior approval of the BIR.
- Appointment of Auditor
Those companies whose annual gross earnings exceed the threshold of PhP3 million are required to have their accounts audited, and they need to submit their audited financial statements along with an auditor’s report issued by an Independent Certified Public Accountant (CPA).
The auditor of the company is appointed by the Board of Directors of the company, and SEC has made it mandatory that the companies need to rotate their external auditors after every 5 years. Once the services of an auditor have been availed for a period of 5 years, then the audit services cannot be availed again from the same auditor.
- Appointment of Company Secretary
Companies that have been newly incorporated, whether foreign or local, are required to appoint a company secretary to ensure that the Board of Directors fulfils all its duties and obligations towards the company and the shareholders of the company. It is the responsibility of the Corporate Secretary of the company to execute all the resolutions, decisions and changes put forth by the board of directors.
It is mandatory for the corporate secretary to be both a citizen and a resident of the Philippines. As per the law, they are required to record the minutes of meetings and ensure that the actions of the board during such meetings are taken in good faith and according to the law. Nevertheless, they can also be granted other duties and responsibilities based on the by-laws of the company.