How to set up a retail company in the Philippines?

Launching a retail business in the Philippines can be exciting and lucrative. With its booming economy, consumer market, and strategic Southeast Asian location, the country offers many opportunities for entrepreneurs. However, setting up a retail company can be complex, involving legal requirements, market analysis, and strategic planning. In this article, we will discuss how to set up a retail company in the Philippines.

Legal requirements to start a business in the retail industry in the Philippines

Starting a retail business in the Philippines necessitates overcoming several legal requirements to secure national regulatory compliance. Here are the legal requirements to start a business in the retail industry in the Philippines:

1. BOC import-export license

You must obtain a Bureau of Customs (BOC) accreditation if your retail company in the Philippines involves importing or exporting products. This license is essential for ensuring that all your import and export activities are legally documented and comply with Philippine customs requirements.

2. Registration with the DTI

Enterprises selling particular products that require a secondary license must register with the Department of Trade and Industry (DTI). This stage ensures that your trading company in the Philippines is legally recognized and permitted to operate by applicable legislation.

3. Licenses by the FDA

The Food and Drug Administration (FDA) regulates several items for retail companies in the Philippines. If your retail stores intend to sell items in the following categories, you must obtain an FDA License to Operate (LTO) and a Certificate of Product Registration (CPR).

• Foods and beverages
• Cosmetics
• Pharmaceuticals and biological goods
• Medical equipment
• Pesticides
• Hazardous household products
• Emission of radiation from electronic products
• Products containing tobacco
• Vaping and e-cigarettes (as per FDA Circular No. 2021-016)
• Drugs, medical devices, and animal feeds (according to FDA Circular No. 2022-0591)

Registering a retail company in the Philippines

To ensure seamless business operations and compliance with local legislation, starting a trading company in the Philippines requires many crucial measures. Below are the four steps in registering a retail company in the Philippines:

Step 1: Acquire a registration certificate with the Securities and Exchange Commission (SEC)

Acquire a registration certificate from the SEC to prove your retail company in the Philippines is legally operating. This will enable your retail stores to receive specific rights under corporation law, issue receipts, and exchange financial assets. This certificate acts as a license validating the legal status of your company under Philippine laws.

Step 2: Register with the Local Government Unit (LGU)

Obtain a business permit or mayor’s permit from the local government unit (LGU) in charge of the region to guarantee that your retail stores in the Philippines comply with city guidelines. This permit is a local operational license, ensuring adherence to municipal regulations.

Step 3: Obtain a registration certificate with the Bureau of Internal Revenue (BIR)

Register with the BIR to obtain and preserve tax revenues, fees, and levies. Additionally, registration lets you control monetary policy, taxes, and finances. This certificate is a tax identification license essential for financial and operational transparency.

Step 4: Acquire a certificate of registration with social institutions

Before employing your first worker for your retail stores in the Philippines, register with PhilHealth for health insurance, SSS for social security benefits, and Pag-IBIG for home loans and financial assistance for affordable housing. These registrations act as licenses confirming your compliance with mandatory employee benefits.

How much does it cost to open a retail business?

Setting up a retail company in the Philippines requires understanding various financial requirements, which can differ based on ownership structure and location. Below are the costs and take to open a retail business:

• Businesses with a majority Filipino ownership: There is no minimum capital requirement for a 60% Filipino and 40% foreign-owned business.
• Foreign-owned wholesale business: The minimum capital for wholesale enterprises with 41%-100% foreign ownership is ₱ 12 million ($214,200).
• Foreign-owned retail business: Retail companies in the Philippines that are 41%-100% foreign-owned must have a minimum capital of ₱ 25 million ($446,250).

Open a retail company in the Philippines with Own Property Abroad

Open a retail company in the Philippines with the assistance of our expert legal team, who will guide you through the complex legal landscapes involved in establishing your business. We provide comprehensive services tailored to the specific needs of your company, analyzing the legal framework, ensuring regulatory compliance, and aligning your business objectives with legal requirements. Our professionals are adept in handling all aspects of business setup, from incorporation to managing operational legalities.

To find out how our legal experts can help you launch your company in the Philippines, please provide your details below or contact us at [email protected].

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