Question & AnswerQ&A (Republic Act No. 11595)
The main purpose of Republic Act No. 11595 is to amend Republic Act No. 8762 (Retail Trade Liberalization Act of 2000) by lowering the required paid-up capital for foreign retail enterprises and to update provisions relating to foreign equity participation, labor policy, and other regulatory aspects of foreign retail trade in the Philippines.
The new minimum paid-up capital required for foreign retailers under RA 11595 is Twenty-five million pesos (P25,000,000.00).
Minimum investment per store includes the value of gross assets, tangible or intangible, such as buildings, leaseholds, furniture, equipment, inventory, and common-use investments like administrative offices and warehouses. It must be reflected in financial statements following accounting standards and pro-rated among the number of stores served. Paid-up capital can be used to purchase assets to comply with this investment requirement.
Foreign retailers must have a minimum paid-up capital of P25 million; their country of origin must not prohibit Filipino retailers' entry; and if operating more than one physical store, the minimum investment per store must be at least P10 million, unless previously exempted under the law.
Violations are punishable by imprisonment of four to six years and a fine of at least One million pesos but not more than Five million pesos. In corporations or partnerships, responsible officers are penalized. Foreign offenders may be deported; Filipino public officers face dismissal and permanent disqualification from public office.
The Securities and Exchange Commission (SEC) monitors and regulates foreign retail partnerships, associations, and corporations, while the Department of Trade and Industry (DTI) oversees foreign-owned single proprietorships engaged in retail trade.
The minimum paid-up capital requirement must be reviewed every three years by the DTI, SEC, and the National Economic and Development Authority (NEDA), with each agency reporting its recommendations to Congress.
Foreign retailers must comply with the Labor Code provisions requiring proof of the non-availability of competent, able, and willing Filipino citizens before hiring foreign nationals, promoting preferential use of Filipino labor as mandated by the Constitution.
Foreign retailers are encouraged to stock inventory of products made in the Philippines to promote local manufacturing under RA 11595.
Foreign retailers must submit a certification from the Bangko Sentral ng Pilipinas (BSP) verifying the inward remittance of their capital investment or provide other proof that their capital is deposited and maintained in a Philippine bank to the SEC or DTI during registration.