Question & AnswerQ&A (Republic Act No. 8756)
Republic Act No. 8756 provides for the terms, conditions, and licensing requirements of Regional or Area Headquarters (RHQ), Regional Operating Headquarters (ROHQ), and Regional Warehouses of multinational companies in the Philippines, amending certain provisions of Executive Order No. 226.
A Multinational Company is defined as a foreign company or a group of foreign companies with business establishments in two or more countries.
An RHQ is an office acting as an administrative branch of a multinational company engaged in international trade, serving as a supervision, communications, and coordination center for its subsidiaries, branches, or affiliates in the Asia-Pacific region and other foreign markets, and which does not derive income in the Philippines.
An ROHQ is a foreign business entity allowed to derive income in the Philippines by performing qualifying services to its affiliates, subsidiaries, or branches in the Philippines, Asia-Pacific region, and other foreign markets, unlike an RHQ which does not earn income in the Philippines.
The foreign entity must secure a license from the Securities and Exchange Commission (SEC) upon the favorable recommendation of the Board of Investments (BOI), provide certifications from the Philippine Consulate or equivalent foreign agency, board authorization, remit at least $50,000 annually into the Philippines, and comply with other conditions regarding activities and operations as specified by the law.
RHQs must not derive income from the Philippines, participate in the management of any Philippine subsidiary or branch, or solicit or market goods and services on behalf of the mother company or its affiliates.
ROHQs may engage in general administration and planning, business planning and coordination, sourcing/procurement, corporate finance advisory, marketing control, sales promotion, training, personnel management, logistics, research and development, technical support, data processing, communication, and business development for their affiliates.
RHQs not earning Philippine income are exempt from income tax and value-added tax (VAT); sales or leases to RHQs have zero percent VAT. ROHQs are subject to a 10% income tax and VAT, while income derived by ROHQs from Philippine sources remitted to the parent company is subject to branch profit remittance tax.
Foreign personnel of RHQs and ROHQs, their spouses, and unmarried children under 21 are issued a multiple entry special visa valid for 3 years, extendible for another 3 years, exempt from immigration fees, alien certificates of registration, and travel tax, subject to conditions such as minimum annual salary and tax compliance.
Violations can lead to cancellation of licenses or registration, forfeiture of goods, fines imposed by appropriate authorities, and other penalties under existing laws including those related to customs fraud.