Question & AnswerQ&A (IRR OF Republic Act No. 11647)
Doing business includes soliciting orders, service contracts, opening offices or branches, appointing representatives or distributors under full control of the foreign corporation, participating in management of any domestic business, and acts implying continuity of commercial dealings for profit. Certain acts like mere investment as a shareholder, having nominee directors, publication of advertisements, or consignment for export processing are not considered doing business.
The IIPCC is composed of the Secretary of the Department of Trade and Industry as Chairperson, Secretary or Undersecretary of the Department of Finance as Vice-chairperson, BOI Managing Head, DTI-PEZA Director-General, Undersecretary of DFA for Multicultural Affairs and International Economic Relations, Secretary of Socioeconomic Planning of NEDA, Secretary of DICT, Chairperson of CHED, Director-General of TESDA, and four private sector representatives from National Capital Region, Luzon, Visayas, and Mindanao.
They must have known competence, probity, integrity, and expertise in investment, advertising, banking, finance, management, or law, with at least 10 years of outstanding leadership experience. They are recommended by leading industry or business chambers and appointed by the President for a term of three years, subject to reappointment.
The FINL is a list of economic activities where foreign ownership is limited to a maximum of 40% of the equity capital, including two components: List A (areas reserved by the Constitution and laws) and List B (areas restricted for reasons such as defense, public morals, or micro and small enterprises under certain conditions).
Foreign equity participation in domestic market enterprises is allowed up to 100% unless limited by the Constitution, laws, or the FINL. Foreign investments in export enterprises are allowed up to 100% provided that the exported products or services do not fall within Lists A and B of the FINL.
The IIPCC Technical Committee, chaired by the Department of Finance with NSC as Co-chair, undertakes risk-assessment studies of strategic industries and geographical areas critical to national security, conducts initial and comprehensive national security reviews upon orders, and submits recommendations to the IIPCC.
Penalties include written warnings for first violation, fines escalating from PHP1,000 to PHP5,000 for late submissions, fines up to half of 1% of total paid-up equity capital for fraudulent reports, and cancellation of registration for repeated offenses or non-submission within 12 months after the taxable year.
Reviews are conducted upon presidential order when the investment is made by a foreign government-controlled entity (excluding independent pension funds, sovereign wealth funds, and multinational banks) or when the investment is located in geographical areas critical to national security.
They have investment rights similar to Philippine citizens in cooperatives, rural banks, thrift banks, private development banks, financing companies, and List B activities including defense-related ones if authorized by the Secretary of National Defense. They may also acquire private land for business purposes within specified limits.
Applications are filed with SEC for corporations and partnerships or with DTI for sole proprietors. The SEC or DTI has 7 working days to decide on domestic entities and 20 working days for foreign corporations. Applications not acted upon within these periods without fault of the applicant are deemed approved automatically.