Are you wondering what is an ROHQ? Does your operations qualify to fall under this category? Learn more about how set up and register one with the BIR in this article. If you have any questions, you can also seek help from a firm focusing on tax services in Manila.
Defining the Parameters of an ROHQ
ROHQ or Regional Operating Headquarters is a kind of resident foreign corporation in the Philippines where legal entities of foreign corporations are brought into the country to offer services that are allowed by law to its branches, affiliates, or subsidiaries.
An ROHQ is not a separate legal entity from its parent company. This means that all of its liabilities will be incurred by the head office. It is similar to an RHQ or Regional Headquarters. It can only be set up by a foreign corporation with branches, subsidiaries, or affiliates around the world.
The qualifying services allowed by the law of the Philippines are as follows:
- Business development
- Data Processing & Communication
- Technical Support & Maintenance
- Research
- Development service
- Product Development
- Logistics
- Training & Personnel Development
- Marketing Control
- Sales Promotion
- Corporate Finance Advisory
- Sourcing & Procurement of Raw Materials and Components
- Business Planning & Coordination
- General Administrative & Planning
The Requirements Needed for Setup
According to tax and accounting services in the Philippines, there are several requirements needed to register an ROHQ. Only then can it be a legal entity that can conduct business in the country.
Official Business Address
You need to secure and show proof of your official business address before you start the registration process. To comply with this requirement, you need to show your lease contract to BIR or Bureau of Internal Revenue and LGUs or Local Government Units.
You can also opt to rent a virtual office as your business address for the meantime and transfer to a physical office after you have finished the registration.
Resident Agent
You need to appoint a resident agent who will be responsible for receiving the summons and legal proceedings served to or against the ROHQ. You can choose a person living here in the Philippines or any legal domestic corporation doing business in the Philippines, like a firm that does tax and audit services in Pasig.
Capital
To serve as capital and yearly support for the operating expenses of the ROHQ in the country, the parent company must deposit US$200,000 for initial inward remittance.
In some instances and under certain conditions, overhead expenses of the head office can be allocated to the ROHQ.
ROHQ Restrictions
ROHQs are not allowed to offer qualifying services to other entities aside from their parent company’s branches, affiliates, and subsidiaries. It is strictly prohibited to solicit or market goods and services on behalf of its parent company, affiliates, subsidiaries, or branches.
Corporate Taxes
ROHQs generate income and by nature, they are profit-oriented entities. ROHQs are subject to the following:
- 10% on Taxable Income
- 10% Value-added Tax
- 15% Branch Profit Remittance Tax on Income Remittances to Parent Company
There are some applicable laws where registered ROHQs with PEZA or Philippine Economic Zone Authority are exempted from paying tax on branch profit remittances.
Aside from real property tax on land improvements and equipment, ROHQs are exempted from all types of local taxes, charges, or fees imposed by the Local Government Units.
Incentives
ROHQs can avail of the following tax incentives:
- Importation of equipment and materials that are not locally available for training and conferences are tax and duty-free
- Disposed Equipment within 2 years after importation (subject to paying taxes and duties)
- Importing brand new motor vehicles (subject to paying taxes and duties)
For Foreign Individuals:
- 15% Preferential tax rate on salaries, annuities, and other kinds of applications for compensation for expatriates
- Exempted from Travel Tax
- Multiple Entry Visa
- Importation of used household goods and personal effects are tax and duty-free
Steps for Registration
The following documents are requirements you need to submit in order for you to establish an ROHQ in the Philippines.
- Application Form
- Name Verification Slip
- Certificate from the Philippine Embassy or Philippine Commercial Office or any equivalent office of the Philippine Department of Trade and Industry (DTI) in the country where the Parent Company is located to verify that the corporation is involved in international trade with branches, subsidiaries, or affiliates around the world.
- Certificate from the Principal Officer of the foreign corporation to verify that establishing an ROHQ in the Philippines was authorized
- Proof of the US$200,000 Inward Remittance
- If applicable, clearance or endorsement from appropriate government agencies
- Board of Investments Endorsement
- Latest Authenticated Financial Statements to show the head office’s financial solvency
It usually takes 6 to 10 weeks to register an ROHQ given that all required documents were submitted early and are not experiencing processing delays from the government. If you need assistance, get professional help from tax and audit services in the Philippines like our team. We offer free 30-minute consultations.
