Company Structuring
When You Need a Company.
What Kind. How to Do It Properly.
First Question: Do You Actually Need a Company?
If you live entirely on passive income — dividends, capital gains, interest, rent, crypto from foreign exchanges — you may not need an operating company at all. These income streams are fully exempt for a Resident Alien in the Philippines.
A holding structure (a US LLC, for example) may still be useful for asset management, banking purposes, or estate planning. But it is not required simply because you have moved here.
A company becomes necessary the moment you are actively billing clients — as a consultant, developer, designer, agency, or any other active service provider.
Offshore Company with Foreign Management
For those working entirely with foreign clients, a company incorporated outside the Philippines — managed genuinely from outside — is often the cleanest solution.
Common jurisdictions: Hong Kong, British Virgin Islands, Cayman Islands, Malta, US (Delaware or Wyoming LLC).
The critical principle: If you are physically present in the Philippines and operationally active, you should not serve as the primary director yourself. Doing so creates a risk of a Philippine Permanent Establishment — meaning the company could be deemed tax-resident in the Philippines and its profits subject to local tax.
The correct structure is to appoint a genuine director based outside the Philippines, who receives a real salary and exercises real decision-making authority. You receive a modest salary or consulting fee locally, which you declare and pay Philippine tax on.
If you can credibly demonstrate — with supporting documentation — that you spend most of your time outside the Philippines and exercise management functions while abroad, you may serve as director yourself. But this requires genuine evidence, not a paper arrangement.
Result: Company profits accumulate offshore, outside Philippine tax jurisdiction. Local tax burden: minimal.
Philippine Company in a Special Economic Zone
For those with a permanent Davao presence and 100% foreign client base — IT, software, design, consulting — incorporating within a PEZA-registered area or Special Economic Zone offers significant advantages:
- ✓Income tax holiday of 4–7 years depending on the zone
- ✓Subsequent reduced corporate tax of 0–5%
- ✓Full legal right to work in the Philippines
- ✓Profits can be distributed to a foreign holding company at reduced or zero withholding rates
This structure suits those who want to be fully present, operate visibly, perhaps hire locally, and still minimise tax. It is more complex than an offshore structure and requires proper local legal advice — which we coordinate.
We Do Not Do Letterbox Companies.
We do not help set up nominee director arrangements designed to deceive, shell companies with no real substance, or structures whose entire purpose is to create the appearance of activity without the reality.
Not because it is illegal everywhere — but because it does not hold up. Tax authorities have seen every version of it. Banks reject it. And when it fails, the consequences fall on the client.
If you want genuine structure with genuine substance, we can help build it.
Important: This information is general in nature and does not constitute legal or tax advice. Company structuring decisions depend heavily on your home country's exit tax rules, CFC legislation, and personal circumstances. Engage qualified legal and tax professionals for advice specific to your situation.
Structure Without Execution Is Just Theory
Setting up a company in a foreign jurisdiction, opening the associated bank account, and maintaining compliance requirements is where most offshore arrangements fall apart. The structure is correct on paper. The execution is incomplete. Our team coordinates the full process — jurisdiction selection, incorporation, account opening, and ongoing compliance. We work alongside your existing advisers.