New Law Allows Foreign Entry Into Retail Trade for 500k USD
The last month of 2021 gave foreign retailers interested in doing business in the Philippines plenty to rejoice for. Last December 10, 2021, President Rodrigo Duterte passed into law Republic Act No. 11595: An Act amending Republic Act No. 8762 or the Retail Trade Liberalization Act of 2000 (RTLA.)
In the last twenty years since the Retail Trade Liberalization Act of 2000 was signed into law by former President Joseph Estrada, only 22 foreign retailers have qualified within the stringent requirements of the Department of Trade and Industry. The recent amendment is poised to open the country further by reducing the paid-up capital requirement for foreign retail enterprises.
The new law allows foreign retailers to operate in the country given the following stipulations:
- The retailer invests a minimum paid-up capital of PHP 25 million or USD 500,000
Before the amendment, the law required a minimum paid-up capital of 2.5 million or PHP119.67 million. Aside from the lowering of the minimum capital, the law also removes pre-qualification categories. These requirements include:
- A USD 200 million minimum net worth
- At least five retailing branches or franchises around the world; unless the retailer has one store capitalized at least USD 25 million
- Five-year track record in retailing
- The investor’s country of origin allows entry of Filipino citizens
- In case the investor operates more than one store, the new law requires a minimum investment of PHP 10 million per store “provided that this requirement shall not apply to foreign investors and foreign retailers who are legitimately engaged in retail trade and were not required to comply with the minimum investment per store at the time of the effectivity of this Act.”
This minimum store investment requirement pertains to all tangible and intangible assets including but aren’t limited to infrastructure, furniture, and equipment, product inventory, various facilities like warehouses, offices, and other storage spaces.
Aside from the lighter requirements, the amendment has also reduced RTLA violation penalties. Prison sentences were reduced from 6 – 8 years to 4 – 6 years. Likewise, fines were lowered from PHP 1 million to PHP 20 million to PHP 1 million to PHP 5 million.
You can read the Republic Act No. 11595: An Act amending Republic Act No. 8762 or the Retail Trade Liberalization Act of 2000 (RTLA) in its entirety here.
Registering a Foreign Corporation in the Philippines
The process of registering a foreign business in the Philippines can be daunting. There are several ways you can establish a presence in the country depending on your scale and industry. Each of your options carry a host of advantages and disadvantages. The decision can influence your company’s success, locally.
If you are a foreign business owner who’s looking to put up a business presence here in the Philippines, we can help you register as a domestic corporation, or a resident foreign corporation via a Branch Office, Representative Office, RHQ, or ROHQ. Through our team of corporate lawyers, accounting experts, and business consultants who have years of experience and expertise, we can ease you of the burdens of the process.
Lessen the hassle and ask about our Foreign Corporation Business Registration services here at Loft!