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 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.
Route 3: No Company at All, but the Employer of Record
The special case many people miss: if your real goal isn't a company but clean status with work authorization, you may not need your own structure. You need a borrowed one. With the 9G via Employer of Record, a substantive Philippine company becomes your formal employer; you keep working for your international clients unchanged, draw a modest, correctly taxed local salary, and hold the tidiest file a foreigner can present. For solo professionals whose primary need is banking legibility, renting beats building surprisingly often. The full trade-off lives on the 9G page.
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.
Frequently Asked Questions
I live entirely on dividends and crypto: Do I need a company?
No. Passive foreign income is tax-exempt for resident aliens, no company required. A holding can make sense for banking or estate purposes, but it's optional, not obligatory.
Can I just keep running my home-country company from Davao?
Careful, twice over: de facto management from the Philippines can shift the company's tax position, and your shares can raise exit-tax questions at your departure, depending on your home country's rules. Both belong structured before you leave, not discovered after.
Which offshore jurisdiction is best?
The one that fits your business model, banking needs and client base: US LLC, Hong Kong, Malta and co. each have distinct profiles. Forum-grade blanket answers are reliably wrong here; selection is part of the structure concept.
What does a PEZA/Freezone setup cost versus offshore?
The zone is heavier: local incorporation, registration, ongoing local compliance, in exchange for the multi-year tax holiday, then 5% corporate tax, with full work authorization included. Offshore is leaner but demands genuine foreign management. We run both variants with your numbers.
Do you work with my existing tax adviser?
Emphatically yes. The usual division: your adviser keeps the home-country filings, we supply the structure and Philippine expertise, and we talk to each other rather than about each other.
How long does incorporation realistically take?
Offshore jurisdictions like a US LLC or Hong Kong: weeks, with the bank account often the longest part. The zone company: months, since registration and zone accreditation come on top. Either way, the structural decision and your home-country exit come first. Incorporation itself is the fastest part of the project.
What happens to my structure if I leave the Philippines again?
Good structures travel: the offshore company moves with you (residence and management questions get re-answered at the new location), while the zone company is place-bound and would be sold or wound down. That, too, belongs in the initial decision: keep your horizon open, lean offshore.
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.
Related reading
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.