Offshore Shell company in philippine feasible?

[facelessvoid]

Hi gents

I been reading off the internet and doing a bit of research and here is what I have gathered

- lots of red tape in PH in corporation setup
- you can have 100% foreign ownership of a domestic corp but you need to have majority sharehold be PH residents
- you need an office
- you need to be one of the few selected sector in order to have 100% ownership(BPO, export etc)

My requirments are
- low overhead/maintaince(i can file taxes or hire an accountant to do the work in ph)
- low initiatl investment( i know some type of corp requires 100k-200k USD upfront investment)
- 100% ownership(it appears that you simply cant have a corp that dont have PH resident shareholder)

I am in IT primarily

my plan here is to just have a offshore shell company in the PH with low maintain/overhead, except for early costs(taxation and the legal filing and such), then "write-off" expenses from my company(canada) here to PH corporation. the funds in PH will be held in a wise corporate account. then moved to an investment account else where.

the reason is that canada taxes passive income corporation at a wooping 40% and interest/gic at 50%. So if you had a million bucks in the bank, and wanted live off interest/investment. you lose about half.

I have a few questions I hope someone has experience in this field/exp and help me navigate
1. most of the online discussion mention that opening/OPERATING a business is a pain in the a*s, but I just want my corporation to be a shell corp to hold funds so i can do investments on..(i am okay paying taxes in PH, but i would prefer not to). How simple/feasible would this be if i just hired a firm to do this for me?
2. if i did get a firm, would their internal folks be my PH majority shareholders here? I know the law there can be a bit iffy. Since they will have majority shareholder, how fucked can i get?(theoretically, they can secure loans, or have liablities right? whats the best way i can protect myself here?)
3. what are my risks if i bought an existing shell corp?what are the things that I would need to watch out for

Thanks for any insight and advice!

 

[bibing]

Why Philippines?

 

[facelessvoid]

mostly odec agreements and lack of tax treaty. but also money not made in the philippines are not taxed(as far as i know) which makes investment returns favable(living off interests or dividends from trade accounts). I do also like the place, been there a few times

 

[bibing]

I understand you like Philippines, I do too, But I would consider another country. It's true, foreigners living in Philippines are not taxed on money made abroad.

If you are from country A (Canada) and live in country B (Philippines) you better incorporate in country C (Maybe Singapore?).

Not sure which country "C" will work for you as a Canadian.

Filipinos with money are stashing their cash mostly in Singapore, Hong Kong and, believe it or not, in USA.

 

[facelessvoid]

i think the main issue with singapore/hk is the setup fee and the overhead that it takes to maintain it. I dont actually live in PH, but i need to move my money from CA to somewhere else to help with the tax burden here. my thought here is that I just need the incorporation document from PH to register a bank account with an online bank(wise) so the money isnt held in PH banking system. as I understand that its easy to put money into PH but hard to get it out

 

[daniels27]

Yes, but how about you go live in the Philippines? There is no Trudeau licking around and sucking taxes, food is better and live is cheaper.

If you want to do what you are talking about, you will need at least some economic substance. Otherwise, you will soon be in troubles. If you have a Canadian company making $400k per year and then suddenly only $20k while having invoices from am ominous philippine company, they will certainly check and then? You want to tell them that you what? got defrauded on the phone and sent the money to hell but they were nice and gave you invoices for it?

They will just ask you to show the owner. If you then have all the documents with your name on it, you are busted. Singapore is certainly better, especially if you have a company from somebody else as nominee director and shareholder.

 

[jesuschrist]

I don't think that is a good idea, the Philippines can be good for tax residency, or for a local business because the workforce is cheap, but parking money there sounds unsafe.

A US LLC or CH/EU company might be better for your use case.

Once the money is in the Philippines it will be very hard to move it out again, careful because even Wise has a local company there and they have special limits/rules/tax for Ph accounts.

 

[facelessvoid]

yeah I 100% agree, food is better and living is cheaper. been there a few times, but the current life circumstance does not allow this move.

and yes if your taxe income becomes dodgy, CRA is going to come and poke their noses around. The idea here isnt to be as drastic, if suddenly 400k income moving to offshore, this will raise a few eyebrows for sure, since the canadian corporate tax is quite low, its favourable here to earn and pay taxes here. but you can certainly have 20-30k expense a year to some contractor overseas right? So the idea is to slowly move some funds over, and those funds can be invested to use as dividend incomes

Yes, but how about you go live in the Philippines? There is no Trudeau licking around and sucking taxes, food is better and live is cheaper.

If you want to do what you are talking about, you will need at least some economic substance. Otherwise, you will soon be in troubles. If you have a Canadian company making $400k per year and then suddenly only $20k while having invoices from am ominous philippine company, they will certainly check and then? You want to tell them that you what? got defrauded on the phone and sent the money to hell but they were nice and gave you invoices for it?

They will just ask you to show the owner. If you then have all the documents with your name on it, you are busted. Singapore is certainly better, especially if you have a company from somebody else as nominee director and shareholder.

 

[facelessvoid]

I don't think that is a good idea, the Philippines can be good for tax residency, or for a local business because the workforce is cheap, but parking money there sounds unsafe.

A US LLC or CH/EU company might be better for your use case.

Once the money is in the Philippines it will be very hard to move it out again, careful because even Wise has a local company there and they have special limits/rules/tax for Ph accounts.

okay this is good to know, that even wise will limit restrictions here..
1. do you know what kind restriction that PH generally have about transfering money out?(i did read in a few plcaes that this is a pain in the a*s), where can i find out more information about this
2. its only going to be a corporate entity. if i opened up an IBKR account with a ph corporate document. would that be an better alternative? the whole point of wise is that so the money isnt held in the PH banking system(but i suppose an international online only bank requires to have connection to a local bank issuer to do business, which has to be complient)

 

[Don]

I don't think that is a good idea, the Philippines can be good for tax residency, or for a local business because the workforce is cheap, but parking money there sounds unsafe.

A US LLC or CH/EU company might be better for your use case.

Once the money is in the Philippines it will be very hard to move it out again, careful because even Wise has a local company there and they have special limits/rules/tax for Ph accounts.

Philippines is actually a great country to run an offshore company from if you are based there, but I would stay away from incorporating locally for anything else than simple staffing company to pay some local tax.

Ive seen some cases of 0% tax setups for 30+ years living full time in Philippines.

Its still a no CRS jurisdiction which is rare these days, and arguably amongst non CRS countries its one of the best destinations if you like to live there.

Many of you don't like 3rd world countries, but almost the whole world is already turned into a shithole anyway.
Some less crowded areas in Philippines should be still liveable, while Canada is the worst of North America when it comes to air quality.

https://www.euronews.com/green/2024...-breathe-safe-air-three-of-them-are-in-europe

 

[facelessvoid]

@Don there is a chance that we actually staff the company and conduct business due to low cost labour. but for now its about tipping the pinky into the water and see how it is. Any guidance on feasibility and process here? i have contacted a few local law firms and waiting for their reply.

on top of mind is that
- if majority shareholder is held by PH resident. how badly can i get effed here if there is bad actors?
- is it normal to have lawfirms holding these positions(similar like those in HK or caymen where your legal consel seats your company)
- any unknown unknown here for me? or other recommandations?

 

[Don]

@Don there is a chance that we actually staff the company and conduct business due to low cost labour. but for now its about tipping the pinky into the water and see how it is. Any guidance on feasibility and process here? i have contacted a few local law firms and waiting for their reply.

on top of mind is that
- if majority shareholder is held by PH resident. how badly can i get effed here if there is bad actors?
- is it normal to have lawfirms holding these positions(similar like those in HK or caymen where your legal consel seats your company)
- any unknown unknown here for me? or other recommandations?

Im not an expert on Philippines myself but I know someone who has extensive experience on the matter. This kind man wrote an comprehensive guide for our circle about some of the ins and outs of life and business in Philippines.

Ill copy some bits that could be relevant below:

Incorporation in the Philippines is regulated by the Securities and Exchange Commission (“SEC”), and they have streamlined their services to focus more on online transactions, reporting, and company formation.

The options available have also been expanded to include companies with as few as one director and one shareholder—although this option has limited scope for foreigners.

With such a variety of choices and industries, I’ll focus on what I have experience in: the IT industry, dealing with revenue from overseas sources and not the Philippine market.

Last March, we incorporated xxxxx Inc., as previously mentioned, to provide outsourced staff working from our office to clients overseas. As my wife and I are both immersed in the business, running separate aspects, we wanted only two shareholders/directors and a 50/50 equity split.

Foreigners are generally limited to 40% shareholding in Philippine corporations (in some industries, 10%), but there are exceptions for export enterprises. As all our revenue comes from overseas clients, we qualify as an export enterprise. I made an application to this effect to the Foreign Investment Review Board online and received approval within 24 hours for the company to have up to 100% foreign ownership if required.

The corporation is required to have a President, Secretary, and Treasurer. The Secretary must be a Philippine citizen, and the President cannot also act as Treasurer. So, I took the position of President, while my wife assumed the roles of Secretary and Treasurer.

I’m not a fan of paid-up capital, as it is hard to withdraw this from a company into another startup once it is operational. Instead, I prefer minimal capital and funding supplied through directors’ loans. Having this loan from a foreign source also provides a mechanism for transferring at least some funds offshore if capital controls are introduced, as loan repayments are usually exempt from such controls.

We opted for an authorized capital of P800,000 (13,200 euros), of which 25% must be issued (P200,000 or 3,300 euros) and 25% of this paid-up. We opted to pay 50% (P100,000 or 1,650 euros), which also met the opening deposit requirement for a corporate bank account with BPI.

Due to the low capital structure, the filing fees and stamp duties were also minimal. The total cost of doing this ourselves online came to less than P6,000 (100 euros) in fees. The entire process was completed in a matter of weeks, with a few more weeks required for registration with other government agencies and the opening of bank accounts (Peso and USD).

While a corporation of this nature is required for a physical presence here as an employer of staff, I would still avoid this setup if you can operate from a home office with a handful of remote staff servicing an overseas market.

 

[facelessvoid]

@Don thank you very much for sharing this. very helpful indeed.
from this, it seems that this gentleman have very similar requirement and situation as me, with the exception of having a filipina wife(which i dont have lol)
- it looks like it is technically possible to do this yourself(the text above seems straight forward), wondering if this is actually possible to navigate all the business redtape yourself.
- it also looks like as part of the step to incorporate, you need to inject capital into the firm(it sounds like the deposit requirment from BPI is about 1600 euro in this case)
- the devil is in the details, here any chance I can connect with your friend to find out more about this process?(if not, do you know anyone else on the forum that has experiences in this area?)

 

[bibing]

okay this is good to know, that even wise will limit restrictions here..
1. do you know what kind restriction that PH generally have about transfering money out?(i did read in a few plcaes that this is a pain in the a*s), where can i find out more information about this

Incoming transfers over 500,000PHP (around 8600USD) get flagged automatically by the banks and must be manually reviewed by somebody at the bank. I suppose same limits apply for outbound transfers (but not sure about that) You are asked to provide source of funds.
This started since the 2016 Bangladesh bank robbery (https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery) which involved some Philippines banks.

 

[alain]

Many of you don't like 3rd world countries, but almost the whole world is already turned into a shithole anyway.

oh my, very true things get tighten a lot in the tax area!

 

[Don]

@Don thank you very much for sharing this. very helpful indeed.
from this, it seems that this gentleman have very similar requirement and situation as me, with the exception of having a filipina wife(which i dont have lol)

For those considering, it's worth noting that only two countries still ban divorce: the Vatican and the Philippines.

- it looks like it is technically possible to do this yourself(the text above seems straight forward), wondering if this is actually possible to navigate all the business redtape yourself.
- it also looks like as part of the step to incorporate, you need to inject capital into the firm(it sounds like the deposit requirment from BPI is about 1600 euro in this case)

right

- the devil is in the details, here any chance I can connect with your friend to find out more about this process?(if not, do you know anyone else on the forum that has experiences in this area?)

yes, feel free to DM.

 

[facelessvoid]

For those considering, it's worth noting that only two countries still ban divorce: the Vatican and the Philippines.

right


yes, feel free to DM.

amazing, thanks again!

for the life of me. there does not seem to be a DM option for your profile(that i can find, only profile comments)

- can you DM me instead so there is a thread to communicate
- if not(or doesnt work) then I can open a telegram account and message you there

what would be your preference?