Other BriefingsCan You Sell in the Philippines Without a Local Company?
Foreign companies can sell goods and services to customers in the Philippines without establishing a local company in certain circumstances. Common routes include selling through an independent Philippine distributor, making cross-border sales from overseas, or providing digital services directly to Philippine customers.
Customs, tax, e-commerce, and sector-specific requirements may still apply.
When Can a Foreign Company Sell Without a Philippine Entity?
The key distinction is between selling to the Philippine market from overseas and conducting business activities within the Philippines.
Certain activities do not by themselves amount to “doing business” in the Philippines. Foreign companies can therefore use certain cross-border arrangements without establishing a subsidiary, branch, or representative office.
Selling Physical Goods Without a Philippine Company
Foreign manufacturers and exporters can sell through an independent Philippine distributor or reseller.
The distributor purchases products from the foreign supplier and resells them in its own name and for its own account. It takes title to the goods, assumes the commercial risk of resale, and deals directly with Philippine customers.
If the distributor instead operates as the foreign company’s agent, sells in the foreign company’s name, or remains under extensive control from the foreign supplier, the arrangement may no longer qualify as independent distribution.
Foreign companies can also make direct cross-border sales to Philippine customers. However, commercial goods entering the Philippines generally need to be imported by an appropriately registered and Bureau of Customs-accredited Philippine importer. A foreign company without a Philippine entity generally cannot act as its own importer of record.
A local distributor will commonly handle importation and customs clearance. Direct sales may require another properly accredited Philippine importer.
Offering Delivered Duty Paid (DDP) terms does not by itself allow a foreign supplier to clear goods through Philippine customs in its own name.
Selling Online and Providing Digital Services
Online sales can create Philippine regulatory obligations even where the foreign company’s activities do not amount to doing business for SEC purposes.
The Philippines’ Internet Transactions Act covers certain online transactions involving Philippine customers, including foreign online businesses that avail themselves of the Philippine market and have minimum contacts in the country. The Department of Trade and Industry (DTI) also administers the E-Commerce Philippine Trustmark as part of the country’s e-commerce framework.
Physical goods sold online remain subject to applicable customs and import requirements.
Digital services are treated differently. Non-resident providers of software, cloud services, streaming, digital platforms, and other covered digital services can become subject to Philippine value-added tax (VAT).
The Philippines imposes 12 percent VAT on covered digital services consumed in the country. Non-resident digital service providers must generally register for VAT once their gross sales exceed, or are expected to exceed, PHP 3 million (US$51,000) within a 12-month period.
VAT registration does not by itself require a non-resident digital service provider to establish a Philippine company.
Tax Obligations Without a Philippine Entity
Selling to a Philippine customer does not by itself mean that the foreign company’s income is Philippine-sourced.
The tax treatment depends on the nature and source of the income. Cross-border sales of goods can be treated differently from income earned from services, royalties, and other arrangements.
A foreign company earning Philippine-sourced income without conducting business through a local entity may be treated as a non-resident foreign corporation. Certain Philippine-sourced payments can be subject to final withholding tax, with the applicable rate depending on the type of income and any relevant tax treaty.
For cross-border services, payment by a Philippine customer does not automatically make the income Philippine-sourced. The BIR’s 2026 clarification requires the source of the income to be determined by examining the income-producing activity and the service arrangement.
For sales of physical goods, where the sale takes place and where title to the goods passes can affect the tax treatment.
Where a tax treaty applies, the foreign company may qualify for a lower withholding rate or other relief, subject to Philippine requirements.
When Does a Foreign Company Need a Philippine Presence?
Maintaining an office, employing personnel who regularly solicit or negotiate business on the foreign company’s behalf, directly operating stores or other facilities, or conducting sustained commercial activities in the Philippines can require the foreign company to establish or register a local presence.
Foreign retailers operating their own stores are generally subject to minimum paid-up capital of PHP 25 million (US$425,000). Where a foreign retailer operates more than one physical store, a minimum investment of PHP 10 million (US$170,000) generally applies to each store.
Foreign manufacturers of products regulated by the Philippine Food and Drug Administration (FDA) generally need an appropriately licensed Philippine importer, distributor, or other local authorization holder before regulated products can be placed on the Philippine market. The specific requirements depend on the product category.
This does not necessarily require the foreign manufacturer to establish its own Philippine company.
Where the foreign company needs its own presence, it may establish a Philippine subsidiary or register a branch. A representative office can be used for permitted non-income-generating activities.
Enter the Philippine Market with Dezan Shira & Associates
Dezan Shira & Associates can advise foreign investors on cross-border sales, distribution arrangements, tax and regulatory requirements, and establishing subsidiaries, branches, and representative offices in the Philippines. Contact our Philippines advisory team to assess the appropriate structure for your business.
About Us
ASEAN Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Jakarta, Indonesia; Singapore; Hanoi, Ho Chi Minh City, and Da Nang in Vietnam; and Kuala Lumpur in Malaysia. Dezan Shira & Associates also maintains offices or has alliance partners assisting foreign investors in China, Hong Kong SAR, Mongolia, Dubai (UAE), Japan, South Korea, Nepal, The Philippines, Sri Lanka, Thailand, Italy, Germany, Bangladesh, Australia, United States, and United Kingdom and Ireland.
For a complimentary subscription to ASEAN Briefing’s content products, please click here. For support with establishing a business in ASEAN or for assistance in analyzing and entering markets, please contact the firm at asean@dezshira.com or visit our website at www.dezshira.com.
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