For reasons relating to the exercise of management powers and the extent of liability, among others, the corporation is generally the most preferred vehicle for investments in the Philippines among the various forms of business organizations. Foreign investors that wish to engage in a business thatis not subject to nationality restrictions generally choose between establishing a Philippine subsidiary and establishing a Philippine branch office.4. Domestic Corporation v. Branch Assuming that the proposed activity isnot subject to any foreign equity limitation, a foreign investor may be set up as a domestic corporation or a branch of a foreign corporation inthe Philippines. These two types of corporate vehicle have their relative advantages and disadvantages relating to, among others, the extent of liability of the parent company/head office, taxation, and the administrative costs of maintaining the same.If the proposed activity is subject to foreign equity limitations, a foreign investor will have to set up a domestic corporation with a Philippine national as a joint venturepartner.Generally, corporations that are more than 40 percent foreign-owned as well asbranches of foreign corporations that are considered domestic market enterprises must have a paid-in capital of at least US $200,000. The paid-in capital requirementis reduced to US $100,000 for domestic marketenterprises whose activities involveadvanced technology or which employ at least 50 direct employees.Entities that qualify as export enterprises (enterprises that export 60 percent ormore of their output) are not subject to any minimum paid-in capital requirement.
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