Setting Up a Philippine Subsidiary for Back-Office Work: A Guide for Australian and New Zealand Businesses

By Jeme Ann Bregente, CPA (Philippines), Camellia Consulting · Sources checked 24 October 2026

An Australian or New Zealand company can usually own 100% of a Philippine corporation that provides back-office services to its own group overseas. If the company exports at least 60% of its services, it can qualify as an export enterprise, and the US$200,000 minimum capital for foreign-owned businesses serving the Philippine market does not apply. As a planning estimate, allow three to four months from preparing documents to being ready to hire. You will also need a corporate secretary and a treasurer who live in the Philippines. Tax filings start as soon as the company is registered with the BIR, and payroll reporting starts once it employs staff.

Own subsidiary, employer of record or outsourcing provider?

	Outsourcing provider	Employer of record (EOR)	Your own subsidiary
Who employs the staff	The provider	The EOR, on your behalf	Your Philippine company
Who directs the work	The provider, to your brief	You, day to day	You
Time to start	Weeks	Weeks	About 3–4 months
Local employer administration	The provider, under the service agreement	The EOR, under its agreement with you	Your Philippine company
Usually suits	Testing a process, variable volume	One to a few hires, quickly	A stable team you plan to grow, your own office, tighter control of data

In every model, your business keeps its own tax, privacy and contractual obligations. With an EOR, check the actual structure under Philippine labour law, including who controls the work and whether the arrangement could be treated as prohibited labour-only contracting. None of the three is always cheaper. An EOR or provider charges a margin on each person; a subsidiary has fixed set-up and compliance costs spread over the team. A subsidiary usually starts to make sense when you expect to keep and grow a team for several years.

Can an Australian or New Zealand company own 100%?

Usually, yes. Under the Philippine Foreign Investments Act, a service enterprise that exports 60% or more of its output is an export enterprise, and services provided to a business outside the Philippines count as exports. Foreign investors may own up to 100% of an export enterprise, unless the activity is on the Foreign Investment Negative List.

Define the activities carefully in the articles of incorporation. Administrative support, scheduling, data entry, customer support and finance processing for the group are generally open to full foreign ownership. Regulated professions are not: the practice of a profession, including accountancy and law, is generally reserved to Filipino professionals. A company doing in-house finance work for its own group is different from one offering accounting services to the public.

Domestic market enterprises with more than 40% foreign equity need paid-in capital of at least US$200,000. Since the 2022 amendments to the Act, that can fall to US$100,000 in some cases, for example where the business directly employs at least 15 Filipino staff who are the majority of its workforce. A qualifying export enterprise does not need to meet either figure. Note that the test is 60%: a company that sells 55% of its output overseas is still a domestic market enterprise.

That does not mean capital can be nominal. The company still needs enough for rent deposits, equipment, salaries before the first service fees arrive, and the bank’s own requirements. If the company later starts selling more to Philippine customers, it may no longer qualify as an export enterprise, so plan for that before the business changes.

Who has to be in the Philippines?

• Directors do not need to live in the Philippines. Each director must hold at least one share in their own name, so the parent holds all the shares except the directors’ qualifying shares. Where the parent keeps the beneficial ownership of those shares, document the arrangement and report it in the beneficial ownership information filed with the SEC.
• The president must be one of the directors.
• The corporate secretary must be an individual who is a Philippine citizen and resident.
• The treasurer must be resident in the Philippines but need not be a citizen.

A One Person Corporation is not available when the owner is a company: it can only be formed by a natural person, a trust or an estate. A subsidiary owned by an Australian or New Zealand company is set up as an ordinary stock corporation.

Many foreign-owned companies engage a professional firm to provide an eligible individual as corporate secretary, and appoint an employee or a trusted local professional as treasurer. Agree how bank signatories and payment approvals work, so control stays with the parent even though the treasurer is local.

What are the steps?

1. Prepare the corporate documents: the parent’s board resolution, the articles of incorporation and by-laws. Check which overseas documents need authentication. Where they do, Australian documents are apostilled by DFAT and New Zealand documents by the Department of Internal Affairs, usually after notarisation.
2. Register with the Securities and Exchange Commission (SEC), including the company name.
3. Open a corporate bank account and bring in the capital. If you will want to buy foreign currency from Philippine banks later to repatriate capital or remit dividends, register the investment with the central bank (BSP) after the funds arrive. Ask the receiving bank which documents it will issue.
4. Get local permits from the city or municipality where the office is, starting with the barangay clearance and the mayor’s permit.
5. Register with the Bureau of Internal Revenue (BIR): tax registration, books of account and invoices.
6. Register as an employer with SSS, PhilHealth and Pag-IBIG, and report the establishment to the Department of Labor and Employment.
7. Hire, under Philippine employment contracts.

Allow around three to four months as a planning estimate. The actual schedule depends on signing and authenticating documents overseas, securing an office lease (permits need an address), SEC processing and bank onboarding.

What does the company owe after it starts?

• Income tax. The regular corporate rate is 25%. It is 20% only where net taxable income is PHP 5 million or less and total assets are PHP 100 million or less, excluding the land on which the office, plant and equipment stand. From the fourth taxable year after operations start, a minimum corporate income tax on gross income applies if it exceeds the regular tax.
• A service agreement with the parent at arm’s length. The parent pays the subsidiary a service fee, commonly cost plus a mark-up. The BIR’s transfer pricing rules expect the pricing to be supported, so set it out in writing from the start.
• VAT. The standard rate is 12%. Services supplied to a business conducting business outside the Philippines can qualify for 0% VAT, if the payment is in acceptable foreign currency, brought in and accounted for under BSP rules, and the other conditions are met. Billing an overseas parent is not enough on its own. Set up the invoicing and remittances correctly from the first month; it is much harder to fix later.
• Monthly and quarterly filings: withholding tax on salaries and on payments to suppliers and landlords, and VAT and income tax returns.
• Payroll costs beyond salary: the 13th-month pay and employer contributions to SSS, PhilHealth and Pag-IBIG.
• Annual compliance: the annual income tax return and financial statements, the General Information Sheet filed with the SEC, and the mayor’s permit renewed each January. Whether the financial statements must be audited depends on the BIR and SEC thresholds.

Larger teams may also look at registering with an investment promotion agency such as PEZA for tax incentives. That usually requires an office in a registered IT park or building, so decide before you sign a lease.

The parent’s side needs attention too. Transfer pricing, controlled foreign company rules and the treatment of dividends in Australia or New Zealand are separate from the Philippine compliance, so agree early who will review them.

What about patient or customer data?

If staff in the Philippines will see personal information held by an Australian business covered by the Privacy Act, start by working out whether the arrangement is a disclosure to an overseas recipient or a use that stays under the Australian business’s effective control. Where it is a disclosure, Australian Privacy Principle 8 generally requires reasonable steps to ensure the overseas recipient does not breach the principles, and under section 16C the Australian business can be held accountable for the recipient’s acts. Health information is sensitive information, so access controls, contracts and staff training matter even more.

For a New Zealand business, Information Privacy Principle 12 of the Privacy Act 2020 regulates disclosures overseas. A subsidiary that only stores or processes information on the New Zealand business’s behalf, and does not use it for its own purposes, is generally treated as its agent instead, and the New Zealand business stays responsible for it.

On the Philippine side, the subsidiary is covered by the Data Privacy Act of 2012. Under National Privacy Commission rules, registration is mandatory for organisations with 250 or more employees, those processing the sensitive personal information of 1,000 or more individuals, and those whose processing is likely to pose a risk to the rights and freedoms of individuals. A small team handling patient records may therefore need to register.

How does Camellia help?

We support foreign-owned Philippine subsidiaries from set-up (corporate documents, SEC registration, BIR, local permits and employer registrations) through the monthly accounting, tax, payroll and corporate compliance once the company is running. Contact us to discuss your plan.

If you are not ready to set up a Philippine company, our Philippines-based team can also keep the books for your existing business: see outsourced bookkeeping for Australian businesses and for New Zealand businesses.

Camellia Consulting is a tax and accounting firm in the Philippines. This article is general information, not legal or tax advice for a particular case.

Sources

• Republic Act No. 11647, amending the Foreign Investments Act of 1991 (Republic Act No. 7042)
• Republic Act No. 11232, Revised Corporation Code of the Philippines
• Republic Act No. 11534 (CREATE Act) and Republic Act No. 12066 (CREATE MORE Act), amending the National Internal Revenue Code
• BIR Revenue Regulations No. 2-2013, Transfer Pricing Guidelines
• OAIC, APP Guidelines, Chapter 8: Cross-border disclosure of personal information
• Office of the Privacy Commissioner (NZ), Principle 12, and Privacy Act 2020, section 11 (agents)
• National Privacy Commission, NPC Circular No. 2022-04
• Embassy of the Philippines in Canberra, Authentication of documents

All checked 24 October 2026.