Sunday, February 20, 2011

What you should know about ROHQ?

Regional Operating Headquarters (ROHQ) (Section 2(3), RA No. 8756) means a foreign business entity which is allowed to derive income in the Philippines by performing the following qualifying services to its affiliates, subsidiaries or branches in the Philippines, in the Asia-Pacific Region and in other foreign markets:

  1. general administration and planning

  2. business planning and coordination

  3. sourcing and procurement of raw materials and components

  4. corporate finance advisory services

  5. marketing control and sales promotion

  6. training and personnel management

  7. logistic services

  8. research and development services and product development

  9. technical support and maintenance

  10. data processing and communication, and,

  11. business development

Being a special entity allowed in the Philippines with certain incentives and preivileges, ROHQ's business activities are subject to the following limitations:

a. Shall offer its services only to its affiliates, branches or subsidiaries, as declared in its registration with the Securities and Exchange Commission (SEC).

b. It shall not directly and indirectly solicit or market goods and services whether on behalf of their mother company, branches, affiliates, subsidiaries or any other company.

c. It cannot directly or indirectly engage in the sale and distribution of goods and services of its mother company, branches, affiliates, subsidiaries or any other company.

Capitalization requirements. The ROHQ is required to initially remit into the country within 30 days from receipt of the Certificate of Registration with SEC through BOI such amount as may be necessary to cover its operations in the Philippines but which amount will not be less than US$200,000 or its equivalent in other currencies. This should be evidenced by a Certificate of Inward Remittance issued by the depository branch.

Taxation and Other incentives includes the following:

ROHQ

a. 10% income tax on taxable net income instead of the 30%/25% on income;

b. 12% value-added tax;

c. 15% branch profit remittance tax;

d. Tax and duty free importation of training materials and equipment, and importation of motor vehicles; and

e. Exemption from all kinds of local taxes, fees, or charges.


Expatriates

a. Multiple entry visa to expats, their spouse and children under certain conditions;

b. Travel tax exemption of expats and their dependents upon certification of the BOI;

c. Tax and duty free importation of personal and household effects ;

d. 15% withholding tax on compensation of managerial and technical alien employees instead of the 25% or 5-32%. Apply also to Filipino citizens holding the same positions.

Licensing. In order to operate and ROHQ in the Philippines, it is required to secure a License with the securities and Exchange Commission (SEC). For the purpose, endorsement by the Board of Investments (BOI) shall be submitted to the SEC along with the other requirements. Likewise, registration with the BIR, and other government agencies are required for the ROHQ.

"Taxes affect lives, care for taxes and save lives"

3 comments:

Eric said...

Hello,

I don't understand how this: "It shall not directly and indirectly solicit or market goods and services whether on behalf of their mother company, branches, affiliates, subsidiaries or any other company." can work with:

5 - marketing control and sales promotion
11 - business development

So, a ROHQ can promote the sales of the mother company but is not allowed to market goods and services. Would you care to elaborate on that?

Joel said...

I have same question as Eric.

Jai Ho said...

Hi to all, we are involved in providing accounting services in our principal abroad and we are also using their different accounting softwares, does this means we are a ROHQ? and do we have to register their acctg. systems to the BIR?

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