Small and Medium Enterprise Development                                    for Sustainable Employment Program             ...
ResponsibleArmando Datuin armando.datuin@gtz.deAuthorDeanna Lijauco dlijauco2001@yahoo.comAurma Manlangit amanlangit@aps.a...
Small and Medium Enterprise Development                                    for Sustainable Employment Program             ...
CONTENTSTABLES ..............................................................................................................
Tables1         Agencies Involved in Business Registration, Permits and Licensing2         Recommendations of the Anti Red...
AcronymsACR     Alien Certificate of RegistrationAWPBAI     Bureau of Animal IndustryBFAD    Bureau of Food and DrugsBFAR ...
FAO         Fisheries Administrative OrderFDA         Food and Drug AdministrationFGD         Focus Group DiscussionFI    ...
REDRUPSBGFC     Small Business Guarantee and Finance CorporationSEC       Securities Exchange CommissionSMED      Small an...
1          IntroductionThe Small and Medium Enterprise Development for Sustainable Employment Program(SMEDSEP) of the Germ...
3          MethodologyThe study involved the review of literature, particularly of available documents andstudies on the l...
of police power while a tax involves the exercise of taxing power. The amount of thelicense fee should not exceed the amou...
National    Registration requirements for a   Licensing required for a specific type   Business Permit Process that is don...
Figure 1 - Flow Chart of BPL Requirements                              National Agencies                                  ...
At the national level, there are nine (9) business registration agencies. Of these nine (9)agencies, only three (3) grant ...
Security System (SSS) — may be done simultaneously. The total processing      cycle may take a day and a half to three day...
ii. Building permit from the engineering office to construct the            facility or building; contract of lease (if bu...
5      Pertinent LawsSome of the more important laws that provide impetus for the growth of SMEs whichspecifically affect ...
levying such taxes, fees and charges shall not be enacted without any prior       public hearing conducted for the purpose...
Table 2 - Recommendations of the Anti Red Tape Project                             Simplification of Internal        Insta...
Centers1st to 6th Class         1406            332                       298                 385MunicipalitiesTOTAL      ...
Government Agency        Regulation         Date                  Guidelines                                           Iss...
b   Inclusion of regulatory requirements to secure permits lengthens BPL processes    The national government agencies’ re...
e      Lack of political will to streamline BPL processes.       One Stop Shop has not been maximized in many LGUs in the ...
to provide the minimum procedures and requirements that shall be followed by       the local governments in the BPL practi...
ANNEX 22
Annex 1: Annotated References          Reference Title                                  ContentReview of Existing Policies...
Reference Title                                  ContentA Look at Past Studies and Efforts    The report seeks to assess a...
Reference Title                               ContentReforms And Practices In Local     The study showcases two urban loca...
Annex 1A - National Requirements for the Business Registration    Agency          Legal Basis              Steps          ...
Agency   Legal Basis   Steps   Processing Time   Fees   Requirements/Actors involved                                      ...
Agency   Legal Basis   Steps   Processing Time   Fees   Requirements/Actors involved                                      ...
Agency        Legal Basis          Steps           Processing Time        Fees       Requirements/Actors involved         ...
Agency          Legal Basis            Steps              Processing Time           Fees         Requirements/Actors invol...
Agency       Legal Basis          Steps            Processing Time           Fees         Requirements/Actors involved    ...
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
SMEDSEP Business Reg Licensing in RP
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SMEDSEP Business Reg Licensing in RP

  1. 1. Small and Medium Enterprise Development for Sustainable Employment Program www.smedsep.phAnalysis of Business Registrationand Licensing in the PhilippinesNovember 2006
  2. 2. ResponsibleArmando Datuin armando.datuin@gtz.deAuthorDeanna Lijauco dlijauco2001@yahoo.comAurma Manlangit amanlangit@aps.ateneo.eduEditorLeah Divina Siton Steigerwald leah22@gmail.comGFA ConsultantPublisherThe Small and Medium Enterprise Developmentfor Sustainable Employment ProgramSMEDSEPsmedsep.ph10F German Development CenterPDCP Bank Center BuildingV A Rufino St cor L P Leviste StSalcedo Village, Makati CityPHILIPPINESMs Martina Vahlhaus, Program Managermartina.vahlhaus@gtz.deMarch 2007
  3. 3. Small and Medium Enterprise Development for Sustainable Employment Program www.smedsep.phAnalysis of Business Registrationand Licensing in the PhilippinesNovember 2006
  4. 4. CONTENTSTABLES ................................................................................................................................................................................... 2FIGURES................................................................................................................................................................................. 2ACRONYMS............................................................................................................................................................................ 31 INTRODUCTION......................................................................................................................................................... 62 OBJECTIVE ................................................................................................................................................................. 63 METHODOLOGY ........................................................................................................................................................ 74 DESCRIPTION OF BUSINESS REGISTRATION, PERMITS AND PROCEDURES........................... 74.1 Major Steps in Business Registration, Permits and Licensing.............................................................. 94.2 Stepwise Process ................................................................................................................................ 115 PERTINENT LAWS ................................................................................................................................................146 OVERALL ANALYSIS ...........................................................................................................................................187 RECOMMENDATIONS...........................................................................................................................................20ANNEX...................................................................................................................................................................................22Annex 1: Annotated References .................................................................................................................... 23 Annex 1A - National Requirements for the Business Registration......................................................................................26 Annex 1B – Regulatory Bodies according to the Nature of the Product .........................................................................40Annex 2: Laws and Regulations on Business Registration, Permits and Licensing ..................................... 43Annex 3: Full Text of Pertinent Laws on BPLS ............................................................................................. 52 Annex 3-1: Republic Act 9178......................................................................................................................................................................52 Annex 3-2: Republic Act 6977......................................................................................................................................................................57 Annex 3-3: Executive Order 226..................................................................................................................................................................66 Annex 3-4: Republic Act 8282......................................................................................................................................................................86 Annex 3-5: Republic Act 9241......................................................................................................................................................................88REFERENCE........................................................................................................................................................................97 1
  5. 5. Tables1 Agencies Involved in Business Registration, Permits and Licensing2 Recommendations of the Anti Red Tape Project3 Proposed Standards in the Simplification of Internal Regulatory Systems4 Compliance of LGUs – as of May 20045 Summary of Different Guidelines in the Implementation of RA 9178Figures1 Flow Chart of BPL Requirements 2
  6. 6. AcronymsACR Alien Certificate of RegistrationAWPBAI Bureau of Animal IndustryBFAD Bureau of Food and DrugsBFAR Bureau of Fisheries and Aquatic ResourcesBFD Bureau of Forest DevelopmentBIR Bureau of Internal RevenueBMBE Barangay Micro Business EnterpriseBNR Business Name RegistrationBOI Board of InvestmentsBOSS Business One Stop ShopBPI Bureau of Plant IndustryBPL Business Permits and LicensingBPLO Business Permits and Licensing OfficerBPSBSMED Bureau of Small and Medium Enterprise DevelopmentBSP Bangko Sentral ng Pilipinas Central Bank of the PhilippinesBTPC Business Tax Payment CertificateCA City AdministratorCBFMCDA Cooperative Development AuthorityCENRCFD City Fire DepartmentCHD City Health DepartmentCMO City Mayor’s OfficeCPDO City Planning and Development OfficeCTO City Treasurer’s OfficeDADBP Development Bank of the PhilippinesDENR Department of Environment andDILG Department of Interior and Local GovernmentDO Department OrderDOF Department of FinanceDOLE Department of Labor and EmploymentDOST Department of Science and TechnologyDTI Department of Trade and IndustryECA Environmentally Critical AreaECC Environmental Compliance CertificateECP Environmentally Critical ProjectEIS Environmental Impact StatementEMBEO Executive Order 3
  7. 7. FAO Fisheries Administrative OrderFDA Food and Drug AdministrationFGD Focus Group DiscussionFI Financial InstitutionFIA Foreign Investment ActFIDA Fiber Industry Development AuthorityFOB Freight on BoardGRT Gross Receipts TaxGSIS Government Service Insurance SystemGTEB Garments and Textile Export BoardGTZ German Technical CooperationIEE Initial Environmental ExaminationIPOIPPIRA Internal Revenue AllotmentIRR Implementing Rules and RegulationsITRLBP Land Bank of the PhilippinesLCP League of Cities of the PhilippinesLGC Local Government CodeLGU Local Government UnitLMP League of Municipalities of the PhilippinesLPP League of Provinces of the PhilippinesLTFRB Land Transportation Franchise Regulatory BoardLTO Land Transportation OfficeNFA National Food AuthorityMAOMSME/SME Micro, Small and Medium-sized EnterpriseNEDA National Economic and Development AuthorityNFA National Food AuthorityNTA National Tobacco AdministrationNWPC National Wages and Productivity CommissionOSS One Stop ShopPAGCOR Philippine Amusement and Gaming CorporationPCAPCFC People’s Credit and Finance CorporationPD Presidential DecreePEZA Philippine Economic Zone AuthorityPIA Philippine Information AgencyPNB Philippine National BankPNP Philippine National PolicePRICQUEDANCOR Quedan and Rural Credit Guarantee CorporationRA Republic Act 4
  8. 8. REDRUPSBGFC Small Business Guarantee and Finance CorporationSEC Securities Exchange CommissionSMED Small and Medium Enterprise DevelopmentSMEDSEP Small and Medium Enterprise Development for Sustainable Employment ProgramSSS Social Security SystemTAG Transparency and Accountable Governance Project (Asia Foundation)TESDA Technical Education and Skills Development AuthorityTIN Tax Identification NumberTLRC Technology and Livelihood Resource CenterVAT Value Added Tax 5
  9. 9. 1 IntroductionThe Small and Medium Enterprise Development for Sustainable Employment Program(SMEDSEP) of the German Technical Cooperation (GTZ), in partnership with theDepartment of Trade and Industry (DTI) and the Technical Education and SkillsDevelopment Authority (TESDA) of the Philippines, aims to establish favorable businessconditions in the Philippines. Enabling the Business Environment, a major component ofthe program, intends to propose and implement policy recommendations in cooperationwith the private sector for the improvement of the business climate at the national,regional and local levels.Since 2004, the program has undertaken several efforts to assist businesses and localgovernment units (LGUs) in building a business friendly climate, particularly in the areaof improving business registration and licensing procedures. Through the program thefollowing were conducted: seminar - workshops, research studies and assessments ofthe business licensing procedures of selected cities so as to identify problems anddetermine / recommend solutions to improve the policy environment. The national andlocal level permits and licensing systems and procedures were similarly studied.Recently, the program also provided technical assistance to selected cities in theVisayas in an effort to streamline and improve the business licensing system andprocedures to achieve business client satisfaction.In its work toward the improvement of the business climate, the GTZ recognizes thatnational and local laws, rules and regulations shape the business registration, permitsand licensing systems and procedures. It appears that several national and local levellaws and procedures on the registration of businesses are sometimes inconsistent witheach other and may impede efforts of these businesses to flourish and formalize theirestablishments. Realizing that policy reforms may be necessary to the achievement ofits program goal, the GTZ commissioned this study in order to review and assess thecurrent laws and procedures in terms of how they are interpreted and applied by thenational and local government units (LGUs).This paper presents the results of the study as well as an assessment of selected laws,rules and studies. Through these findings, it is hoped that the GTZ, through theSMEDSEP, would be able to determine possible areas of assistance that would addressthe concerns and needs attendant to reforming the business licensing and permitsprocedures and processes. Furthermore, it hopes to contribute towards policy reformsand the adjustment of the existing practice of issuing business permits and licensing.2 ObjectiveThis study aims to conduct an inventory of the laws, rules and regulations that governbusiness and licensing procedures in the Philippines on the national and local levels.The study will also describe and analyze their impact on the actual process of securingbusiness permits. 6
  10. 10. 3 MethodologyThe study involved the review of literature, particularly of available documents andstudies on the laws, rules and policies of pertinent government agencies. It similarlytackled the business experiences on Business Permits and Licensing (BPL) at thenational and local levels, as well as published and unpublished studies from theacademe and the public sector, etc pertaining to business permits and licensing ofSMEs. The presentation of the list of pertinent laws and regulations and the full text ofsome of these selected laws are found in the annexes.A significant aspect of the study is a description of the current BPL practices ofselected LGUs in the last three years. These are summarized in a flow chart indicatingthe procedures and steps in securing a business license / permit.4 Description of Business Registration, Permits and ProceduresThe first step for businesses to be able to operate in the country is for them to submitthree major requirements(1) business registration(2) business license and(3) a local business permit.Business registration • is a document which gives the business a juridical personality. Regardless of where the SMEs are located, all of them need to undergo these registration processes.Business license • is a document issued by duly authorized government agencies or representatives at the national and / or local level to regulate the business operation of a person, partnership or corporation. It is in the nature of a special privilege, of permission or authority to do what is within its terms. Any license granted by the state is always revocable.Local business permit • is a document issued by the LGU through the Mayor who has jurisdiction over the intended place of the business. It authorizes the business to operate in the locality.The three (3) requirements involve the payment of fees and charges. License or permitfees, which are different from taxes, are charges imposed under the police power of thestate for purposes of regulation. A license fee is the legal compensation for specialservices, while a tax is an enforced contribution assessed by sovereign authority todefray public expenses. Imposed for regulation purposes, a license involves the exercise 7
  11. 11. of police power while a tax involves the exercise of taxing power. The amount of thelicense fee should not exceed the amount of the expenses incurred in the course of theinspection and regulation. Meanwhile there is no limit to the amount of taxes that maybe imposed. Whereas license fees are imposed on the right to exercise a privilege, a taxis imposed also on persons and property. Moreover, while failure to pay a license feemakes the business illegal, failure to pay a tax does not necessarily make the businessillegal. It is important to distinguish the two because the power to regulate does notinclude the power to impose fees for regulatory purposes (de Leon and de Leon Jr2004).Table 1 shows a summary of the agencies involved in the following processes: businessregistration, business licensing from the respective national agencies and businesspermitting at the local level. The steps and time required in obtaining theseauthorizations and requirements are also indicated in the table below.Table 1 - Agencies Involved in Business Registration, Permits and Licensing National Registration requirements for a Licensing required for a specific type Business Permit Process that is done Agencies business firm of business to get a business permit at the LGU level to get a business permit Processing No. of No. of Processing No. of # of Processing No. of # of Time Steps Doc Time Steps Doc Time Steps Doc Reqd Reqt ReqtDTI 30 min 5 2SEC 1 week 7 7CDA 2 hours 3 4SSS 1 day 2 2BIR 1 day 3 7DOLE 1 day 5 2BOI 20 3 6 daysPEZA 26 23PhilHealthBFAD 1 month 10 13BFAR 4.42 hrs 5 5BPI 3-5 days 10 7BPS 3 months 8 8DENR 105 days 3 8ECC 1 month 6 3FIDA 36.5 hrs 5 8IPO 32 9 4 monthsNFA 1 hour 4 5NTA 30 4 5 minutesBAIGTEBPCA 8
  12. 12. National Registration requirements for a Licensing required for a specific type Business Permit Process that is done Agencies business firm of business to get a business permit at the LGU level to get a business permit Processing No. of No. of Processing No. of # of Processing No. of # of Time Steps Doc Time Steps Doc Time Steps Doc Reqd Reqt ReqtLTOLTFRBLGU 5min- 720 4-10 3-8 minsSource: DTI filesMajor Steps in Business Registration, Permits and LicensingThe summary of the process of securing a business permit is shown in Figure 1. FlowChart of BPL Requirements. At least 18 steps are usually involved, although there havebeen cases where the process took only 15 steps (Bacolod) 1 to 25 steps (Malaybalay). 24.1 Major Steps in Business Registration, Permits and LicensingThe summary of the process of securing a business permit is shown in Figure 1. FlowChart of BPL Requirements. At least 18 steps are usually involved, although there havebeen cases where the process took only 15 steps (Bacolod) 3 to 25 steps (Malaybalay). 41 Deanna Lijauco and Aurma Manlangit, Business Permits and Licensing Study of Bacolod and Ormoc, GTZ- SMEDSEP, 2006.2 Ateneo School of Government, Making Cities Work, 2006.3 Deanna Lijauco and Aurma Manlangit, Business Permits and Licensing Study of Bacolod and Ormoc, GTZ- SMEDSEP, 2006.4 Ateneo School of Government, Making Cities Work, 2006. 9
  13. 13. Figure 1 - Flow Chart of BPL Requirements National Agencies Typical Local Government Process Complete/ revise Register with DTI documents (Sole Proprietorship) 30 min. Prepare basic Applies at the No Prepare Is the application form and documents DTI, SSS, Mayor’s Office documents documents complete? BIR 2-5 minutes Ok Register with SEC(Partnership/ Corporation; Notary and StampDTI Registration optional) 1 week New Application Inspect SSS 1 day Barangay Issue Clearance? Clearance Permit Renewal Issue Proceed to the ff. 5 minutes BIR offices** 1 day New Application Refer to Zone Map Issue Clearance? CPDO/Zone DOLE Permit Renewal Issue 3 days **the sequence varies per 2-5 minutes LGU New Application Inspect (if engineering department is ready and Building Office 1 day otherwise scheduled) ECC (Safety Issue Clearance? 30-120 days Inspection) Permit Renewal Issue 5 minutes Other agencies (BFAR, BFAD, No Business establishment to install If firemen available, etc.) corrective measure otherwise schedule Issue Clearance? Fire Yes Issue 5 minutes No Business establishment to pay correct Issue Clearance? dues SSS Yes Issue 5 minutes No Inspect Issue Clearance? 1 day Health and Sanitation Permit Renewal Issue 5 minutes 3 basic documents for any type of business 1. DTI 2. BIR BIR Annual Fee for VAT 3. SSS and Non-Vat Registration 5 minutes For specific type of business processing of Issuance of claim documents vary from 30 minutes to a year to sheet Old/Renewal 3 minutes complete requirements Encoding Section of business and licensing permits division Enter data in TRACS 5 minutes Signature of the Chief CTD Assessors’ (if not computerized, manual encoding) of the Permits and Permits and Licensing Payment of CTD Division – Prepare Collection Section – Section for Licensing Division assessment of New Release of Permit and City Mayor Mayor’s Permit Issue Receipt 1 minute 2 minutes payment 2 minutes 2 minutes (either scheduled of released Notes: immediately after signed) Application for business permit can be processed within 1 day with one-stop business station 10
  14. 14. At the national level, there are nine (9) business registration agencies. Of these nine (9)agencies, only three (3) grant the business name and juridical personality of a business— DTI for a sole proprietorship, the Securities and Exchange Commission (SEC) forpartnership or corporation, and the Cooperatives Development Authority (CDA) forcooperatives. To register a business name, only one of the three need be approached,with DTI offering the fastest service and the cheapest rates. The Department of Laborand Employment (DOLE), Board of Investments (BOI), and PEZA registrations are meantfor businesses that wish to avail of certain business incentives like tax exemptions. TheDOLE registration is also intended for the protection of workers.Where business licenses are concerned, a regular business has to obtain the same fromone or two of the 13 national regulatory agencies. In contrast, a business permit isequivalent to a mayor’s permit signed by the mayor and by the business permits andlicensing officer (BPLO). Before a business applies for a mayor’s permit, however, itshould have obtained local licenses from several local agencies.4.2 Stepwise Process I. Registering the business name of a firm. R.A. 3883 requires an enterprise to register its business name so as to guarantee its exclusive use and the goodwill and patronage that it represents. This entails registering the business with the DTI. Having the business registered at DTI is quite quick: roughly about 30 minutes, especially if done at the national level or at the regional offices of DTI. Registering at the Securities and Exchange Commission (SEC), on the other hand, normally takes about a week. While the CDA registration takes only two hours, this can only be secured by cooperatives. Thus, the registration of the business with the DTI or the SEC constitutes the first step towards securing the other prerequisites for a business permit. II. Regulatory licensing for a business to be able to operate legally is determined by the type of product or service offered by the business. Annex 1B 2 contains a list of the national regulatory agencies for specific business types. For example, a firm that will engage in the export of animals and animal byproducts needs a license to operate one from the Bureau of Animal Industry (BAI). Getting the needed regulatory requirement involves substantial processing time, considering the documentation involved from the office concerned. The process may take from 30 minutes to 105 days, depending on the nature of the business or its product. III. Securing other regulatory licenses for the business firm as prerequisites to getting a business permit. Registration with the following three government offices — the Bureau of Internal Revenue (BIR), Philhealth and the Social 11
  15. 15. Security System (SSS) — may be done simultaneously. The total processing cycle may take a day and a half to three days maximum. Annex 1A details the various requirements for the business registration, particularly the amount of the fees, the time and processes involved. It should be noted that there are specific requirements and other documentations from these national agencies that must be met before a business firm may formally apply for a business permit / license at the local level.IV. Getting a business permit at the LGU level. The securing and granting of a business permit are processes / procedures enshrined in RA 7160 or the Local Government Code and the Local Revenue Code. The implementing rules and guidelines for the same are provided for by the local ordinances passed by the LGUs. The business permit, more popularly referred to as the mayor’s permit (a piece of document) and granted at the local level, provides legitimacy to the operation of the business firm. For the firm to be issued this document, it is imperative that business registration and licensing processes and procedures for both renewing and new business should have been observed. The processes involved in getting a business license/permit, in addition to the various requirements of the national government, vary across LGUs. In most of the LGUs in the Philippines, the issuance of a new business permit may be done any time of the year but has to be renewed every year. However, the renewal of the business permit of an existing business may only be done in January of each year, from the first working day of the year to the 20th of the said month (Legaspi year). Moreover, requisite to renewing a business permit is the payment of the corresponding business taxes. The procedure for securing a business permit at the local government level is as follows a. Whether it is for a new or renewing business, the process starts with the business owner who should secure an application for a business permit from the office of the mayor to operate. This process should be undertaken annually. Some LGUs, however, offer business owners the option to pay beyond the registration period, that is, up to the end of the month of January, without having to pay a penalty. b. The next procedure entails securing the necessary local level clearances. This holds true for both renewing and new businesses. The process flow for getting a business permit is shown in Figure 1. The clearances required and the respective offices involved are as follows i. Barangay clearance from the barangay government where the business is located; clearance fee has to be paid. 12
  16. 16. ii. Building permit from the engineering office to construct the facility or building; contract of lease (if business place is rented) or proof of ownership if owned. In putting up the building itself for the business activity, certain permits to legitimize the construction of the building are required: electrical, plumbing or sanitary, excavation and mechanical based on the building plan. iii. Occupational permit of employees from the Office of Business Permit License iv. Locational clearance to indicate whether the business’ location is within the approved zone area (as specified in the land use plan of the LGU, issued by the Planning and Development Office) v. Certificate of electrical inspection from the Engineering Office of the LGU vi. Fire Safety inspection certificate from the Fire Station Department of the DILG vii. Health certificate for all employees of the establishment and viii. A sanitary permit for the business place.Aside from complying with the abovementioned certificate requirements, theplace of business has to be inspected by representatives of the Office of theEngineer, the Fire Station Department, and the Health Office. This is done toensure that the business establishment has complied with all the sanitationand safety standards and requirements imposed by the said offices, based onthe national codes passed, the Sanitation Code, the Building Code and theFire Safety Code.For both renewing and new business firms, there are post- omplianceactivities mandated by the LGU in line with its regulatory or police powers.The LGU conducts ocular inspections of all business establishments, evenafter they have been granted the permit to operate. This mandate is providedfor in the respective National Codes of existing laws to ensure the promotionof the health, peace, good order and safety, and general welfare of thepeople. It constitutes part of the local authority’s post licensing monitoringfunctions to determine whether or not the license conditions are beingcomplied with.It is interesting to note that most local governments do not institute amonitoring scheme or feedback mechanism for the reactions or complaints ofthe consumers or clients, but do so more in terms of compliance with thefees charged. 13
  17. 17. 5 Pertinent LawsSome of the more important laws that provide impetus for the growth of SMEs whichspecifically affect business registration, permits and licensing at the national and locallevels are the following: 1. Republic Act 7160 or the Local Government Code (approved in October 1991) 2. Republic Act 6977 (as amended by RA 8289). Magna Carta for Small Enterprises. (approved on 24 January 1991) 3. Republic Act 9178 or the Barangay Micro Business Enterprise Act (approved on 13 November 2002) 4. Executive Order 226 or the Omnibus Investment Code. (approved in 1987)Among the abovementioned laws and regulations, the Local Government Code is themost comprehensive in terms of promoting local economic development. The codeprovides LGUs with more powers, authority, responsibilitie, and resources through adecentralized system. These powers are mandated in the following sections of the code 1. Section 147 - Municipalities may impose and collect reasonable fees and charges on businesses and occupations commensurate to the cost of regulation, inspection and licensing before a person may engage in any business or occupation, or practice such profession or calling. 2. Section 151 - Cities may impose and collect fees and charges that provinces and municipalities may impose. 3. Section 152 - Fees and charges may be imposed by barangays and which shall accrue exclusively to them. No city or municipality may issue any license or permit unless a clearance has first been obtained from the barangay where such a business is located. For such clearance, the Sangguniang Bayan may impose a reasonable fee. The application for clearance may be acted upon within seven (7) days from filing. 4. Section 444 and 455 3 (iv - v). Mayors have the power to issue licenses and permits, and to suspend or revoke the same upon violation of any of the conditions upon which said licenses or permits have been issued, pursuant to a law or ordinance. 5. Section 447 and 458 – The local legislative councils have regulatory powers, such as those contained in Sec 447 and 58, to enact ordinances authorizing the issuances of permits and licenses and to regulate activities relative to the use of land, buildings and structures within the town or city, among their powers, duties and functions, to promote the general welfare of their constituents.Thus, under the LGC 1991, the LGUs have the power to create their own sources ofrevenues and to levy taxes, fees and charges that will accrue exclusively to the LGU.The only limitation to the LGUs’ power to impose and collect reasonable fees andcharges as contained in LGC Section 186 are “. . . that the taxes, fees and charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national policy. In addition, ordinances 14
  18. 18. levying such taxes, fees and charges shall not be enacted without any prior public hearing conducted for the purpose.”Cities have a broader revenue base and taxing powers than provinces andmunicipalities; and are thus able to better absorb the additional functions brought aboutby the devolution of functions. The LGUs’ share in the national taxes has been increased(from 20 percent in 1991 to 40 percent in 1994) and fixed; and its release should beautomatic. Despite their expanded powers and the increase in their internal revenueallotment (IRA) share, however, LGUs, especially the smaller ones, have not managed toperform their functions more efficiently due to tight budget constraints. Increasingexpenditures on social services and the rising costs of public services likewiseseriously threaten the local revenue base. Amid these prevailing conditions, more fundsmust flow into the LGUs and service delivery must be made more cost efficient. To beable to do this, LGUs have to address major fiscal problems such as a high dependencyon the IRA, outdated local tax codes, the underutilization of real property tax bases, theunderassessment of local business taxes, the poor operation of economic enterprises,insufficient utilization of financial resources, and poor planning and budgeting (Orial2003).Hence, in their desire of the LGUs to attain local autonomy and increase revenues, mostLGUs have opened opportunities for increased tax earnings, mainly from real propertyand local business taxes. Studies also reveal that in the LGUs goal to earn morerevenues that they have begun to address the businesses’ complaints on thecumbersome permits and licensing procedures (Ateneo School of Government and AsiaFoundation 2005).Many LGUs, especially cities, have adopted positive measures to streamline thebusiness permits and licensing procedures. They have simplified internal regulatorysystem, installed One-Stop Shops; and installed Customer Service Complaint Desk in aneffort to improve compliance and tax collection efficiency. This initiative is supported bythe Department of Interior and Local Government’s (DILG’s) Anti Red Tape memorandumorder (see Tables 2 - 3). As of May 2004, all cities, capital towns, and LGUs withgrowth centers have implemented the three recommendations of DILG (see Table 4)(Ateneo School of Government and Asia Foundation 2005). 15
  19. 19. Table 2 - Recommendations of the Anti Red Tape Project Simplification of Internal Installation of One Stop Installation of Customer Regulatory System Shops Service Complaint DeskObjectives / Targets • reduce the • complement the • institutionalize an issuance of a simplification of administrative business permit the internal mechanism to to less than one regulatory system address red tape hour related complaints • reduce the issuance of a building permit or certificate of occupancy to not more than two daysFunctions • simplify and • facilitate the • act on red tape- rationalize local processing and related queries and rules and issuances of complaints that procedures business permits, are within the • work for the licenses and other authority or eventual relevant competence of the computerization documents Complaints Desk of internal • act on problems Officer to address regulatory related to the • refer to the Local systems delivery of basic Chief Executive all • display step by services or to red tape-related step application refer such complaints against procedures in problems to any local the form of flow competent local government chart in public authorities for personnel for accessible and resolution appropriate action conspicuous • recommend places measures to the • develop primers Local Chief or flyers on the Executive to simplified rules improve the and procedures workings of the for distribution One Stop Shop to the publicSource: Department of Interior and Local GovernmentTable 3 - Proposed Standards in the Simplification of Internal Regulatory Systems Civil Application Processing Number of Documentary Number of Number of System Time Requirements Steps SignatoriesBusiness Permit 30 min 8 6 2Building Permit 8 hrs 5 5 3Certificate of 8 hrs 3 2 2OccupancyReal Property 30 min 4 2 2DocumentsSource: Department of Interior and Local GovernmentTable 4 - Compliance of LGUs – as of May 2004 LGU Type / Classification Number With One Stop With Customer Service With Simplified Shops Complaint Desk ProceduresCities 115 115 115 115Capital Towns 42 42 42 42LGUs with other Growth 28 28 28 28 16
  20. 20. Centers1st to 6th Class 1406 332 298 385MunicipalitiesTOTAL 517 483 570Source: Department of Interior and Local GovernmentDespite these innovative additions, however, LGUs remain constrained by the Code’sregulation that business establishments may only renew their business permitapplications in January of every year instead of year round. As a result, the BPLapplications pile up during this period, putting pressure to LGUs to process voluminousnumber of BPL applications in less than a month. Muntinlupa City established itsBusiness Center that offers BPL services year round.The other laws focus on the establishment of a framework which will foster thedevelopment of micro, small and medium enterprises. Among them are the following a. Magna Carta for Small Business and the Barangay Micro Business Enterprise (BMBE) which provide for the rationalization of government regulations on small enterprises in order to provide the necessary impetus for growth in the countryside. b. The Omnibus Investment Code which provides for the development of an Investment Priorities Plan that lists down the industry and investment areas which can avail of both fiscal and non fiscal incentives from the national government. These fiscal incentives include, among others, income tax holidays, net operating loss carryover, the duty free importation of capital equipment and access to bonded warehouses.While these laws intend to promote the growth of SMEs, the procedural applicationbased on the implementing rules and regulations hinders the SMEs’ formal registrationand operation. National government agencies issue various department orders andcirculars, whereas local government units issue ordinances and revenue codes, whichare, at times, in conflict with the very objectives of these laws. For instance, the studyentitled “Review of Existing Policies Affecting Micro, Small and Medium Enterprises(MSMEs)” reveals that different government agencies issue own guidelines in theimplementation of RA 9178, as shown in Table 5 below.Table 5 - Summary of Different Guidelines in the Implementation of RA 9178 Government Agency Regulation Date Guidelines IssuedDept of Trade and DAO 01, Series 7 February Implementing Rules andIndustry (DTI) of 2003 2003 Regulations of RA 9178Dept of Finance DO 17 - 04 20 Guidelines to Implement the(DOF) April,2004 Registration of BMBEs (Spell out) and the Availment of Tax Incentives under RA 9178Dept of Interior and Memo Circular 8 April Implementation of RA 9178Local Government 2003-69 2003 providing Incentives and Benefits(DILG) therefor and for Other Purposes 17
  21. 21. Government Agency Regulation Date Guidelines Issued Memo 2003 - 23 August Clarification on the 172 2003 Implementation of Section 7 of the Rules and Regulations Implementing RA 9178Dept. of Labor and DO No. 45-03, 15 May Guidelines for the ImplementationEmployment (DOLE) Series of 2003 2003 of Section 8 of RA 9178National Wages andProductivity NWPC 11 March Guidelines on the Issuance ofCommission (NWPC) Guidelines 2003 Wage Advisories for BMBEs No.01, Series 2003Bangko Sentral ng Circular No. 11 March Guidelines on the ImplementationPilipinas(BSP) 374, Series of 2003 of Section 9 and second 2003 Paragraph of Section 13 of RA 9178Source: BSMED filesThese issuances, particularly that of the DOF, have a. made it difficult for microenterprises to register as they require all sorts of documents and several signatures. b. drove certain government agencies (such as the BIR, the DOF, DOLE) and local government units to loose (in terms of tax revenues foregone or the mitigation of labor laws) and not implement the BMBE law c. encouraged the local government units to take advantage of the non compliance of SMEs to earn revenues through the imposition of fines and other charges. d. simplified the documentation requirements for the registration of BMBEs with assets of PHP 300 000 and less.( DOF Department Order 31-05 dated 16 Dec 2006)6 6 Overall Analysisa Conflict between the intent of the laws and imposed procedural guidelines. Business registration, permits and licensing procedures are dictated by the implementing rules and regulations issued by national and local agencies in support of the laws of the land. There exists a conflict between the objectives of the national laws with those of the procedural guidelines imposed by the national agencies and the local government units. The conflict between the BMBE Law and the DOF issuances mentioned earlier exemplifies this point. Such may be due to the conflicting interests of business and government. Generally, businesses seek to lower the cost of business taxes paid to government, while the government agencies’ (especially the LGUs) seek to regulate, control and generate more revenues through business taxes. 18
  22. 22. b Inclusion of regulatory requirements to secure permits lengthens BPL processes The national government agencies’ regulatory processes and the LGUs’ regulations contribute to the long and cumbersome process of securing a business permit. Some LGUs, for instance subscribe to the idea that the more steps involved in BPL process, the more revenue they can generate. In addition, the practice of national agencies like the BIR, SSS, Philhealth, etc to enforce their own regulatory requirements increases the number of steps involved and the amount of fees to be paid at the local level. In order for the national agencies to implement their laws, the national government agencies’ strategy is to ride on the LGUs’ business permitting procedures to ensure that businesses will comply with their regulations. Thus, particularly where renewing businesses are concerned, there is a need to review whether the collection of revenues should be a prerequisite to the securing of permits and licenses or not. The SSS law, for example, was passed after the LGC made it illegal for local governments to issue business permits unless the applicant can show an SSS clearance. The SSS law is thus just one of the most visible examples of the fact that regulatory agencies are becoming more dependent on local governments, specifically on the business permit, in this case, for the enforcement of their mandates.c Lack of standard or minimum requirements to follow in securing BPL The lack of a standard in terms of processes and procedures in securing business permits at the local level is evident. Depending on the ordinances approved at the said level, the process of securing a business permit can become very cumbersome and complex. For instance, studies made by the GTZ on the Bacolod and Ormoc BPL in 2005 showed that the steps involved in getting a business permit in these cities numbered 21 and 14, respectively. In 2006, the replication studies on the Bacolod and Ormoc BPL processes reflected a change in the number of steps. For Bacolod, the recorded steps were 15; and for Ormoc 5. Both cases illustrated the extremely varying steps and procedures that a business owner goes through to obtain a business permit to legitimately operate a business.d Not year round BPL period The abovementioned studies also revealed that business firms renewing their business permits have the tendency to register towards the end of the registration period in January. This practice creates long queues and translates to considerable time wasted during registration. In addition, renewing businesses have to contend with the presence of new business firms securing their business permits around this period. 19
  23. 23. e Lack of political will to streamline BPL processes. One Stop Shop has not been maximized in many LGUs in the country despite many successful implementations of the practice in Muntinlupa, Marikina, Cebu and Iligan. Most of the LGUs in the country continue to operate piecemeal and perform BPL processes and procedures manually. The lack of political will on the part of many LGUs in the course of implementing changes or even adopting an OSS, coupled by the lack of technical know how in implementing such a system, prolongs the BPL process and renders it cumbersome.7 7 RecommendationsReforms in the BPL laws and their application at the national and local levels areapparently necessary. Among the proposed reforms are the followingProvide clear guidelines for coordination among and between national agencies andLGUs involved in business permits, especially for renewing business 1. Coordination between and among national agencies and critical offices which have a stake in the business permit renewal, namely the DTI, BIR, SSS, has to be instituted. The DILG, the appropriate national government agency, should initiate guidelines and even amendments to existing regulatory requirements for securing business permits. In this regard, it is necessary for instance, that the DILG spearhead the process of dialogue among concerned national and local agencies and the DTI to spearhead dialogues between government an the business sector regarding regulatory processes both at the national and local levels, so as to streamline the process and procedural requirements. 2. Identification of a national agency (for instance the Presidential Adviser on Good Governance) to continue to work with concerned stakeholders, (such as the various leagues, namely League of Municipalities (LMP), League of Provinces of the Philippines (LPP), League of Cities of the Philippines (LCP), industry partners, etc) in installing effective monitoring, the evaluation of how laws are applied and adjustments to these, as necessary, to ensure improved BPL practice. It might help that a best practice and rewards system be set up in order to encourage the LGUs to ensure the good practice of the BPL process.Establish standard processes and procedures in securing business permits at the locallevel. 3. Encourage LGUs, through the various Leagues and the DILG, to have standardized procedures and requirements that will redesign the current process flow of BPL transactions and procedures at the local level. At this juncture, there is a need for a government body (the DILG in consultation with the DTI to spearhead this) 20
  24. 24. to provide the minimum procedures and requirements that shall be followed by the local governments in the BPL practice. 4. Encourage LGUs to reduce the number of required clearances prior to the securing of business permits, particularly where the renewal of business permits for SMEs at the local level are concerned. Many LGUs still combine their objectives of enabling SMEs to legitimately register, namely the orientation of generating revenues. Clearances referred to here are those secured from the SSS, Philhealth, BIR, etc.Enact laws and revise specific provisions in RA 7160 5. Advocate the amendment of the LGC to make the Business One Stop Shop BOSS year round rather than during the first month of the year only. The BOSS can effectively reduce the number of steps in securing a business permit. 6. Revise the provision found in Republic Act (RA) 7160 - Local Government Code: Year Round Renewal with the representation of either the DTI or a lobby group from the industry sector. RA 7160 mandates that business permits can only be renewed in the month of January. This restriction adds much burden to the LGU. The period is simply too short to accommodate all renewing enterprises, particularly since it is not uncommon for establishments to renew only towards the last two weeks of the month. It is highly recommended that RA 7160 be revised in order to allow year round business permit renewal. If this is allowed, then LGUs will not be overburdened by the processing of renewals only for a month, and enterprises — especially those that wait till the last minute to renew — will not have to waste time standing in long queues. Should the specific business registration provision in RA 7160 be successfully amended, SMEDSEP could help in its implementation by (Aleta et al 2004): • Drafting the Implementing Rules and Regulations (IRR) • Disseminating information on the revised RA, for example, through the various leagues during the general assemblies of city and municipal mayors from all over the country. SMEDSEP could participate and present these changes.Develop and strengthen the capabilities of service providers in BPL 7. Invest on the upgrading of personnel involved in BPL. Continuous performance improvement measurement should be initiated by the LGUs to improve transactions in the course of the BPL. Moreover, investments should be made by LGUs to be able to obtain the necessary state of the art IT know how for BPL processing and documentation purposes. 21
  25. 25. ANNEX 22
  26. 26. Annex 1: Annotated References Reference Title ContentReview of Existing Policies The present study evaluated the existing laws andAffecting Micro, Small and Medium regulations relevant to the workings of MSMEs. AnEnterprises in the Philippines by analysis of the intent/content of national lawsGwendolyn R Tecson and local ordinances that affect the different areas of activity of MSMEs was undertaken. TheGTZ SMEDSEP, December 2004 effects of these laws and regulations on MSMEs were determined through the use of focused group discussions (FGDs) involving a number of micro, small and medium enterprise owners undertaken in two cities in the Visayas. In relation to BPLS, the study analyzed two laws the BMBE Act of 2002 and the Magna Carta for Small Enterprises. It also discussed the implementing rules and regulations of national government agencies pertaining to these laws.Survey of Business Registration and This study seeks to review the processes ofLicensing in Mindanao from Private business registration and of the acquisition ofSector Perspective, July - August permits / clearances from offices in charge of2004, Transparency and processing these documents. This includes sevenAccountable Governance Project cities in Mindanao: Bislig, Dipolog, Koronadal,(TAG) of The Asia Foundation Malaybalay, Tacurong, Ozamis and Zamboanga to gather the needed information.A Survey of Business Regulatory This survey describes and analyzes the mostProcesses in Select Visayan Cities, crucial processes an SME must undergo inOctober 2004, by Carisa Aleta, selected cities in order to become a legal formalManuela Kropp and Mary Jean business establishment. The report identified notRoxas, GTZ SMEDSEP just areas of improvement for LGUs, but also best practices which LGUs can emulate. The study only covers the processes of paying business taxes and obtaining the mayor’s permit. The descriptions and analyses focused on new or first time applicants seeking business permits, as opposed to renewing applicants. 23
  27. 27. Reference Title ContentA Look at Past Studies and Efforts The report seeks to assess and summarize relatedon Business Permits and Licenses studies, laws and regulations, and programs thatand Local Economic Development, delve on local economic development. The study2005, Ateneo School of Government discusses the relevant laws and regulations,and The Asia Foundation, Making particularly those that concern the growth ofCities Work Project micro, small, and medium enterprises. Further, it analyzes the various indicators the business sector looks at in assessing the LGUs’ competitiveness. It reviews past studies in the area of streamlining business registration and licensing procedures. It also describes the success stories of five (5) LGUs in Luzon by rationalizing business registration and licensing procedures through One Stop Shops.City of Oroquieta, Business Permits Proceedings of workshop, containing a descriptionand Licensing System Assessment of BPLS of the city, the needed areas ofWorkshop, 6 – 7 September 2005 improvement, and the formulated systems planby Mr Cesar Cuyugan, Jr improvementCity of Ozamis, Business Permits Proceedings of workshop, containing a descriptionand Licensing System Assessment of BPLS of the city, the needed areas ofWorkshop, 8 – 9 September 2005 improvement, and the formulated systems planby Mr Cesar Cuyugan, Jr improvementMuntinlupa City: Business with a This is a teaching case on how Muntinlupa CityHeart, 2003, by Deanna Lijauco, Mayor Jaime Fresnedi employed three strategiesAteneo School of Government and for more transparent and red tape freeWorld Bank transactions in the local government. These were as follows 1. systemwide computerization for efficiency and transparency 2. business process review 3. confidence building initiatives in the business sector. The case also presented the streamline business permit and license procedures of the city. 24
  28. 28. Reference Title ContentReforms And Practices In Local The study showcases two urban local authoritiesRegulatory Governance: The Case in the Philippines: Quezon City and Dagupan City.Of The Philippines by Ms Perla E The paper examines closely their regulatoryLegaspi (year?) systems, focusing on their business licensing systems. It also looks into the issues, problems and concerns in regulating the operations of business establishments and enterprises in the two cities. The actual practices, changes and reforms in the licensing system are documented by the paper as well as the effects of the regulatory system on the promotion of business or economic activities in the cities. The paper discusses constitutional and the Local Government Code provisions relevant to the regulation and promotion of economic development, the national regulatory systems, the roles and functions of the national government agencies, which influence or affect the operations of local governments. It dwells on the structural or economic and legal or administrative systems at the local level. Special discussion is given to the business licensing system of the local governments of Quezon City and Dagupan City.Recommendations For This paper is on the legal and regulatory aspectsPhilippine Anti Trust Policy And of competition policy, particularly the frameworkRegulation for effective enforcement of competition in allAnthony Amunategui Abad sectors of the Philippine economy. 25
  29. 29. Annex 1A - National Requirements for the Business Registration Agency Legal Basis Steps Processing Time Fees Requirements/Actors involvedDepartment Of RA 3883 and RA 1. pay registration 30 minutes to 1 Registration fee For Single ProprietorshipTrade And 7042 (FIA’91) as processing fee hour, depending on = PHP 300 a. The applicant must beIndustry (DTI) amended by RA the national or local A surcharge of of majority age (18– Business 8179. 2. complete DTI. PHP 5.50 is years or over)Name application form imposed on a b. He or she mustRegistration For single (4 copies) renewal if filed submit two (2)(BNR) proprietor using a beyond the passport size pictures name other than 3. filing of form three (3) taken not more than his / her own with DTI Office months grace one year preceding the name, that where business period counted filing of such business name is located. from the date of application. should be expiration of the c. If an alien, he must registered. The registration certificate submit the following Business name shall be valid for previously documents. registration with five (5) years. issued. 1. Alien Certificate of the DTI is optional Registration (ACR) for partnerships 4. wait for the if any: and corporations. approval of the 2. accomplished DTI By registering the registration Form 17 under business name certificate Republic Act 7042 with the DTI, the 3. a written entrepreneur is appointment of assured that no Filipino Resident other entity may Agent legally use his / 4. authority to verify her business bank accounts / name anywhere in bank certificate of the Philippines. deposit 5. proof of inward 26
  30. 30. Agency Legal Basis Steps Processing Time Fees Requirements/Actors involved remittance of foreign currency for non resident alien and Bank Certificate of Deposit For resident alien a. copy of valuation report from the Central Bank if investment includes assets other than foreign exchange b. clearance from other involved agencies as Department of Science and Technology (DOST), Philippine National Police (PNP), etc. In case of alien retailer a. latest permit to engage in retail business per R.A. 1180 without the need to submit the requirements under letter c except ACR. b. if the applicant has acquired Filipino 27
  31. 31. Agency Legal Basis Steps Processing Time Fees Requirements/Actors involved citizenship by naturalization, election, or by any other means provided by law, he or she must submit proof of his or her ilipino citizenship. c. Filipinos whose name are suggestive of alien nationality must submit proof of Filipino citizenship (such as birth certificate, voter’s identification card, PRIC). For Corporation and Partnership Registration of business name is optional for corporation / partnership using their corporate / partnership name. However, corporations / partnership name must register such business name. a. a certified true copy or photocopies of the Articles of Incorporation or 28
  32. 32. Agency Legal Basis Steps Processing Time Fees Requirements/Actors involved Partnership, bylaws, respectively, and the Registration Certificate duly approved by the Securities and Exchange Commission (SEC) must be submitted. b. if the corporation or partnership is fully owned by an alien or the capital of which is more than 40% owned by aliens, the SEC certificate must specify that it is in accordance with the Foreign Investment Act (FIA) of 1991. c. in case there is an increase of capital, submit certificate issued by the SEC. An applicant who maintains a business with branches must register the main business and each and every branch separately.Cooperative R.A. 6938 Submit 4 copies of one (1) month Minimum of HP a. group of at least 15 29
  33. 33. Agency Legal Basis Steps Processing Time Fees Requirements/Actors involvedDevelopment Economic Survey, 250.00 for b. 25 percent ofAuthority Articles of registration. authorized capital is Cooperation, Bylaws, Registration fee subscribed minimum Affidavit of Non depends on paidup capital must Relationship, Bond amount of be PHP 2000.00 of Accountable paidup capital OfficersSecurities and Batasang Submit 7 copies of One (1) week if Non stock Corp. a. group of at least 5Exchange Pambansa Blg 68 the following: using Express Lane PHP 470.00 but not more than 15Commission Articles of Stock depends incorporators /(SEC) Incorporation, on the capital: stockholders; majority Bylaws, Treasurer’s 1/10 of 1% of should be residents of Affidavit, Bank paidup capital the Philippines Certificate of b. paidup Capital must Deposit, not be less than PHP Authority to verify 5000.00, however Bank Account, TIN of other types of Incorporators, activities may require Registration Data higher paidup capital SheetPhilippine P D 66 as 1. submit initial Thirty (30) Working Application Fee: Laborintensive enterprises -Export Amended and R A requirements in Days New Non if not labor intensive,Processing 7916 3 Copies : Pioneer – PHP enterprise must involveZone (PEZA) 2. application For 3000.00; New techno transfer – must be Registration Pioneer: PHP export oriented - Project 5000.00 Feasibility Study Registration 3. approval of Fee: PHP application. 5000.00 Additional 30
  34. 34. Agency Legal Basis Steps Processing Time Fees Requirements/Actors involved Documents shall Incentives / be required Advantages upon approval. - exemption from taxes. In lieu, a payment of 5% tax of total gross income - Value Added Tax zero rating - other special privileges: - ownership of equity - employment of aliens - simplified import and export proceduresBoard Of EO 226 submit 3 copies of twenty (20) working - filing fee of a. projects should be IPPInvestments the following: BOI days PHP 1000.00 listed(BOI) Form 501 (Duly to PHP b. if not listed: 50% Of Notarized), SEC 4000.00 for production should be non Registration, Articles project cost traditional products Of Incorporation and below PHP Bylaws, Project 4m to above Feasibility Study, PHP 50m 31

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