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Employing in Philippines

At a glance

Employment in Philippines

Foreign companies willing to employ workers in the Philippines, whether they are locals or foreign nationals, must comply with the Labour Code applicable standards. Adhesion to the labour regulatory framework is key to avoid the nullification of contractual terms and conditions between employer and employees.

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Payroll & Tax in Philippines

The Philippines made paying taxes easier for companies by introducing an electronic filing and payment system for social security contributions. Many companies will consider outsourcing this task to GEO (Global Employment Organization).

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Immigration / Work Permits in Philippines

Foreign workers are required to have the proper visas and work permits in the Philippines, as established by immigration laws. This often requires incorporation and licensing prior to sponsoring work permits for employees, which can be a problem if your company is trying to enter the country quickly. The most common work permit is the Temporary Visitor’s Visa 9 (a).

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Incorporation

There are several business structures available for incorporation in the Philippines. In some cases it will depend upon the type of industry that the company operates in, and the scope of planned business activity. Our guide has a comparison of the time and cost for incorporating standard company structures including Corporation, Partnership and Sole Proprietorship.

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GEO Solutions or DIY Employment in Philippines?

Companies entering the Philippines must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Philippines Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a local entity established that can run payroll.

A DIY approach will typically take 2-3 months until there is a properly incorporated entity ready to run payroll and cost. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Using Shield GEO Employer of Record Services in Philippines

Payroll Philippines
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote.

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

 
Grossed income Tax Rate (%)
Php 0 – 10,000 5%
Php 10,000 – 30,000 10%
Php 30,000 – 70,000 15%
Php 70,000 – 140,000 20%
Php140,000 – 250,000 25%
Php 250,000 – 500,000 30%
Php 500,000 and above 32%
Tax Returns Supplied

Yes.

Employers Social Security and statutory contributions

The employer Social Security contribution is PHP 1,208.7 per employee per month, calculated on gross salary.

Employees Social Security and statutory contributions

The employee Social Security contribution is 1.33% to 2.98%, calculated on gross salary (withheld).

Insurance requirements

Depending on the insurance premium, PHP 0.5 every PHP 4.

Corporate Income Tax Rate

30%, calculated on taxable profit.

Payroll Tax

1.16%-1.19% (per employee per month). The Payroll Tax is separated from employer social security. For more info please consult the Employment Section.

Sales Tax

VAT is equal to 12%.

Withholding Tax

Tax on Interest is equal to 20%.

Other Tax

Local Business Tax: 0.5%, calculated on the previous year turnover;

Real Property Tax: 2%, calculated on the assessed property value;

Community Tax Certificate: PHP 10,500 (Fixed Fee);

Environmental Tax: PHP 10,000 (Fixed Fee);

Tax on check transactions: PHP 1.15 per check.

Work Permits
Work Permit cost

Alien Employment Permit : PHP 8,000;

Provisional Work Permit : PHP 4,000.

Work Permit processing time

Alien Employment Permit : 2-3 weeks;

Provisional Work Permit : 2-3 weeks.

Work Permit process

Alien Employment Permit (AEP) – The following documents must be filed at the DOLE Regional Office or Field Office:

– Duly accomplished Application Form;

– Photocopy of Passport, with visa or Certificate of Recognition for refugees;

– Contract of Employment/ Appointment or Board Secretary’s Certificate of Election;

– Photocopy of Mayor’s Permit to operate business or in case of locators in economic zones, Certification from the PEZA or the Ecozone Authority that the company is located and operating within the ecozone; and

– Photocopy of current AEP (if for renewal).

Provisional work Permit:

– Secure the CGAF from either at the Public Information and Assistance Unit (PIAU) at BI G/F Main Office or from the official BI Website;

– Submit the documents for pre-screening to the Central Receiving Unit (CRU) or to the frontline officer or staff of other Immigration Offices able to process this transaction;

– Get the Order of Payment Slip (OPS);

– Pay the required fees;

– Submit copy of Official Receipt;

– Get the approved PWP.

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