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They are not allowed to generate income in the Philippines and offer services to
third parties. Hence, their parent companies are required to remit at least
US$30,000.00 every year to support their operations as well as cover their
operating expenses.
Under Philippine laws, a representative office is only allowed to engage in the
following activities:
Corporate Taxing
Since none of its income is generated in the Philippines, it is exempted from
paying income and value-added taxes to the taxing authority in the
country – the Bureau of Internal Revenue (BIR). It is, however, subject to
withholding taxes on its remittances to its parent company and employee
compensation.
A consequence of its tax exemption is that it is not qualified to apply for fiscal
and non-fiscal tax incentives from the Board of Investments (BOI) or Philippine
Economic Zone Authority (PEZA).