Why My $200K Business Requirement Dropped to $100K (And Yours Can Too)

I remember the first time I read that a 100%-foreign-owned company in the Philippines typically needed US$200,000 in paid-in capital. My pockets tightened. But fast forward a few registrations, approvals, and a lot of paperwork later - the requirement for my company dropped to US$100,000. Not a loophole, not a gimmick - a set of legal, widely used options available to investors who structure their business the right way.

If you're a foreign investor or a Filipino partner trying to bring in foreign capital, this article walks you through how that drop happens, why it's legitimate, and how you can make it work for your company in the Philippines.

The $200K baseline - where it comes from

Historically, the Securities and Exchange Commission (SEC) and implementing rules tied a US$200,000 minimum paid-in capital to corporations that are 100% foreign-owned, especially if they operate in the domestic market. The idea: ensure the business has enough capital to operate and contribute to the economy.

But the rule has exceptions. Philippine policy actively promotes export-oriented businesses, technology transfer, job creation, and investments in special zones. Those exceptions let qualified investors lower the required minimum paid-in capital - commonly to US$100,000 or even less in special cases.

The key players and rules you need to know:

• SEC: registers corporations and enforces paid-in capital rules.
• BOI (Board of Investments): gives registrations and incentives for priority activities.
• PEZA (Philippine Economic Zone Authority): incentives and special status for companies in economic zones.
• DTI: sets broader trade and foreign investment policy.
• BSP: manages foreign exchange and capital remittance/reporting.

How I reduced my requirement - the practical reasons that matter

There are common pathways recognized by Philippine authorities that legitimately reduce the baseline paid-in capital:

1. Registered as BOI/registered under investment incentives
   If your activity is on BOI's priority list and you get BOI registration, you can qualify for the reduced capital requirement. BOI registration focuses on projects that generate employment, promote exports, or introduce technology.

2. Located in a PEZA special economic zone
   Companies inside PEZA zones enjoy tax and customs incentives and are treated differently for capital requirements. Many PEZA-registered companies are allowed lower paid-in capital thresholds.

3. Export orientation
   If the company will export a majority of its output (or be export-oriented), regulators accept lower capital thresholds because export activities bring foreign exchange and jobs.

4. Employment creation
   If you commit to hiring a certain number of direct Filipino employees (often 50 or more, depending on policy updates), the capital requirement can be reduced. The Philippines wants jobs; they'll trade a chunk of capital requirement for people employed.

5. Use of advanced technology or capital‑intensive activities
   If the project introduces significant technology or capital equipment and has a government endorsement, the paid-in capital hurdle can be lowered.

6. Special provisions for certain industries
   Some sectors (e.g., IT‑BPO, export manufacturing, renewable energy) have special treatment. Check BOI and PEZA lists for specifics.

In my case, it was a mix: we registered with BOI as an export‑oriented IT service company, committed to hiring 60 direct employees in Metro Manila, and demonstrated that our project introduced specialized software tools and training (advanced technology). That combination qualified us for the US$100,000 threshold.

Step-by-step: How you can replicate this

1. Decide your company type and activity
   Be specific. "IT services" or "online export sales" is different from a general trading company. Export-oriented and tech-driven activities are advantageous.

2. Check BOI/PEZA priority lists and incentives
   Go to BOI and PEZA websites and search their updated investment priority lists. If your activity is on these lists, prepare to apply for registration.

3. Prepare a feasibility/business plan focused on employment and exports
   The BOI (or PEZA) will evaluate your expected foreign exchange earnings, local employment, and tech transfer. Numbers matter: show projected revenue, export percentage, and hires.

4. File for BOI or PEZA registration before finalizing capital structure
   Registration and issuance of a Certificate of Registration from BOI or PEZA usually happens before relying on the lower capital requirement with the SEC. Engaging early avoids rework.

5. Register with the SEC using the incentive endorsement
   When you go to the SEC to incorporate, include your BOI/PEZA clearance and the commitment documents. The SEC will accept the reduced paid-in capital based on the government endorsement.

6. Open a corporate bank account and bring in the capital (BSP reporting)
   Follow BSP's reporting rules when you inbound remittances. Keep clean documentation that funds were legally brought into the country.

7. Hire and document compliance
   If you committed to hiring 50–60 direct employees, start the HR process. Maintain payroll, employment contracts, and compliance records - regulators can audit.

8. Maintain reporting and compliance during incentive period
   BOI and PEZA require periodic reports. Failing to meet commitments may result in penalties or reverting to the original capital conditions.

Real-world tips and common pitfalls

• Don't claim employment numbers you can't meet. The government verifies actual hires.
• Be honest about export percentages. Customs and BOI audits can check invoices and shipment records.
• Use a local lawyer or corporate services firm familiar with BOI/PEZA processes - mistakes in submission are common for first-timers.
• Timing matters: sequence BOI/PEZA registration before SEC incorporation when aiming for reduced capital.
• Keep licenses aligned: BIR registration, local permits, and environmental compliance (if applicable) should be part of your plan.
• Expect bureaucracy. Approval times vary; plan for 8–12 weeks for complete processing across agencies.
• For PEZA: you'll also need an available site inside a PEZA zone and compliance with their location and infrastructure rules.

Who benefits most from the US$100K path?

• Startups and SME-scale foreign ventures that are export-oriented (IT services, software development, export manufacturing).
• Investors who can commit to hiring local talent rather than packing the business with foreign employees.
• Companies that bring technology transfer, training, or capital equipment to the Philippines.
• Entrepreneurs who prefer to use incentives to reduce upfront capital but can comply with reporting and commitments.

A short checklist you can use today

• Identify business activity and confirm BOI/PEZA priority status.
• Draft a business plan focused on exports, employment, and tech transfer.
• Contact BOI/PEZA for registration requirements (and any pre-application consult).
• Prepare SEC incorporation documents and include BOI/PEZA endorsements.
• Open a corporate bank account and arrange foreign capital remittance with BSP compliance.
• Set HR hiring timeline and payroll setup.
• Maintain periodic reports to BOI/PEZA/SEC/BSP.

Final encouragement

Lowering your paid-in capital from US$200K to US$100K is a common, legitimate pathway in the Philippines - not a hack. It's about aligning your business model with national priorities: exports, jobs, and technology. If you can show those outcomes, regulators will give you the break. Bring a clear plan, get the right endorsements, and keep your commitments.

Happy building - the Philippines wants the investments that create jobs and move the economy forward.