Distinctions between Regional Operating Headquarters (ROHQ) and Regional Headquarters (RHQ)

  1. The distinctions between ROHQ and RHQ are:
  • As to purpose, R.A. No. 8756 defines Regional Operating Headquarters (ROHQ) as any foreign business entity formed, organized, and existing under any laws other than those of the Philippines whose purpose is to service its affiliates, subsidiaries or branches in the Philippines, Asia-Pacific Region, and other foreign markets.

Meanwhile, Regional Headquarters (RHQ) is any foreign business entity formed, organized, and existing under any laws other than those of the Philippines whose purpose is to supervise, coordinate and communicate center to its affiliates, subsidiaries, and branches in the Asia-Pacific Region and other foreign markets.

  • As to capability to derive income, a ROHQ may derive income for the qualifying services it renders in the Philippines, while a RHQ cannot derive income in the Philippines. The parent company of the RHQ office may market and sell products to other companies except for the RHQ office in the Philippines.
  • As to requirements, an ROHQ is required to deposit an initial inward remittance of US$ 200,000.00 and must submit proof of said remittance to the SEC within 30 days from receipt of the license.

An RHQ is required to deposit an initial inward remittance of US$ 50,000.00 which will be registered with the Board of Investment (BOI). It must submit a certificate of inward remittance from any local bank  that it has remitted the amount of US$50,000 within 30 days from the receipt of the SEC registration certificate.

  • As to tax implications and incentives, ROHQ is subject to the preferential rate of 10% on taxable income; exemption from all kinds of local taxes, fees, or charges except real property tax on land improvements and equipment; tax and duty-free importation of equipment and training materials (provided that equipment or material is not available locally and subject to prior approval of the BOI).

RHQ has an Exemption from Corporate Income Tax (but RHQs still need to file an annual information return); Exemption from local taxes, fees, and charges; Exemption from VAT; Tax and duty-free importation of equipment and training materials (provided that equipment or material is not available locally); and  importation of motor vehicles are subject to payment of taxes and duties.

Related Articles:

Requirements to establish a representative office in the Philippines

Differences in setting up a local subsidiary office and a branch office of a foreign corporation



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