Last December 10, 2021, the President signed into law Republic Act 11595, otherwise known as “An Act amending Republic Act No. 8762 or the Retail Trade Liberalization Act of 2000 (RTLA), by lowering the paid-up capital requirement for foreign retail enterprises and other purposes”.
The new law lowers the requirement for foreign investors to engage in retail trade in the country by promulgating these amendments:
1. Lowering of the Minimum Paid-up Capital Requirement and Investment Per Store Requirement.
The minimum paid-up capital was lowered from USD 2,500,000 to PHP 25,000,000 which, if converted, is around USD 500,000. For foreign retailers having more than one (1) physical store, the law also decreased the minimum investment per store to PHP 10,000,000 (around USD 200,000 if converted) from USD 250,000.
It also removed the Certification of Prequalification that was formerly issued by the Board of Investments (BOI).
2. Removal of Public Offering Requirement
Retail enterprises with more than 80% of foreign ownership are no longer required to publicly offer 30% of their share in the Philippines.
3. Preferential Use of Filipino Labor and Promotion of Locally Manufactured Products
Before engaging the services of a foreign national, foreign investors should comply with the Labor Code on the determination of nonavailability of a competent, able, and willing Filipino citizen. Foreign retailers are also encouraged to have a stock inventory of products that are made in the Philippines.
4. Change of Regulatory Agency
Partnerships, associations, and corporations are now under the regulation of the SEC instead of the DTI. Nevertheless, the DTI remains to have authority over foreign retailers who have or will have sole proprietorship in the Philippines.
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants
As published in SunStar Cebu, dated 25 February 2022
