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How Foreigners Can Set Up a Business in Davao City, Philippines: A 2025 Guide
- Herald Studios
- Nov 14
- 3 min read
Davao City has become one of the most attractive investment destinations in the Philippines. Known for its stable peace and order situation, reliable local governance, business-friendly policies, and rapid economic growth, it is now a top choice for foreign entrepreneurs looking to establish operations in the country.
If you are a foreign national exploring business opportunities in Davao, this guide will walk you through the key requirements, allowed industries, registration process, and important legal considerations.
Why Davao City Is Ideal for Foreign Investors
1. Strategic Location
Davao serves as the major commercial and logistics hub of Mindanao, with access to international airports and seaports.
2. Strong Local Governance
Local government units (LGUs) in Davao are known for being efficient, predictable, and business-friendly—an advantage highly valued by foreign companies.
3. Talent Pool and Competitive Costs
Compared to Metro Manila and Cebu, Davao offers:
Lower cost of labor and office space
Large English-speaking workforce
Growing IT-BPM, construction, real estate, and agribusiness sectors
4. Investment Incentives
Certain areas in Mindanao offer incentives under the Board of Investments (BOI) and Philippine Economic Zone Authority (PEZA). Davao City also maintains local incentives for priority industries.
Can Foreigners Own a Business in Davao?
Yes, foreigners can set up a business in Davao City legally, subject to Philippine laws on foreign ownership.
Full (100%) Foreign Ownership Allowed If:
The business is not included in the Foreign Investment Negative List (FINL)
The Paid-Up Capital is USD 200,000 minimum (may be reduced to USD 100,000 if the business uses advanced technology or hires at least 50 Filipino employees)
Industries Fully Open to Foreign Ownership
IT and Business Process Outsourcing (BPO)
Consulting and professional services (with exceptions for regulated professions)
Export enterprises
Trading and wholesale businesses
Manufacturing
Real estate development (land cannot be owned—only buildings/leases)
Industries with Restrictions
Under the Public Service Act (as amended) and the Foreign Investment Negative List, some sectors have caps on foreign ownership (e.g., mass media, small retail, professions requiring Philippine licenses).
If you want confirmation whether your proposed business is allowed for foreign ownership, our office can conduct a foreign equity assessment based on the latest laws.
Step-by-Step Guide to Setting Up a Foreign-Owned Company in Davao
1. Choose Your Business Structure
Most foreign investors choose among:
Domestic Corporation (Most common)
Branch Office
Representative Office
Regional Headquarters (RHQ) or Regional Operating Headquarters (ROHQ)
A domestic corporation provides flexibility and easier access to local incentives.
2. Secure Name Reservation with the SEC
The Securities and Exchange Commission (SEC) handles corporate registrations. Name availability can be checked and reserved using the SEC online system.
3. Prepare Documentary Requirements
Typical requirements include:
Articles of Incorporation & By-laws
Proof of inward remittance (for foreign capital)
Passport of foreign directors/officers
Notarized documents (may require apostille if from abroad)
Board resolution of the parent company (for branches or representative offices)
4. Register with the Appropriate Agencies
After SEC approval, the company must register with:
• Bureau of Internal Revenue (BIR)
For tax registration, official receipts, and accounting books.
• Local Government of Davao City
To obtain:
Mayor’s Permit
Business Permit
Barangay Clearance
• Social agencies, if hiring employees:
SSS
PhilHealth
Pag-IBIG
Special Considerations for Foreign Companies in Davao
A. Visa Options for Foreign Investors
Special Investor’s Resident Visa (SIRV)
13A Resident Visa
Temporary Visitor Visa with work permit (SWP or AEP)
B. Land Ownership Restrictions
Foreigners cannot own land but can lease long-term (up to 50 years, renewable).
C. Tax Incentives
Depending on the business’s location and industry, the company may qualify for:
BOI incentives
PEZA incentives
Local tax holidays for priority sectors
Foreigners can set up a business in Davao City legally, subject to these special considerations.
Need Help Establishing Your Business in Davao?
Hernandez & Associates assists foreign investors with:
Business registration
SEC compliance
Tax and regulatory advisory
Work Visas and Immigration
Contracts and corporate governance
Setting up branches, representative offices, or subsidiaries
📩 Contact us through www.hernandezlaw.info to schedule a consultation. Let us help you start your business journey in Davao City smoothly and legally.
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