How to Register a Business in Davao City, Philippines: A Step-by-Step Guide for Entrepreneurs

Unlock business success in Davao City, a thriving business hub with an ideal location, cost-efficient operations, and supportive government policies that encourage growth and investment.

Types of Businesses You Can Register in Davao City

Before registering, choose a business structure that best suits your needs. Here are the main options available in Davao City:

1. Sole Proprietorship

   • Owned and operated by a single person.

   • Simple to set up and manage but comes with unlimited liability.

2. Partnership

   • A business owned by two or more individuals.

   • Partners share profits and liabilities and may operate as general or limited partners.

3. Corporation

   • A separate legal entity that offers limited liability to its shareholders.

   • Ideal for medium to large businesses, requiring at least two incorporators.

4. One Person Corporation (OPC)

   • Allows a single individual to form a corporation.

   • Provides limited liability with fewer compliance requirements than a traditional corporation.

5. Foreign-owned Entities

   • Foreign corporations can set up subsidiaries or branch offices in Davao City, but specific industries have foreign ownership restrictions.

     
     

Step-by-Step Guide to Registering a Business in Davao City

Navigating the registration process is straightforward if you follow these steps:

1. Choose the Business Type and Reserve a Name

   • Decide on a business structure and reserve your business name with the Securities and Exchange Commission (SEC) for corporations and partnerships or the Department of Trade and Industry (DTI) for sole proprietorships.

   • Ensure your chosen name is unique and unused by other businesses.

2. Register with SEC or DTI

   • Submit the necessary legal documents, such as Articles of Incorporation or Partnership and by-laws, to the SEC (for corporations/partnerships) or DTI (for sole proprietorships).

3. Obtain a Barangay Clearance

   • Secure this clearance from the barangay where your business is located. It’s a prerequisite for obtaining your business permit.

4. Register with the Local Government Unit (LGU)

   • Apply for a Mayor’s Permit from Davao City’s government. Required documents include:

     • SEC/DTI registration certificate

     • Barangay Clearance

     • Lease contract or proof of property ownership

     • Location map and, if necessary, an occupancy permit

   • The city’s Business Bureau will process your application, issuing a Mayor’s Permit once approved.

5. Register with the Bureau of Internal Revenue (BIR)

   • After getting the Mayor’s Permit, register your business with the BIR to obtain a Tax Identification Number (TIN), classify your business for tax purposes, and register your official receipts.

6. Register with Government Agencies for Employee Benefits

   • If you plan to hire employees, register with the Social Security System (SSS), PhilHealth, and Pag-IBIG Fund. These agencies require employer contributions on behalf of employees.

     
     

Estimated Costs and Timeline for Registration in Davao City

Here’s an estimated breakdown of the fees:

• Business Name Reservation (SEC/DTI): PHP 500 – PHP 1,500

• SEC Registration (Corporation): PHP 4,000 – PHP 7,000

• Barangay Clearance: PHP 500 – PHP 1,000

• Mayor’s Permit: PHP 2,000 – PHP 5,000 (depending on business size)

• BIR Registration: PHP 500 – PHP 1,500

The process generally takes 1-2 months but varies depending on document completeness and processing times.

Understanding Taxation in Davao City

Businesses in Davao City are subject to national taxes (income tax, VAT, or percentage tax) managed by the BIR, as well as local business taxes calculated based on gross sales or receipts. Corporate income tax rates are 25% for large corporations and 20% for corporations with net taxable income not exceeding PHP 5 million and total assets not exceeding PHP 100 million.

Incentives for Businesses in Davao City

Davao City offers incentives, especially to businesses in priority sectors such as agriculture, tourism, IT, and manufacturing. These can include tax holidays, exemptions from certain fees, and support with infrastructure development.

Benefits of Registering a Business in Davao City

Davao City is a business-friendly environment with a streamlined permit process, supportive government, and a growing economy fueled by agriculture, commerce, and a booming BPO industry. The city’s Business Bureau even allows online submission options, making it easier for companies to comply with requirements.

Conclusion

Davao City offers an attractive environment for entrepreneurs and companies looking to establish a presence in one of the Philippines’ most dynamic regions. By following this guide, you can navigate the registration process efficiently and set your business up for success.

Whether you’re a small startup or a large corporation, Davao City’s supportive government, cost-effective operations, and strategic location make it an excellent choice for your business. Partnering with local experts, such as Davao Accountants, can help ensure smooth registration and compliance with local regulations.