On December 10, 2021, the President signed into law Republic Act 11595, otherwise known as the “An Act to Amend Republic Act 8762 or the Retail Liberalization Act of 2000 (RTLA), by lowering the paid-up capital requirement for foreign retail businesses. and for other purposes.
The new law reduces the requirement for foreign investors to engage in retail business in the country by enacting these amendments:
1. Lowering the minimum paid-up capital requirement and the investment requirement per store
The minimum paid-up capital has been lowered from $2,500,000 to P25,000,000 which, if converted, is approximately $500,000. For foreign retailers with more than one physical store, the law also reduced the minimum investment per store to P10,000,000 (about $200,000 in case of conversion) from $250,000.
It also removed the prequalification certification that was previously issued by the Board of Investments (BOI).
2. Removal of the public offer obligation
Retail companies that are more than 80% foreign-owned are no longer required to publicly offer 30% of their share in the Philippines.
3. Preferential use of Filipino labor and promotion of locally produced products
Prior to engaging the services of a foreign national, foreign investors must comply with the Labor Code on the determination of non-availability of a competent, capable, and willing Philippine citizen. Foreign retailers are also encouraged to stock products made in the Philippines.
4. Change of regulatory agency
Partnerships, associations and corporations are now regulated by the Securities and Exchange Commission instead of the Department of Trade and Industry (DTI). Nevertheless, the DTI continues to have authority over foreign retailers who have or will have a sole proprietorship in the Philippines.
Please be guided accordingly.
P&A Grant Thornton
pblic certified account