Context
In the Philippines, every company must secure a Business License (Mayor’s Permit) from the Local Government Unit (LGU) yearly. The cost of this license is calculated as a percentage of declared gross revenue: the higher the revenue, the higher the fee.
⚖️ Calculation method
– Basis: gross revenue declared with quarterly VAT returns,
– Percentage varies by city/municipality and type of activity,
– Rebilling of costs may artificially inflate revenue and increase the license fee.
Risks
– Unnecessary extra cost if rebilling is included in revenue,
– Issues during LGU audits if inconsistencies with financial statements,
– Possible disputes if the calculation is contested.
✅ Best practices
– Analyze revenue structure and distinguish real income/rebilling,
– Document intra-group transactions,
– Avoid artificially inflating reported revenue,
– Align LGU filings with audited financials,
– Consult a local tax advisor to optimize revenue reporting.
In summary
The cost of the Business License depends directly on declared revenue. Careful management of rebilling helps reduce this cost and secure compliance.
Opko Finance, an accounting and outsourcing services company based in Asia and managed by a French expatriate, helps Start up, SME, Entrepreneurs, subsidiaries of big companies to set up and develop their business in the best hubs in Asia and Middle East, faster and with fewer resources through outsourcing solutions in the Philippines.
For any information on The Registration of a One Person Corporation in the Philippines, please contact our team to info@opkofinance.com.
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