Retail trade was historically closed to foreigners, and the Retail Trade Liberalization Act of 2000, Republic Act No. 8762, opened it subject to capital thresholds high enough that few could enter. Republic Act No. 11595, which amended it in 2021, lowered the barrier dramatically. Under the amended law a FOREIGN RETAILER must have a minimum PAID-UP CAPITAL of twenty-five million pesos (P25,000,000.00). The change is best understood against what it replaced: the previous requirement was pegged in dollars at two and a half million US dollars, which translated to roughly one hundred forty million pesos, so the reform cut the entry threshold by more than four-fifths. A separate and additional requirement applies to multi-store operations: where the foreign retailer engages in retail trade through more than one physical store, the minimum INVESTMENT PER STORE must be at least ten million pesos (P10,000,000.00). Several conditions accompany the capital requirement. The foreign retailer's COUNTRY OF ORIGIN must not prohibit the entry of Filipino retailers, a reciprocity condition. For registration with the Securities and Exchange Commission or the Department of Trade and Industry, the foreign retailer must submit a certification from the Bangko Sentral ng Pilipinas of the INWARD REMITTANCE of its capital investment, or other proof that the capital is deposited and maintained in a Philippine bank — the point being that the capital must actually be brought in and kept here, not merely declared. The law also directs that the DTI, the SEC, and NEDA REVIEW the required minimum paid-up capital every three (3) years from the effectivity of the Act, so the figure is designed to be revisited rather than fixed permanently. Two practical notes. The liberalisation concerns RETAIL TRADE specifically, meaning the sale of goods for consumption to the general public, and does not by itself change the rules for other restricted activities, which continue to be governed by the Foreign Investment Negative List and the Constitution. And a foreign retailer meeting the threshold is still subject to the ordinary requirements applicable to any business here: SEC or DTI registration, BIR registration, the mayor's permit, and the labour and consumer protection laws.
What Changed
RA 8762 opened retail trade in 2000 but at thresholds few could meet. RA 11595 (2021) cut the minimum PAID-UP CAPITAL for a foreign retailer to P25,000,000 — down from a dollar-pegged figure equivalent to roughly P140 million, a reduction of more than four-fifths.
The Per-Store Requirement
Additional and separate: a foreign retailer operating through more than one physical store must invest at least P10,000,000 PER STORE.
The Conditions
- RECIPROCITY — the retailer's country of origin must not prohibit the entry of Filipino retailers;
- A BSP certification of INWARD REMITTANCE of the capital, or proof it is deposited and maintained in a Philippine bank — the capital must actually be brought in and kept here; and
- Review every THREE YEARS by the DTI, SEC, and NEDA, so the threshold is meant to be revisited.
What It Does Not Change
The liberalisation concerns RETAIL TRADE — the sale of goods for consumption to the general public. Other restricted activities remain governed by the Foreign Investment Negative List and the Constitution. A qualifying foreign retailer still needs SEC or DTI and BIR registration, a mayor's permit, and must follow labour and consumer protection law.
Frequently Asked Questions
How much capital does a foreign retailer need in the Philippines? A minimum paid-up capital of twenty-five million pesos under RA 11595, which amended the Retail Trade Liberalization Act.
Is there an extra requirement for multiple stores? Yes. Where the foreign retailer operates through more than one physical store, the minimum investment per store must be at least ten million pesos.
Does the capital have to be brought into the Philippines? Yes. Registration requires a Bangko Sentral certification of the inward remittance of the capital investment, or other proof that it is deposited and maintained in a Philippine bank.
Is the P25 million threshold permanent? No. The law directs the DTI, SEC, and NEDA to review the required minimum paid-up capital every three years from the effectivity of the Act.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If you have questions about your rights or options under Philippine law, our firm is available to assist. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.