[Ask Henry] – Having An Online Business While Living in the Philippines



online biz in the philippinesQuestion:  “My question is about the legality of online retail businesses in the Philippines.  Is it legal for me, as a retired expat living in the Philippines, to have an online retail store which sells merchandise purchased and shipped from China and/or America and sold through the website to be mailed to the philippines buyer? — From Donna W. Henry:  Hello Donna.  Well, I’ll start with the disclaimer that I’m not an attorney or accountant so, I can only share with you my thoughts, friend to friend.  But here’s the situation as I understand it.   If you are a Single person (unmarried) then you’re required to get an extension on your Visa on a monthly basis.  Under such circumstances you are considered a ‘Tourist’.  A tourist on a really long vacation, but still.. a tourist in the legal sense.  

Now, as a tourist, you cannot hold a job here in the Philippines unless you get a Visa specifically allowing you to do so.  So.. in regards to working “offline” at a factory or physical business here, you’re not allowed to take up a ‘Job’ here. Now.. that being said.  Because you are a Tourist, if you happen to have an online business it only makes sense that during your extended vacation here in the Philippines you will need to continue running your business.  Where you log into while here is your private matter.  Very few, in fact I can’t think of any offhand, people actually ‘host’ their website on an ISP server that is located here in the Philippines.. so it can’t even be said that the business is even physically present here.  If a person’s online business is on a server with say, GoDaddy, whose servers are in the US and some abroad.. then all you’re really doing is monitoring your business from afar same as making a business call to your restaurant in your home country.  Now, just since we’re on the subject.. living in the Philippines does not mean you don’t have to file taxes in your home country just because your business is online and you’re not living in your home country.  You still have to file.  Right now it’s up to each individual State in the US whether or not Sales Tax is required on internet purchases.  If I remember correctly, California does this and it drove Amazon sales from CA down the toilet for Californians.  After all, why buy a book from an Amazon seller in CA when you could order it without sales tax from any other Amazon seller outside of it.

Also, even if the business is not registered as a business.. you still need a way to collect the money online.  Most people opt to use PayPal since it’s so well known, but there are lots of other online CC processors available too.  CCBill is another well known, trusted industry leader.  When you set up an account with a CCard processor they are required to ask for your Social Security number.  (If you have an EIN or ITIN number, you can use that.)  So, whether your online business is registered or not.. if the IRS ever wanted to audit you (shudder).. they would pull up any money that passed through the hands of your SS#, including income via PayPal, CCBill, etc. But to answer your question succinctly, the answer is; “Yes.. you can have an online retail store while living in the Philippines.”  In fact, many expats do this already to supplement their income.  I myself own the following online store;

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A Few Things To Know About Running An Online Store Overseas

First let me share with you my philosophy regarding any kind of business.  I am a big believer in the Free Market.  If a multitude of vendors are selling the same thing, the best businesses will prosper while the others just fade away.. leaving the Consumer with the best service and options and rewarding those who provide it.  I also believe there is PLENTY of business out there, more than enough for everybody.  But you have to be able to compete well to get that business. Take for instance, selling cell phone accessories online.  There are lots and lots of people looking for cool, new covers for their phones, earplugs, screen-protectors, etc. and they are hungry for something cool or durable at an affordable price.  There is no shortage of consumers, almost everyone even in the Philippines and India has a cell phone, not just first-world countries.  But.. there are also a lot of other vendors/businesses out there looking to get a slice of that business.  Lots of competition whether it’s an online store, eBay auctions or a kiosk at the mall.  People here buy them cheap from China and I see both cell phone accessories and cell phones sold practically every ten feet along the street and malls here. So.. even though there are tons of consumers who need or want your goods, the real trick with any business (online or brick-and-mortar) is to attract buyers to YOU.  ‘Traffic’ is the key to a successful business.  For brick-and-mortar the old adage is “Location.  Location.  Location.”  

Online, it’s an even playing field, location doesn’t matter.  That’s good.. and bad.  Because now you can compete with anybody else but.. you gotta get attention to your site before you can see any sales. There is such a thing as ‘conversion rate’, usually measured in percentage.  Basically, out of every 100 persons who ‘visit’ your site.. how many of them make a purchase?  Is it five?.. then your CR is 5%.  But a CR of 5% is actually pretty darn high unless you’re a major online player.  A new website that simply ‘exists’, and is only advertised to friends and family can expect a CR of about .1%.  That’s about 1 sale for every 1,000 visitors.   You may have great inventory and fantastic prices.. but just like a lot of fantastic garage bands I’ve heard play in small dives.. unless you get noticed, the returns are kinda dismal.  I’m not trying to discourage you.  I’m just telling you up-front that you gotta have some way of “getting the word out” to the Internet World that out of all the web-sites selling widgets.. they should be buying them from you.

So, How Do I Get Traffic? running an online business

Remember the story of Rumpelstiltskins?  The little guy who spun straw into gold?  That’s how you get traffic:  You make it out of thin air.  Not an easy thing to do always, but obviously lots of people manage to do it in a variety of creative ways.  One thing you need is ‘Branding’.  A logo, catch-phrase that you consistently put ‘out there’.  Out where?  Well, as it turns out I recently wrote an article on my other blog about free ways you can market your product online, you can read it here, “Easy and Free Ways To Market..”  But wait.., there’s more!  I also wrote another free article titled, “7 Places You Should Be Advertising Online.. For Free”, so check those out sometime. You can also hire people to do this for you.  This is called SEO (Search Engine Optimization).  

Now, first.. let my share my own personal opinion of SEO providers.  In my book, 90% of them are snake-oil salesmen.  They have absolutely no clue what they’re doing.  Many of them subcontract your SEO work out to someone else online.  On top of that, others simply bought some program that creates “back-links” on websites that nobody ever reads with the idea that it will somehow fool Google into thinking lots of people are talking about your website and push you higher into the search rankings.  The problem with that is, Google is not stupid. The algorithms Google employs to determine a site’s “importance” (relevancy, actually) also takes into account where those links came from.  So, a back-link from some link-farm isn’t worth squat.  Another angle some inexperienced SEO guys make money off is by simply duplicating your content by reposting it in other places.  Now, it might seem at first that if you exist on more websites it will make your site seem noteworthy to Google.  But, again, Google knows via its spider-bots that the content originally came from your site and all the other re-posts are just duplicated ‘noise’.  In short, it’s my opinion the vast majority of small-time SEO, one-man outfits are either dishonest or incompetent and will actually damage your online presence in the long run with any number of tactics that are at best, amateurish and over-priced.

But, just like looking for Love.. it is out there.  Some SEO guys are what they call “White Hat” SEOs.  They only use ethical methods to “possibly improve” your standing with Google.  But even with them, it’s an ongoing campaign.. which means money you pay to them for months before they can deliver lasting traffic.  And just like the guy who says, “I love you” with his fingers crossed behind his back.. many SEOs claim to be White Hat and are not.  So it’s back to ‘buyer beware’ for you. What I can tell you is this with surety; If anyone just builds a website, finishes it and does not add fresh content to it.. it will sit there and die as surely as a plant that doesn’t get watered.  It’s inevitable.  Website stores NEED traffic to survive and they don’t do it on their own.

So What’s The Solution?

Pretty simple really.  And for $49.95 I’ll sell you my eBook on how it’s done.  Ha!  Just kidding.  Although that is exactly what some people will charge you for what I’m about to tell you for free right here.  Ask yourself; “How do you attract Ants?”  The answer is obvious to anyone who ever dropped a piece of cake or donut on the floor and left it there.

You Need A ‘Honey-Pot’.

There you go.  In a nut-shell, there is my online course and thesis in Online Business.  Congratulations, you just graduated.. now go make it happen.  Seriously, it’s not any more complicated than that.  You attract people with something.. anything, that you give away attract buyers to your online storefor Free.  Yes, free.  Because the surest way to attract people is;  “Give them something for nothing.”  It’s ingrained into our human-nature.  If something has value.. and someone is giving it away for free.. people will check it out, take it and then figure out the rest later.  When you walk through Costco and they’re giving away free samples of cheesecake or smoked sausage, you know you have to practically wrestle within yourself to stay away.  After all.. it’s free!  That is their ‘Honey-Pot’.  Why do they keep giving away free samples?  Because it WORKS.  Sales go up with it and drop without it.  They’ve run the numbers and they can pay someone to give out the samples and increase their sales more than enough to pay for it. When I was about 19 years old, I went to the movie theater one day and at the door a salesman was giving away.. for free, a brand new Gillette Shaver.  It had a real metal handle, weighty and it was free.  So, yah.. I took that home and used it.  Well, guess what?  Eventually the razor head got dull so I inserted the extra shaver head that came in the package and used it another month.  And would you believe it?  I continued to buy Gillette replacement heads for that disposable shaver with the cool, metal handle for over FIVE YEARS.  Before that I only bought super-cheap BIC shavers made of plastic.  But because they gave me something of value for free.. I walked right into their honey-pot and they got my business.

Think about it.  How many times have you wanted a program that did something.  Did you go to the store and pay for it like most commercialized drones?  Or.. did you check somewhere like Cnet.com or FileHippo and get it for FREE?  Did you ever wonder to yourself;  “Why would someone spend all this time creating a great piece of software only to give it away for free?”  Well, once you start installing it you kinda get led into installing some toolbars or advertising unless you opt-out of it during installation.  But most people just keep clicking “OK” until the program loads.  Also, once it’s installed they now can offer you either a ‘Full’ or ‘Premium’ version.. just click on their box to order.  See it now?  The free software was the Honey-Pot and it got them “in the door“.  Or, more precisely.. on your desktop to sell you the upgraded version.

What can you offer for free as your Honey-Pot?  Well, unless you’re a software programmer, the next closest thing you can write is.. a Blog!  Give to people, for Free.. something of value.  Something they enjoy.  Something with no strings-attached.  No site membership fees.. just free online goodness that is either useful or entertaining.  Something they will want to re-post to their Facebook or Google+ friends and say, “Hey!.. look at this cool thing I found.”   And whether you’re in your home country or the Philippines.. it doesn’t even have to be a travel-blog.  It can be a blog about cooking, motorcycles, funny photos, politics, marital advice columns, tech stuff, computer repair, sewing, playing guitar or just about anything under the sun that people have an interest in!  I firmly believe that even if you tried to come up with a topic you thought NOBODY would be interested in.. if you built a site on it and wrote daily on it.. the nutjobs would come out of the woodwork and love your site.  I’m serious.  I’ll bet if you devoted a site to “crazy looking doll heads”, “photos of flies”, “gummi worms”, “japanese game shows” or any other nutty thing you could type into Google.. people are already looking for content on that.  

The world is a big place and all you need is a small slice of them to come to your site! Take a look at my site here.  I love talking about the Philippines, it’s my passion.  I love sharing my adventures.  And, as you’ll notice to the right.. I have ads to my online store asmake money with adsense well as affiliate ads and Google Adsense to bring in revenue any time someone clicks it. Whether they buy anything or not, each click brings me some revenue.  The articles, photos and videos.. it’s a pleasure to share those for free because I also get to meet some pretty cool people, both online and offline when they drop by Cebu or Bohol.  It’s a win-win for everybody.  My readership has gone up every month since I began writing here on a regular basis.  I still have a ways to go, but the methods do work.  Anyone promising you overnight Google placement.. it will disappear just as fast the moment you stop pumping money into it.  But provide something of value for free.. and you’re not creating a need for an advertising budget.  Instead, you let other advertisers pay you. So, my advice to anybody thinking about having an online store is that the store needs traffic and the surest way to get that is to provide people with something of value.. for free.  Constant, fresh articles will do MUCH MORE to attract Google’s attention and move you up in the rankings than most money thrown to the wind with a lot of these SEO outfits.  And using the free, online marketing methods I linked to above in my two articles will help as well.

Now, just like Love.. sometimes you can do all the right things and.. still end up sad and lonely.  There is no overnight, sure-fire solution or else word would have gotten out and everybody would be doing it.  I put a lot of time into this blog.  I want to provide the best content I possibly can.  And, I have fun doing it.  As an old Greek adage goes, “Anything worthwhile never came without effort.” Another suggestion for anyone hoping to rely on online income for living overseas.. start now.  While you are still in your home country, start now.  If you’re lucky you’ll begin seeing even a little money drip in after 6 or 9 months.. and that’s if things go fairly good with your readership.  The time to start is now, while you still have your ‘day job’, routine or whatever at home.  You may have to try a few ideas, just pay attention to what works and modify your plan as you go along.  It’s about learning and persistence.

You also asked about, “..an online retail store which sells merchandise purchased and shipped from China and/or America and sold through the website to be mailed to the Philippines buyer.”   Here are a few thoughts that come to mind.  Look into it more for yourself since it’s your vision and maybe there’s an angle I’m missing here. Shipping costs within the Philippines from one island to another are very fair.  Cheaper and faster to me than what you’d pay for UPS or FEDEX back in the States.  I’ve shipped stuff from island to island, overnight delivery, for about $6.   I won’t go into details on who this happened with, but I once bought an ebook online about various ways to make money while in the Philippines.  Of the many ideas it had the one that intrigued me was the online store idea.  But in the book it basically said that one idea is to have an online store.  It didn’t go into who was the best shipping company, rates or the logistics of getting a pizza delivered to another island.  So.. I emailed the author asking for that info, figuring he’d forgotten to include it in the book.

Well, he basically felt that was ‘proprietary information‘ which was worth too much to include in the book at that price.  Hmm, this was no cheap eBook.  Most eBooks go for less than $9 and this one cost me over $30.  So, since he didn’t tell me, I simply asked a local online shipping in philippinesFilipino, “Who is the most reliable shipper for island to island deliveries?”  Their answer in a heartbeat was a local company calledLBC Shipping“.    Not only do they have good rates, but they are very professional and provide online tracking.  In addition, they have an office in practically every decent sized mall I’ve ever been in, so convenient as well.  If your business ever gets to where you’re delivering several packages a day, they’ll even pick up from your Philippines address.  Good company, I use them exclusively for my store and I also use them to transfer money instantly from island to island.  Much cheaper rates than Western Union. Now.. shipping from the Philippines to the US, or outside of the islands, wow!.. what a sticker-shock!!  I checked both LBC and DHL Shipping and the cost to send my Mom some 14″ dolls was in the range of $120.00 USD.  Yah, that’s not gonna happen.  (I went online and ordered her flowers from the florist in her town instead.)  I prefer LBC for shipping within the Philippines.  But I prefer DHL for sending anything International, whether it’s incoming or outgoing to the US or Philippines.  But because sending packages is so expensive, I’ve only sent original documents when it was absolutely necessary for about $30.

You may be familiar with Balikbayan Boxes, or not.  But with those you can ship a pretty big box about 45 pounds worth of stuff for around $90.  Some say delivery is anywhere from 1 month to 2 months.  It goes by ship so, I guess it all depends on how quickly or slowly they process those freight containers once it hits the dock.  So it’s best for shipping internationally to your family and friends, but doesn’t make for a good choice with business. Now.. when I got here I noticed something.  Computers and laptops are very expensive.  A $350 laptop in the US goes for about double that here in the PH.  The buying market is smaller and the tariffs jack up the price a lot.  I had the idea of importing laptops I’d get off eBay, have them shipped via Balikbayan and resell them here.  But the more I thought about it, even having a price edge.. selling here is not easy when so very few people have money to spend aside from foreigners.  And there’s always the risk customs demands a huge tax to pick up the box if they notice it.  I know how to build PCs and I can build one here for about $150 even getting the parts at mall prices.  But selling them.. not so easy.

So.. those are my thoughts and suggestions regarding an online business, whether from home or overseas the same rules apply.  There are some useful links we covered, so be sure to check those out.   One more useful link I’ll leave with you is one that has lots of free articles and videos about online business, which isSmartPassiveIncome.com‘.  Peruse their site and I’m sure you will come up with some other ideas and methods to consider.  But most of all, since it will require a lot of your time and perseverance . choose something you enjoy.  It will make the ‘work’ a bit more enjoyable.

Post script:  One last comment that came to me regarding buying from China.  There are some great deals you can buy, especially wholesale, from China.  But start small because you want to know the quality first before committing to a big order.  Also check what the actual shipping costs are and whether there are any added tariffs when it enters Philippine Customs you need to pay.  Usually tech items come with a tariff, appliances and such.  General rule of thumb.. if it’s going to hurt local Philippine business.. they add a tariff to jack up your overhead.

Henry “Reekay” V.
www.lifebeyondthesea.com

Boost Your Tech Skills Fast!

Author: Reekay

After 49 years living in Southern California, USA, I decided to move to the Philippines despite never having been here before. In July, 2012, I took a leap of faith and transplanted myself to the amazing Philippines. I am a single man taking an honest look at all that the islands here have to offer, one day at a time. I hope you find my LBTSea site informative, entertaining and hopefully a bit of each. 🙂 Be sure to visit the Forum and other parts of what the site has to offer. Browse around and be sure to sign up for updates via email. Enjoy!
— Reekay

34 comments

  1. thank you Henry for your quick and thorough answer to my question about having an online store while I am living in the Philippines. I have had some retail sales merchandising experience in the past and I cant go out to the people to sell anymore due to my age and physical disabilities so it seems the online store would be much more manageable for me. I have done a lot of research online to find that online retailing is in its baby stages in the Philippines but most people have at least some availability to the internet.

    so it kinda makes common sense to me that online shopping will soon take hold there as it is doing here.and there is no reason while families and friends living in other countries couldnt use my website to send things to their people in the Phils. I have some other tricks up my sleeve too with taking some of Sam Waltons marketing tactics into mind. he was a hardworking, common sense kind of guy and we all know how that scenario unfolded for him. i have lots of details to work out but the information you have given me will surely make that a little easier. as for a blog, I have that in mind too and I can advertise my other merchandise store there too. i hope people will like what I have to share with them while i am living there on the islands. i have some good ideas about things to write about and I am sure something will entice me to write every day. It might be a lot easier than I think. and me being a retired, single female expat is kinda different than most of the other expat bloggers. hearing things from a womans point of view. It has and still is a great experience for me to dig and find information about moving to and living there in the Philippines.

    I cannot afford to buy information and I have visited a lot of blogs and learned so much. this was a question i had never seen a point blank answer for and now you have given it to me. during my online searches, i have encountered expats and blog visitors from all walks of life and it is wonderful. there is no price you can put on an array of knowledge and opinions from all sorts of people. and I think I am pretty capable of compiling information and knowing how to use it to benefit myself. of all the great blogs i have visited, I can honestly say, Henry, that yours is my favorite. You are THE MAN and thanks again for your fun and informative article and answer to my question.

  2. The reason coming to the Philippines is to enjoy life not to enjoy work. Many people have worked for a long time in the US. Why would they want to work again when they come to the Philippines? What happen if they get sick and cannot run the online business? Then the online income stop coming then what is next? We all get old and get sick eventually. How can anyone continue to run business when they get old and sick? Good medical care is expensive here in the Phil. Some foreigner has died because they cannot pay for the medical care in the Phil. Depend on your online business to live in the Philippines is extremely risky. Medicare does not pay in the Philippines. The list of question is long. I have blue shield for life so I am OK in the Phil and the US. But I am leaving nothing to chances because quite a few foreigner runs into big big trouble without a rock solid life time income.

    1. It’s true, many expats come to the Philippines to retire. Some people, like me, are only 50 and not ready or willing to retire. For me, I enjoy writing and blogging.. to me, it’s not work. I do agree that there has to be some sort of steady income. For many US citizens who have already worked, as you mentioned, there may or may not be Social Security benefits when they reach their late 60′s.

      I’ve noticed here on Bohol many more ‘young’ travelers and expats. Not even 50 or 40.. but in their 30′s. Some might be college students. But one guy I met from France was leaving Thailand to live in Cebu. He has some online income to get him by, without it.. he’s way too young for a pension.

      I’d say there’s no one solution for everybody, in anything. But the inevitability of getting old and too weak to work has a longer shelf life online than doing physical work, that much is for sure. To me, retirement isn’t sitting around doing nothing. It’s the chance to do what I enjoy. And if it makes me some money.. all the better. 🙂

  3. Yes I hope anyone who is reading this and considering coming to the philippines in their retirement years does not plan to make a living from only a website of the kind I am speaking of. it would be risky. but I have social security income. it isnt a lot and as a matter of fact its pretty meager but I also have an adult son who is coming with me. he will be involved in the online business also at least at some point……..like knowing how to take care of it if I cant. i am hoping it is something I can leave for him. Yes I am coming to the Philippines without a medical care safety net and that is just more reason why I need to raise my income level. a move to the Philippines should be well thought out by anyone considering it. Have fun, and live and love life to the fullest.

    1. Donna,
      I recommend you don’t involve your son in your retirement. He is young and a lot of potential in the US working and creating income there (Much more than he could in the PI). Having him go to the PI with you and wasting valuable income earning and career building years in very selfish on your part. You go, but he should stay and build a future for himself in the US…there is nothing you will be able to build for him of value online in the PI. Just good advice.

  4. Awesome article! Well written, lots of information and so much fun to read. I have been following your adventures and enjoy reading your blog.

  5. The rules are probably the same. Foreigners whether tourists or even with permanent visa are normally not allowed to engage in business in the Philippines, probably if permanent one can secure a work permit, I didn't try that since there was no need. If you have business in the Philippines you have to pay taxes.

    But if your business is outside the Philippines it is tax free. So if, say, you have online business, permanent resident, say you don't have to pay taxes in your country if you don't live there for more than x days a year, you don't pay taxes at all. Just go to BIR, get your TIN number and this is it. Just wire money to your Philippines bank account.

    1. Some countries (such as the USA) do tax their citizens on money they make even when outside the country, whenever $9,000 or more for the year. Most States do not require filing, but states like California do. Some countries, like Australia, continue to expect taxes at an even higher rate than if the Aussie had simply stayed in his country. So each person should check on their country’s tax requirements. Here is a useful FAQ link regarding USA taxation on Expats earning abroad..
      http://americansabroad.org/issues/taxation/us-taxes-while-living-abroad-faq/

      p.s. I was reading a story a while ago about a rise in the small amount of people opting to actually renounce their USA citizenship as it was the only way they could be free from being taxed on money they earned abroad. Some people have been seeking citizenship status with Singapore since their tax rates are lower than the US.

    1. Well.. I suppose it depends what you do with it. Technically, there are a lot of ‘general ideas’ in it. But honestly, many I found to be either impractical or not very profitable for either the investment or work required. As for the “how to” in order to implement many of these ideas.. that is perhaps the biggest drawback I dealt with. I can give you an idea right now.. “Open a pizza shop near a busy mall. Lots of traffic, you’ll get customers.” There you go, there’s one idea right there. Did I tell you how to do it? Did I tell you what the ROI (return on investment) is? Did I discuss the demand or customer base for pizza in a Filipino neighborhood or the competition you’ll be facing? Nope.

      The book has ideas, and that’s what you get. I suppose if someone brainstorms and works out the details and mechanics on their own they’d say the book was helpful. For being a book in the over $30 range, personally I expect more than just general ‘ideas’. Had I put that book out, I’d have priced it more along the $4-$7 range myself. But, that’s just me.

  6. Thanks for your thoughts. The pizza idea was in the book? Funny considering his blog is always going on about how people shouldn’t open businesses like that.

    But anyway, your thoughts confirmed my suspicion. His pricing conforms to something I’ve read on other internet marketing type sites–basically urging people to sell their e-books at inflated prices to create an illusion of value (ironically) as people will assume a book at that price is exponentially better than a similar book at a lower price point.

    I do enjoy the point of view you bring to the Philippines expat blog world.

    1. With the pizza-biz, I was just giving an example of the “general idea” versus the “meat-and-potatoes” that is lacking in the book to make the point. For instance, when I did a book titled, “How To Start, Run & Grow A PC Repair Business” (available on amazon).. I did over 90 pages on just that ONE concept. I went into the details of exactly how to get business, what to say on the phone, how to get referrals, where to advertise, where to get the software needed, details on in-home customer service,.. I systematically give everything a person would want to know in order to succeed. And I sell it for less than $10. To me, that’s how you create value.

  7. This is very informative, I have one question though in regards to online retail store, I’m a filipino citizen and
    I’m planning to put up an online retail store ( and let my wholesale supplier dropship the items sold from my website to my customer ) I want to know will I still need to register my business, how will it pass customs and such. I am doing some research, any insight will be much appreciated.

    1. I don’t know enough about PH BIR or Customs to really say. Except that if your drop-shipper is within the PH there should be no customs issues. Shipping in from out of the PH could be pricey so check those rates before committing to the idea.

  8. Donna,

    Concerning the legality of what you propose, you did not get a point blank answer, because there can be none until you have a business model. For instance, do you plan to warehouse your U.S/Chinese products in the Philippines for delivery when you received orders? If so, you would be doing business in the Philippines and it would be illegal to proceed without establishing a registered business under the provisions applicable to foreign-owned business in the Philippines. Many foreigners receive electronic orders and arrange delivery of Philippine-made coffee cups and teddy bears to someone’s sweetheart(s), but as an adjunct to a business registered in the name of a Filipino, who can bump them out of the business simply by not splitting the profits.

    If not, you might be able to remain legal if your model revolves around just-in-time orders that never come into your possession. But visit places like alibaba.com to find out how unprofitable it would be to place one-of-kind orders with sources in China even if they chose to respond. Even for one-off orders placed with U.S. vendors you’ll find many are hesitant to accept PayPal and/or credit card orders from the Philippines.

    If you can sell a digital product; a book perhaps, or a way to push a website to the top of a search list, maybe you could make a little money in a realm not considered illegal.

    I have yet to see a-come-to-the-Philippines blogger, mention the long lists (there are two) of endeavors banned to foreign participation, a layout of the costs that accrue to foreigners who want to start single proprietorship businesses in the limited areas from which they are not excluded.

    Finally. And from what I read, this may apply to you. If you don’t have the money to live an austere lifestyle in the U.S., the Philippines will not be an enjoyable life in a tropical paradise. It will more than likely equate to walking a high-wire without a safety net. Spend the money to spend a month before you sell the farm.

    Bernard

    1. Good points, Bernard. Personally I do not advocate a brick-and-mortar business for expats in the Philippines. For the reasons you cited as well as the competition factors plus the low, local payout unless the business is dealing with tourists spending foreign money. And even then expect local government to dip their hand deeply into a successful business until it become unprofitable.

      Online, virtual business of any sort is a better way to go. I’d go so far as start a small biz with a wife if we ran it ourselves, but then that would defeat the purpose of me retiring to the PH. But it’s about the only way to control costs, embezzlement, etc. Life in the PH is great (for me), but it’s not for everybody. Just like camping, it looks great in the brochures but not everyone is keen when the mosquitoes, humidity and many other incidentals become a reality.

  9. I have tried several physical types of business there. All have failed, even those ones done by relatives.
    Whom can trust as a foreigner ?
    Well, I think a small online business is the best way to make some money.I´m doing FOREX intradaytrading and trading with CFDs and so on.It´s risky and not that big money what many people thinking that a trader has.
    As a single man I can control costs, and as a minimalist I can living there even with a crazy minimum of money.The condition for it: You must love living in this way.
    In the moment you have a girlfriend or you start living with relatives the costs run out of control for granted.
    I have made it through several times and today I don´t tell someone my living place anymore.I know they would show up and not leave anymore until the money is over.
    The Philippines are my paradise, my place where I want stay and live.But the biggest problem is this thinking, every foreigner is generally rich and can afford everything.I have talked with them, even with relatives, a thousand times about, but they cannot or want not understand.
    The solution of this question has become the question of my life in between: “Why comes this thinking about foreigner and foreign countries?” Even they have relatives abroad, working hard there in USA or in Europe and even these relatives tell them about how hard it is, they cannot realize it.
    I really want solve this question and find an answer.
    It´s sad but some of my realtionships got broken about this point. I am not that rich foreigner but the point is
    I DONT WANT TO BE and I am not longing to get wealthy or to get a big house, a car and so on.The main reason for me to live there was the wish to live simple, with the basics. Having food for the day, clean clothes and a place to sleep for the next night.Living day by day and living free.
    I have two philippine friends abroad, two women married with foreigner and they know what I am talking about. Now after 10 years abroad they are longing to go back and living simple the same way.
    They also tired living a life like slaves for consumerism and materialism and they want go beyond all that like I want.

    So Henry, thank you very much for your site.

    1. My only thoughts are the same as I have for myself and anyone else looking for the right spouse.. be with someone who is wants what you want. Take your time and perhaps a province girl who is already accustomed to a simple life is really where you should be looking. Only with time will she realize the truth of how you want to live your life and if she wants to be with you.

  10. There’s a lot of useful information in the article and the comments – thanks Henry, and the rest. I’d be grateful if you have any advice for my situation.

    I’m a British citizen working online (freelance writer) for companies based in Australia, currently living in the Philippines with my girlfriend on tourist visa extensions but I travel around a lot. I am registered as non-resident for tax purposes in the UK and I’ve confirmed with them that I don’t have to pay taxes on my income – I was actually paying full tax at the premium rate before (40%!!!) because my income was over the threshold and I was being overly cautious, even though I hadn’t set foot in my home country for years, but that’s been sorted out and most of it has been refunded. I also don’t pay tax on the income from Australia, where it originates.

    My online work has been my livelihood for four years, giving me all the freedom I want to see the world. I’m not ready to settle down and get a house yet (still in my 20s), but if I did settle in the Philippines, and married, would I be liable to pay tax here if I continued working online for a company not based in Phil? I’m worried it’s too good to be true, if I can earn $50,000+ per year tax-free and benefit from the lower prices of this country too while saving for my early retirement. But I won’t evade tax responsibilities if they exist (hence why I overpaid before).

    Thank you for reading. I’ll definitely keep an eye on this site.

    1. I’m no tax expert by any stretch, let alone international taxes. However, as I understand it there are definitely 2 instances where an expat needs to pay taxes when living in the PH. The first would be if you had a physical (brick and mortar) business located in the Philippines. To do so you’d need to file with the BIR (their version of the IRS) and pay quarterly taxes. Same if you chose to employ Filipinos physically for your business. (This does not seem to apply to ‘outsourcing’ work online, even if you use workers online from the PH, India or wherever they may be located.) The second instance would be if you petitioned for Philippine citizenship. However, being on a tourist (extended) Visa, that I know of.. there is no taxation upon you from the PH for money you earn online since it is not based in the PH.

      It sounds like you’ve already worked out the UK tax situation. For USA expats, the US taxes income on US citizens without regard to where they live or where the money is earned.

      One other thing, just since we’re on the subject. If you employ (roughly) a dozen Filipinos in your physical business in the Philippines, immigration will discount or waive your Visa extension fees. Check with the PH Immigration site for more details on those requirements.

      1. I’ve read that US citizens teaching English for 300 days or more only need to file returns but dont have to pay taxes. This likely applies to most US citizens.

  11. Hi Henry, I'm leaving from NY to go to the Philippines to meet a woman from Lala her and her sister are meeting me at Labo airport and i'm staying at her parents house which freaks me out, shes 28 and im almost 62. Her parents work in the rice fields

  12. How about registering an online business? What would be the main difference for it? I am currently selling online and posting my ads in free classified ads sites like OLX, AYOS and http://www.mybenta.com at the moment, but I would to be able to send out sales quotes to offices, so I would be needing to have my small online business registered.

  13. Henry and others out there, I hope you guys realize that the demand to live in the Philippines itself is a huge opportunity that will make you billionaire overnight. All you have to do is ease the transition from living in the states to moving in the Philippines for good. I don’t have the capital to do it, but I will if the opportunity presents itself.

  14. Online businesses should register like a regular business. I just finished registering my online business. I don't have an online shop or own website but I post my ads on http://www.mybenta.com. I went through the same registration process for sole proprietorship.If you are registering as a corporation, you should go to Securities and Exchange Commission (SEC)

    There are 3 offices to go to: DTI, City Hall/Municipal Hall, and BIR.

    1. DTI for the registration of your business name.

    2. To become legit, you have to secure a mayor's permit to operate (You may also want to check if your local government would require you to secure a provincial permit). Get a checklist from the Mayor's office on the required documents. They might require you to submit a baranggay clearance and community tax certificate/cedula.

    3. You will go to BIR to get a TIN. Or if you already have one, update or request for transfer of location. You will also ask for authority to print receipts and invoices from BIR. Production of receipts can only be done by BIR-accredited printing press.BIR penalizes failure to secure or issue receipts on before commencement of business. Before printing the receipts, you will have to attend a BIR seminar.

    It's always best to visit or call those offices first and request for a checklist or ask about their step-by-step process to avoid inconvenience.

  15. Hello there, I stumble upon your blog and I wonder if you can help me. I sell illustrations online, I have an online store. Do I have to legally register the business it here in the philippines and pay taxes? I am basically a freelancer. Please let me know. Thanks a lot!

    1. If your online store is on a server in your home country (example; GoDaddy in USA), and any business documents you have are in your home country.. and your status in the PH is as a ‘Tourist’, then you are simply logging-in while on an extended vacation to maintain your business ‘back home’. No different than if you were on a 2-week vacation anywhere in the world.

      However, if you were to start a BPO business or online call-center and employ local Filipinos while living within the Philippines, then you could have some issues as you are now an Employer within the Philippines. But if you were living OUTSIDE the Philippines and employing Filipinos on-line.. then you would have no issues. People do this all the time employing freelancers online for various tasks.

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