Scenario: a Vietnamese enterprise wants to acquire an operating food-processing company in Cebu. The Philippines opened up significantly with the amended Foreign Investments Act (RA 11647) — but “open” does not mean “no negative list”, and the land trap here is among the hardest in the region.
The Philippines: negative list after RA 11647 — open but bounded
The Foreign Investments Act (RA 7042, amended by RA 11647) plus the Foreign Investment Negative List is the main framework: RA 11647 materially lowered barriers — allowing 100% foreign ownership in many previously restricted sectors. But the negative list survives: some activities remain absolutely closed or capped (mass media, professional practice, land and the like). Acquiring an operating company means checking the target’s sector against the latest negative list — many investors check an outdated version and misprice the deal.
CREATE incentives: the sweetener with strings attached
The CREATE Act (RA 11534) overhauled tax incentives: time-bound CIT holidays/reductions and enhanced deductions for qualified enterprises. When buying a company enjoying CREATE incentives, DD the conditions for keeping them — a change of control, business-line change or missed investment/employment commitments can kill the incentives, and the price must reflect that risk.
Merger control: the PCC — mandatory notification
The Philippine Competition Commission (PCC) requires mandatory notification for deals above value thresholds — unlike voluntary Singapore/Malaysia. Failure to notify, if discovered, can bring fines and deal review. A “hard” procedural screen, much like Vietnam’s.
Vietnam: capital-contribution registration plus concentration notification
In Vietnam, a foreign investor buying shares or stakes must complete registration of capital contribution, share or stake purchase under the Law on Investment 143/2025/QH15 (effective 1 March 2026, replacing Law 61/2020/QH14) in prescribed cases; register member/shareholder changes under the Enterprise Law 2020 (amended by Law 76/2025/QH15, effective 1 July 2025); and file the economic concentration notification under the Competition Law 23/2018/QH14 + Decree 35/2020/ND-CP above thresholds.
Due diligence: the Philippines is hardest on land
The biggest trap: foreigners cannot own land in the Philippines (Constitution) — only long-term leases. Every “land via subsidiary” structure must be vetted for legality; buying a company whose “land” is really a workaround structure means buying confiscation risk. In Vietnam, foreigners likewise cannot own land but can hold time-limited land-use rights — a clearer framework for investors.
Quick comparison
| Criterion | Philippines | Vietnam |
|---|---|---|
| Foreign-investment approval | Negative list (RA 7042/RA 11647); many sectors open to 100% foreign equity | Registration of capital contribution/share purchase in prescribed cases (Law 143/2025) |
| Merger control | PCC: mandatory notification above value thresholds | Mandatory notification above thresholds (Law 23/2018 + Decree 35/2020) |
| Capital-transfer tax | Capital gains on unlisted share transfers (under TRAIN); check the Vietnam–Philippines treaty | Organisations: CIT (Law 67/2025/QH15 + Decree 320/2025/ND-CP); individuals: PIT |
| Typical closing timeline | 3–5 months; land DD and CREATE-incentive review are bottlenecks | 1–3 months |
Recommended actions
1. Check the latest negative list for the target’s sector. 2. DD the target’s CREATE-incentive maintenance conditions. 3. Vet every land-related structure closely. 4. Confirm with local counsel.
Frequently Asked Questions
Does buying shares in the Philippines need investment approval like M&A in Vietnam?
The Philippines regulates via the Foreign Investment Negative List under RA 7042 (amended by RA 11647): many sectors are now open to 100% foreign ownership, but some remain absolutely closed or capped. Acquiring an operating company requires checking the latest negative list. In Vietnam, the corresponding gate is registration of capital contribution, share or stake purchase under the Law on Investment 143/2025.
How does the CREATE Act (RA 11534) affect the purchase price?
CREATE overhauled tax incentives (time-bound CIT holidays/reductions). If the target enjoys CREATE incentives, DD their maintenance conditions — a change of control or missed commitments can kill them, and the price must reflect that risk.
What are the Philippines’ merger-control thresholds?
The PCC requires mandatory notification for deals above transaction-value thresholds. Failure to notify, if discovered, can bring fines and deal review — a “hard” procedural screen like Vietnam’s.
What is hardest in Philippine due diligence compared with Vietnam?
Land: the Philippine Constitution bars foreigners from owning land (long-term leases only); every land-via-subsidiary structure must be vetted for legality. In Vietnam, foreign investors can hold time-limited land-use rights under a clearer framework.
What tax applies on transferring shares in a Philippine company?
Unlisted share transfers face capital gains tax under Philippine tax law (TRAIN reform); the Vietnam–Philippines double tax treaty should be checked. In Vietnam, organisations pay CIT and individuals pay PIT.
How long does a Philippine M&A deal usually take?
About 3–5 months; bottlenecks are usually land DD and review of the target’s CREATE-incentive conditions.
