A sentence I regularly hear in client discussions: “We have looked at the Philippines – nothing is possible there without a local majority partner.” The assessment was correct. It is just usually from 2019.

On July 1, 2026, the World Bank upgraded the Philippines to the category of upper-middle-income countries: gross national income per capita of around US$4,850 against a threshold of US$4,636, with growth averaging 5.8 percent annually over the past five years. A classification is not an investment decision. But it is a good reason to revisit a question that many German SMEs considered once and then checked off: How much ownership can I actually hold in the Philippines?

What has actually opened up

The answer has changed significantly since 2021 – but this has barely registered in Germany.

1. Public Service Act (RA 11659, 2022). The amendment defines the term “public utility” narrowly. Telecommunications, airports, rail and maritime transport, and toll roads no longer fall under the constitutional 60/40 limit and are, in principle, fully open to foreign investors – subject to screening on national security grounds.
2. Foreign Investments Act (RA 11647, 2022). A foreign-owned Domestic Market Enterprise generally requires paid-in capital of US$200,000. The threshold falls to US$100,000 if the company uses advanced technology, is recognized as a startup, or directly employs at least 15 Filipino employees – previously, that number was 50. This makes smaller sales and service companies viable for the first time.
3. Retail Trade Liberalization (RA 11595, 2021). The minimum capital for foreign retailers is 25 million pesos instead of US$2.5 million – a level that makes the market accessible to mid-sized companies in the first place.
4. Renewable Energy (DOJ Opinion No. 21, s. 2022). According to the Department of Justice, solar, wind, hydropower, and biomass projects are not subject to the 60/40 limit on the exploitation of natural resources. Wholly foreign-owned project companies have since become a reality – a key reason why international developers are currently entering the market.

CREATE MORE: Predictable incentives

The CREATE MORE Act (RA 12066) was signed on November 8, 2024, and entered into force on November 28, 2024. It reorganizes the incentive system – and, almost more importantly in practice, makes it predictable.

• Corporate income tax. 20 percent for Registered Business Enterprises under the Enhanced Deductions Regime; the standard rate is 25 percent.
• Electricity costs. 100 percent deductible instead of 50 percent – relevant for energy-intensive manufacturing in a country with high electricity prices.
• Local levies. 2 percent on gross income during the incentive period instead of the patchwork of local government taxes.
• Value-added tax. Exemption and zero rating for services directly attributable to the registered activity, expressly including cleaning, security, financial, and consulting services – a point of contention for years.
• Loss carryforward. For up to five years after the end of the incentive period.

The Strategic Investment Priority Plan 2026 focuses on infrastructure, the energy transition, data centers, and technology-related projects.

What remains closed – and the cost of ignoring it

The Constitution itself remains unchanged. The 60/40 rule continues to apply to land ownership, mass media, advertising, educational institutions, and the exploitation of natural resources in the narrower sense. Foreign investors cannot acquire land; in practice, long-term leases are used.

That is also where the real risk lies. The Anti-Dummy Act (Commonwealth Act No. 108) criminalizes nominee arrangements: anyone who circumvents the 60/40 limit through nominal Filipino shareholders risks not only the invalidity of the structure but also the personal liability of those involved. For some time now, regulators have been scrutinizing beneficial owners much more closely; beneficial ownership transparency is no longer merely a matter of filling in forms.

Three practical recommendations

1. Revisit the choice of legal form. Anyone who concluded before 2022 that only a joint venture with a local majority partner could be considered will reach a different conclusion in many sectors today. A review memorandum from that time cannot support today’s decision.
2. Incentives are not automatic. They depend on registration, the registered activity, and ongoing documentation requirements. The structure must support the incentives, not the other way around.
3. Consider structure and dispute resolution together. Entering a market without planning for legal enforcement merely shifts the risk into the future – potentially into Philippine recognition proceedings years later.

Conclusion

Market access in the Philippines is now a question of structure, not partners, in many sectors. What is open is set out in four laws; what remains closed is set out in the Constitution. The mistake rarely lies in the market – but in an assessment that is too old.

ADWA combines German legal advice with a local presence at eleven locations across Asia. If the Philippines is on your list: feel free to contact me.

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Your point of contact in the Philippines: Lutz Kaiser

Villanueva Gabionza & Dy Law Offices

20th/F Corporate Center
139 Valero St., Salcedo Village
Makati City 1227, Philippines

CELL: +63 995 985 4957
TEL: +63 2 8813 3351

www.vgdlaw.ph
kaiser@adwa-law.com

Singapore is stepping up its fight against online fraud and is also placing greater obligations on private service providers. The Scams (Countermeasures) and Other Matters Bill, introduced in Parliament on 4 August 2026, is intended to involve banks, payment service providers, telecommunications providers and online services even more closely in detecting and combating fraudulent activities.

New instruments for the authorities

In particular, the bill provides for new powers for the police:

• “Disclosure Orders” can require service providers to disclose information about certain accounts and possible fraudulent activities.
• “Account Disabling Orders” allow certain suspicious accounts to be disabled for up to 30 days; a one-time extension for a further 30 days is possible.
• “Service Limitation Orders” can restrict certain services for persons who have been flagged in connection with so-called “money mule” offences. The restrictions can remain in force for up to three years.

The Online Criminal Harms Act (OCHA) is also to be tightened. In particular, a new system of administrative fines of up to SGD 10 million per violation is planned for certain breaches of regulatory requirements. In addition, OCHA orders may in future also be issued automatically, including through the use of AI.

Stricter requirements for online platforms

The bill is accompanied by new or revised codes of practice for messaging services, social networks and e-commerce platforms, which were published on 17 August 2026. Among other things, they provide for additional safeguards against fraudulent messages and advertising, as well as stricter requirements for verifying advertisers.

Conclusion: The developments show that Singapore is increasingly involving private service providers in combating fraud. Companies offering financial, telecommunications, online or other account-based services in Singapore should therefore examine whether their internal processes enable the rapid implementation of information disclosure, blocking and restriction orders issued by the authorities.

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Your point of contact in Singapore: Dr. Andreas Respondek

Respondek & Fan Pte Ltd

1 North Bridge Road
#16-03 High Street Centre
Singapore 179094

CELL:      +65 9751 0757
TEL:        +65 6324 0060

www.respondekfan.com
respondek@respondekfan.com

Cross‑border e‑commerce (“CBEC”) is now a core growth strategy for businesses selling goods internationally online. In 2026, companies of all sizes use online platforms, global marketplaces, and direct‑to‑consumer websites to reach overseas customers without establishing physical retail operations abroad.

While technology, logistics, and digital payments have reduced barriers to international online sales, regulatory expectations have increased. Businesses engaged in cross‑border e‑commerce must navigate customs formalities, overseas VAT and GST obligations, consumer protection rules, data privacy requirements, and corporate tax exposure across multiple jurisdictions. 

These considerations are particularly relevant when operating through Hong Kong. With its territorial tax system, free port status, and advanced logistics infrastructure, Hong Kong remains an attractive base for cross‑border e‑commerce, if business activities are structured correctly. 

This guide explains what cross‑border e‑commerce is, how to start and operate a compliant international e‑commerce business in 2026, and the key legal and tax issues to consider, with a practical focus on Hong Kong and the Asia‑Pacific region. 

What Is Cross‑Border E‑Commerce? 

Cross‑border e‑commerce is the online sale of physical goods to consumers in another country, where the transaction is initiated digitally and goods are shipped internationally. This typically includes business‑to‑consumer and consumer‑to‑consumer transactions. 

Customs authorities and international trade bodies use this definition when designing rules governing data exchange, customs clearance, taxation, and consumer protection. 

Why Cross‑Border E‑Commerce Matters? 

Cross‑border e‑commerce has become a cornerstone of global trade. Increased internet access, mobile commerce, global marketplaces, and international delivery solutions have enabled consumers to purchase goods from overseas sellers with ease. 

For businesses, cross‑border e‑commerce allows rapid market entry, geographic diversification, and brand expansion without the capital costs of physical stores. At the same time, it introduces complex compliance and operational risks that must be actively managed. 

Market Signals and Growth Trends 

Research consistently shows strong growth in cross‑border e‑commerce through 2030. Common entry markets include: 

• China, the world’s largest e‑commerce market by volume. 
• The United States, a mature market with high cross‑border purchase rates. 
• Germany, Europe’s largest e‑commerce market. 
• Asia‑Pacific, particularly Southeast Asia, driven by mobile adoption and digital wallets. 

These markets present diverse opportunities across mass volume, premium products, and emerging consumer demand. 

Example of Cross‑Border E‑Commerce 

A Hong Kong‑based fashion retailer sells clothing through its website to customers in Germany and the United States. Orders are placed online, payments are processed digitally, and goods are shipped direcetly from the Chinese factory to either a warehouse in the target destination for further distribution or to the end customer. 

This transaction qualifies as cross‑border e‑commerce because the seller and buyer are in different countries, the transaction is completed online, goods cross national borders, and the seller and buyer must comply with customs, tax, and data protection laws. 

How to Start a Cross‑Border E‑Commerce Business (Step‑by‑Step)? 

Step 1: Market and Channel Selection 

Businesses should assess: 

• Consumer demand and purchasing power. 
• Import restrictions and customs processes. 
• Consumer protection and product compliance rules. 
• Local payment preferences. 

Sales channels may include global marketplaces, direct‑to‑consumer websites, or social commerce platforms, each with different compliance and operational implications. 

Step 2: Product Readiness and Localisation 

Effective localisation includes:

• Accurate translation of product descriptions. 
• Pricing in local currencies. 
• Clear disclosure of shipping costs, duties, and taxes. 
• Use of Delivered Duty Paid shipping where feasible. 
• Offering locally preferred payment methods. 

Transparent pricing and localisation reduce delivery disputes and abandoned checkouts. 

Step 3: Payments and Checkout 

A cross‑border checkout should be: 

• Mobile optimised. 
• Secure and compliant with Payment Card Industry Data Security Standard (“PCI DSS”). 
• Capable of handling multiple currencies. 
• Integrated with local digital wallets and card networks. 

Mobile commerce remains dominant in most markets in 2026. 

Step 4: Logistics, Customs, and Tax Setup 

Businesses must ensure: 

• Correct Harmonised System classification. 
• Advance electronic data submission to customs authorities. 
• Clear return and refund processes. 

Tax obligations generally arise in the customer’s jurisdiction. Examples include: 

• EU VAT: One Stop Shop system (“OSS”) and Import One-Stop Shop (“IOSS”) schemes. 
• Australian and New Zealand: Goods and Services Tax (“GST”) on low‑value imported goods. 
• Singapore: GST requirements for overseas sellers. 
• China:  Value Added Tax (“VAT”) frameworks for imports. 
• India: Integrated Goods and Services Tax (“IGST”) collected at customs. 

Why Hong Kong Is a Strategic Hub for Cross‑Border E‑Commerce? 

Hong Kong remains attractive for cross‑border e‑commerce due to its geographic location, developed logistics infrastructure, and business‑friendly legal environment. 

Free Port Status 

Hong Kong is a free port. Most goods are not subject to customs tariffs, with excise duties limited to specific categories such as alcohol, tobacco, hydrocarbon oil, and methyl alcohol. 

Hong Kong’s Cross‑Border E‑Commerce Tax System 

Territorial Profits Tax Principle 

Hong Kong operates a territorial system of profits taxation. Profits are subject to Hong Kong Profits Tax only if they arise in or are derived from Hong Kong, regardless of where customers are located or where payments are received. 

Profits Tax Rates 

Where profits are regarded as Hong Kong‑sourced, Hong Kong applies a two‑tiered profits tax rates regime: 

• Corporations
  • 8.25 percent on the first HKD 2,000,000 of assessable profits. 
  • 16.5 percent on any assessable profits above that amount. 
• Unincorporated businesses
  • 7.5 percent on the first HKD 2,000,000. 
  • 15 percent on profits above that amount. 

Only one entity in a group of connected companies may benefit from the lower tier. 

Compliance and Filing 

Even where profits are claimed to be offshore‑sourced, Hong Kong companies must still: 

• File annual Profits Tax Returns. 
• Prepare audited financial statements. 
• Maintain proper books and records. 
• Respond to IRD enquiries where required. 

Failure to substantiate an offshore position can result in profits being reassessed as taxable in Hong Kong. 

No VAT, GST, or Sales Tax 

Hong Kong does not impose VAT, GST, or sales tax on online or offline sales. This means: 

• No Hong Kong consumption tax is charged at checkout. 
• No periodic VAT or GST filings are required in Hong Kong. 

Any consumption taxes applicable to cross‑border e‑commerce sales are governed by the laws of the customer’s jurisdiction, such as EU VAT, UK VAT, Australian GST, or Singapore GST. 

Data Privacy, Consumer Protection, and Operational Risk 

Cross‑border e‑commerce businesses must manage: 

• Overseas consumer protection rules.
• Product safety and disclosure obligations. 
• Cross‑border data transfers and cybersecurity risks. 

In Hong Kong, the Personal Data (Privacy) Ordinance applies. While Section 33 on cross‑border data transfers is not yet in force, regulators encourage compliance with international privacy standards. 

How Ravenscroft & Schmierer Can Help? 

Structuring a cross‑border e‑commerce business requires alignment between legal structure, tax strategy, and day‑to‑day operations. 

Ravenscroft & Schmierer advises founders, SMEs, and international groups on: 

• Structuring cross‑border e‑commerce operations through Hong Kong. 
• Applying the territorial profits tax principle. 
• Assessing offshore profit exposure. 
• Supporting tax positions with operational substance. 
• Coordinating Hong Kong structures with overseas VAT, GST, and customs rules. 

To discuss your cross‑border e‑commerce structure, contact us. 

FAQ: Cross-Border E-Commerce 

Is cross‑border e‑commerce taxable in Hong Kong?
Cross‑border e‑commerce profits are taxable in Hong Kong only if they are sourced in Hong Kong. Profits sourced outside Hong Kong may not be subject to Hong Kong profits tax.

Does selling to overseas customers create Hong Kong tax exposure?
Customer location alone does not determine tax liability. The Inland Revenue Department focuses on where profit‑generating activities occur.

If my company is incorporated in Hong Kong, are my profits taxable?
Not automatically. Incorporation does not determine tax source. Substance and commercial reality are decisive.

Does Hong Kong charge VAT or GST on online sales?
No. Hong Kong does not impose VAT, GST, or sales tax.

Do Hong Kong bank accounts affect profits tax treatment?
Banking location alone is not decisive. Operational activities and decision‑making are more relevant.

Why seek legal advice for cross‑border e‑commerce?
Cross‑border e‑commerce structures are reviewed closely by tax and regulatory authorities. Inconsistent operations or poor documentation can lead to disputes and reassessments.

How can Ravenscroft & Schmierer assist?
Ravenscroft & Schmierer advises on legal structuring, compliance, and risk management for cross‑border e‑commerce businesses operating through Hong Kong. To get tailored advice, contact us.

Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

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Your point of contact in Hong Kong: Stefan Schmierer

Ravenscroft & Schmierer

22nd Floor, Bupa Centre
141 Connaught Road West
Hong Kong, SAR

CELL:    +852 9229 6603
TEL:      +852 2388 3899

www.rs-lawyers.com.hk
sschmierer@rs-lawyers.com.hk