Press Release
October 12, 2017

BPO group thanks Senate for retaining tax perks

The IT-Business Process Association of the Philippines (IBPAP) said IT-BPM investment pledges in the country are now showing "signs of recovery" thanks to the Senate version of the first tax reform package which retained the current incentives of the industry.

"The Senate did not touch the industry's tax incentives to enable the country to continue attracting more BPO investments that would spur economic growth and create more jobs for Filipinos. Our policy should always be geared towards making doing business in the Philippines easier and easing unemployment in the country," said Senator Sonny Angara, chairman of the ways and means committee.

This year, new investment commitments under the IT-BPM industry slowed down because of various uncertainties. Some investors are delaying decisions to invest in the Philippines or deciding to invest elsewhere amidst earlier plans to alter the current tax regime for investors.

But, following the filing of Senate Bill 1592 or the Tax Reform for Acceleration and Inclusion (TRAIN) bill which retained the current incentives, IBPAP said investor perception on doing business in the country has been improving.

"We would like to thank the Senate for its continuing support of the IT-BPM industry especially in view of the headwinds and challenges that the industry is currently dealing with. The efforts to take into account the potential impact of SB 1592's VAT provisions on the industry's ability to generate employment certainly shows a full understanding of the sector's concerns," said IBPAP's President and CEO Rey Untal in a Philippine Daily Inquirer report.

In 2016, the IT-BPM industry provided direct employment to some 1.15 million Filipinos, and generated $23 billion in revenue.

The Department of Labor and Employment recently reported that employment opportunities in the BPO industry remains at the leading spot in the top job vacancies available at the PhilJobNet.

"The BPO industry has been one of the biggest job generators of our country in recent years. Layunin nating maresolba ang patuloy na kawalang trabaho sa bansa kung kaya't minabuti nating mapanatili ang tax incentives ng sektor na ito upang magpatuloy ang kanilang paglago at paglikha ng trabaho," said Angara, a known advocate of labor reforms.

SB 1592 likewise retained the zero VAT provisions for the Philippine Economic Zone Authority (PEZA) locators.

Some 350 zones established under PEZA host over 3,500 investors who provide most of the export of goods and services of the country. These investors employ around two million Filipinos.

These investors have selected the Philippines because of the quality of the Philippine workforce and incentives being granted by the government.

The Senate TRAIN version ensured that the zero-rating will not be removed through the insertion of specific provisions relating to sales to entities registered with the ecozones and freeport zone authorities.

"Foreign investments are crucial in sustaining the country's economic growth and in providing jobs for millions of Filipinos. We value such contribution that's why the government has been very supportive of the industry by granting them various incentives. We will ensure that such incentives will remain intact," Angara said.

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