Sen. Juan Edgardo ?Sonny? Angara has allayed the fears of the business process outsourcing (BPO) sector, saying that tax incentives currently enjoyed by BPO companies will remain despite the proposed comprehensive tax reform program of the government.
“Makakahinga na po nang maluwag ang ating BPO sector matapos liwanagin na hindi mawawala ang kanilang VAT exemption. With the industry’s incentives intact, we can continue to attract more BPO investments that would spur economic growth and job creation in the country,” said Angara, chairman of the ways and means committee.
The Department of Finance (DOF), during a public hearing on the proposed tax reform, has clarified that foreign services of BPO companies in special economic zones will remain exempted from VAT, while those outside special economic zones, including those registered under the Board of Investments, will retain their zero-rated (0% VAT) status.
Certain groups from the industry had earlier voiced out their concerns that the removal of the VAT exemption would make the country a less attractive destination among global BPO firms.
DOF Usec. Antonette Tionko said that there is no change in their tax policy, and some industry stakeholders have likely misinterpreted the provisions of the bill.
Lawyer Jocelle Batapa-Sigue, chair of the public policy committee for the National ICT Confederation of the Philippines (NICP), welcomed the assurance from Angara.
“This is an encouraging development for the countryside as all ICT councils exert full efforts to bring jobs and investments to provincial locations,” she said in a statement.
In 2016, the Information Technology and Business Process Association of the Philippines reported that the industry provided direct employment to some 1.15 million Filipinos, and generated $23 billion in revenue.
Meanwhile, five Philippine cities made it to the 2017 Tholons top 100 outsourcing sites in the world, with Metro Manila recognized as the fourth most competitive global BPO destination. Other Philippine cities on the list include Cebu (12th), Davao (85th), Bacolod City (97th), and Santa Rosa, Laguna (100th).
Angara stressed that the IT-BPO industry should be tapped as a key driver of rural development through the creation of high-value online jobs in far-flung communities.
“While the industry thrives as one of the top career providers in our major cities, we must also bring opportunities in the countryside where they are needed the most. Dapat, bigyan din natin ng pagkakataon ang ating mga kababayan sa mga malalayong probinsya na makapagtrabaho sa sektor na ito na hindi na kailangan pang lumuwas ng Maynila,” he added.