Tax reform impact on BPO a concern – MBC

The negative impact of tax reform on industries, particularly withdrawing the value-added tax (VAT) exemption of business process outsourcing (BPO) companies, is a cause for concern, an official of the Makati Business Club (MBC) said Wednesday.

"We have to see if it does impact negatively on the BPO. Definitely, it should be a concern, because it’s one of the major contributors to our growth and the potential for growth in the BPO sector is still huge," MBC Executive Director Peter Perfecto told reporters on the sidelines of Integrity Forum in Makati City.

House Bill 5636 or the Tax Reform for Acceleration and Inclusion seeks to lower personal income tax rates but at the same time removing VAT exemptions of various sectors and adjusting excise taxes as compensating measure.

Once the bill is enacted into law, transactions of BPO companies in the country would be subject to 12 percent VAT on gross receipts.

Property consultancy firm Colliers International noted removing the BPO sector's tax incentives would hinder the government's ability to attract more outsourcing investments to the country.

"They’re part of our services sector. That’s been our strength in terms of global supply and value chains," Perfecto said. "If it has negative impact on the sector, then it is something of concern," he noted.

In every bill enacted there are "winners" and "losers. BPO as losers? That’s unfortunate, but I don’t think there will be no recourse for them. It’s an important sector," Perfecto said.

"As business always does, we will have to make the adjustments and continue to work on getting the right policies passed or promoted," he added.

Perfecto said the government must do more in addressing the concerns of the BPO sector. "Because they are actually a winning sector for us and we know that they will provide us with more wins in the future," he said.

According to the latest report of professional network LinkedIn, the top three most hired professionals in the country are related to the BPO and information technology industries.

The Philippine IT and Business Process Management earlier said it seeks to generate as much as $39 billion in revenue over the next six years, in line with the industry's 2022 Roadmap.

"We hope that congress will also be as receptive in terms of calling for comprehensive discussion. For instance, in the BPO, I think there’s enough data they could have based their decision on," Perfecto said.
 
"But we’re cognizant of the fact that in the final tax reform there will be winners and losers. But the best way forward is to ensure that the consultation, the dialogue process will be as comprehensive as possible," he added. — VDS, GMA News