Angara allays fears of BPO sector, says tax perks won’t be touched

The chairman of the Senate ways and means committee on Thursday allayed the fears of the business process outsourcing (BPO) sector on the tax reform program of the government, assuring it that tax incentives currently enjoyed by BPO companies will remain.

“Makakahinga na po nang maluwag ang ating BPO sector matapos liwanagin na hindi mawawala ang kanilang VAT exemption,” Senator Sonny Angara said in a statement Thursday.

“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,” he said.

On Wednesday, the Department of Finance (DOF) clarified that that foreign services of BPO companies in special economic zones would remain exempted from VAT, while those outside special economic zones, including those registered under the Board of Investments, would retain their zero-rated status.

DOF Undersecretary Tonette Tionko said some industry stakeholders have likely misinterpreted the provisions of the bill.

Several groups have earlier voiced out their concern on the removal of tax perks on BPO firms.

MBC Executive Director Peter Perfecto earlier said a possible impact on the BPO sector was a cause for concern as the industry  is “one of the major contributors to our [economic] growth.”

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

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 said the IT-BPO industry should be tapped as a key driver of rural development.

“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 said. — with John Ted Cordero/MDM, GMA News