Tax perks still key factor for investing in PH: IT-BPM group

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KEY FACTOR. The umbrella organization of information technology (IT) and business process management companies in the country cites the importance of maintaining fiscal incentives in attracting investments from the industry. In 2021, the IT-BPM sector’s revenues increased to USD29.49 billion, and created 122,000 full-time employees despite the pandemic. (File photo)

MANILA – The IT and Business Process Association of the Philippine (IBPAP), the umbrella organization of information technology (IT) and business process management companies in the country, has underscored the importance of maintaining fiscal incentives in attracting investments from the industry.

IBPAP president and chief executive officer Jack Madrid said IT-BPO firms value fiscal incentives being provided by the government, and it is often “the tiebreaker in their investment considerations”.

“As a global leader in IT-BPM services, the Philippines finds its competitive advantage in the Filipino talent, our expanding digital infrastructure, and strong government support that creates an enabling and conducive business environment. It is the harmonious combination of these factors that allows the Philippines to maintain its global leadership in the industry,” Madrid said in a statement.

Some IT-BPM registered business enterprises (RBEs) have decided to forego their tax perks from the government to maintain the work-from-home (WFH) arrangement for IT-BPM employees, as the Fiscal Incentives Review Board (FIRB) ordered RBEs in the sector to bring back 100 percent of their operations in the office. 

RBEs that will not comply will lose their fiscal incentives.

“The decision of IT-BPM RBEs to forego their income tax perks is a difficult interim measure to address the needs of their employees and meet the demand of clients who prefer WFH/hybrid work arrangements. As such, the industry hopes that the FIRB will soon reconsider its decision and rule in favor of the IT-BPM industry by allowing its players the privilege of fully implementing the PEZA (Philippine Economic Zone Authority) Letters of Authority (LOA) on WFH,” Madrid said.

Madrid added the industry group stands by its position on hybrid work arrangement and the legal basis of PEZA’s granting of LOA to allow 30 percent of WFH until Sept. 12, 2022.

In 2021, revenues of the IT-BPM sector increased to USD29.49 billion, 10.6 percent higher than the industry’s 2020 revenues.

The industry also created 122,000 full-time employees despite the pandemic, bringing the total FTEs in the sector to 1.44 million.

“Growth prospects for 2022 and the medium-term are as bullish if favorable conditions are sustained. To retain and grow existing investments and encourage inflow of new investments, the country’s regulatory and investment policies need to be clear and consistent,” he said. (PNA)