The Fort Bonifacio, or Bonifacio Global City (BGC), area will be burdened by higher taxes with the ruling of the Court of Appeals (CA) saying that the business district is under Makati City’s jurisdiction.
This is because buildings in BGC and the McKinley area are now subjected to 30 percent to 50 percent higher tax rates in Makati compared to the tax rates in Taguig City, particularly the infrastructures unregistered with the Philippine Economic Zone Authority (PEZA) which cater to the “traditional office takers.”
According to Jie Espinosa, Colliers International office services director, the increase in taxes “will be felt more” by “non-PEZA registered buildings” than PEZA-registered buildings, which have spaces catered to the business processing management sector.
“For non-PEZA buildings, those who are geared for traditional office space takers, [higher taxes imposition]would be felt more. But for PEZA buildings that are geared toward more BPO [business process outsourcing]companies, the effects would be negligible,” Espinosa said.
“Taxes would always affect to any kind of business, may it be in the development or normal operations,” said Ieyo de Guzman, Colliers International executive director.
But de Guzman also told reporters during the presentation of the Philippine Real Estate Market Second Quarter report that the PEZA-registered buildings, unlike the nonregistered, would not be affected that much by the appellate court ruling, since they receive tax incentives from the government.
“The least that would have a reaction to [the appellate court ruling]are the BPM companies who are still enjoying tax incentives [from the government]for a certain period,” de Guzman said.
About 40 percent of the infrastructure developments that supply offices for BPM and other industrial sectors are in the BGC area. Also, the influx of new real estate premium buildings mostly at the BGC “may overtake the demand” of offices by the year.
But Espinosa said that such imbalance in supply and demand of infrastructure for offices “will be corrected toward 2016” as the demand for BPM business opportunities in the country increases.
“We are oversupplied of buildings in Fort Bonifacio, because that is where the buildings are in right now, but that will be easily corrected in the subsequent quarters,” Espinosa said.
BPM centers in McKinley hill area are mainly offices for the voice sector or the call centers, while BPM segments at the BGC are more into “knowledge process outsourcing companies” which concern think tanks and institutional agencies.