BUILDINGS and real estate properties inclined with the occupancy of traditional office takers in The Fort Bonifacio or Bonifacio Global City (BGC) area will now be burdened by higher taxes as the Court of Appeals (CA) ruled the business district to be under Makati City jurisdiction.
This is because buildings in the BGC and McKinley area are now subjected to 30 to 50 percent higher tax rates in Makati than their former 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 tax increase in taxes “will be felt more” by the “non-PEZA registered buildings” than the PEZA-registered buildings, which spaces are catered to the business processing management (BPM) 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 towards more BPO 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 at the Philippine Real Estate Market 2nd quarter report that the PEZA-registered buildings, unlike the non-registered, would not be affected much to the CA ruling as they receive tax incentives from the government.
“The least that would have a reaction to [the CA ruling]are the BPM companies who are still enjoying tax incentives [from the government]for a certain period,” de Guzman said.
De Guzman added that effects of the CA ruling for the building developers and other businesses in BGC and McKinley area will result in an “inflation of the tax in BGC” which is still to be “taken into consideration” at present.
About 40 percent of the infrastructure developments that supply offices for BPM and other industrial sectors are in BGC area, which have the highest rates of infra development among the business hubs of the country like Makati and Ortigas.
The influx of these 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 towards 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.