‘Tax reform to impact BPO competitiveness’

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The Tax Reform for Acceleration and Inclusion (Train) bill could affect the competitiveness of the Information Technology and Business Process Management sector, industry leader Rey Untal said.

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“This will impact our competitiveness and, therefore, the growth trajectories outlined in our Roadmap 2022, including sectors that benefit from the 3.2 multiplier effects of the IT-BPM industry,” Untal, president of the IT and Business Process Association of the Philippines, told The Manila Times.

Train or House Bill 4688 seeks to reduce the rate of personal income tax. Filipinos earning below P250,000 a year are also exempted from paying personal income tax.

However, this will also take away the value-added tax exemption from the IT-BPM sector to broaden the VAT base by imposing a 12 percent VAT on gross receipts.

“We are not opposing the tax reform bill in its entirety. However, we are communicating with the government to demonstrate the possible effects should the incentives of the industry be removed,” Untal said.

“With the current model, there is flexible demand for our services allowing us to be competitive in the global market. This is because the margin of difference is counterbalanced by high quality service and the talent the industry offers,” he said.

Under the Roadmap 2022, the industry is expected to generate 2.6 million direct and indirect jobs over the next five years, and achieve total revenue of $40 billion by 2022.

Every direct job is a multiplier of more than three additional jobs, IBPAP earlier said.

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