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Bills on Tax Break Removal to Dampen PH BPO Edge

by: Sarah Joson

Thursday, May 3, 2012 | Outsourcing News |

The business process outsourcing (BPO) industry and other various sectors of the Philippines are facing yet another challenge as bills that seek to remove income tax holidays (ITH) are created.  

The Executive Director of Business Processing Association of the Philippines (BPA/P), Martin Antonio S. Crisostomo, pleaded through a position paper for Senate Bills 2142, 2379, and 2755, all of which are designed to limit the government-regulated aids and financial grants for merchandise export-oriented and micro-and small-scale enterprises, to be reviewed and the ITH to be reconsidered.

Crisostomo stressed in the paper that if the ITH incentive is removed, it will affect the country’s capability to market itself and attract foreign investors, making neighboring countries the preferred BPO locations. Another factor that might discourage possible investors is the country’s high tax rate of 30%, versus Singapore’s 17% and 25% for Indonesia, Malaysia, and Vietnam.

Removal of the tax break would also affect the perception of investors as changes in incentives could mean the country is unsure of its policies, and its government is not fully fulfilling its duties.  Crisostomo added that the Congress should at least wait for the remaining tax incentives to expire before changing anything in the policy regarding ITH.


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