BPOs better managed by BOI than PEZA – Salceda

MANILA, Philippines — Now that the COVID crisis is easing, it would be best if business process outsourcing companies be placed under the Board of Investments (BOI), especially in light of the more practical work-from-home arrangements, according to a lawmaker.

“The best way to do this is to manage the transition of BPO companies from PEZA registration to the more flexible enhanced deductions system, either still as exporters, or as BOI-registered domestic enterprises,” Rep. Joey Salceda proposed, referring to the Philippine Economic Zone Authority.

BPOs are currently under the ambit of PEZA, following work-from-home arrangement problems with the government, specifically with the Department of Finance (DOF) that compelled them to return to their face-to-face setup.

Salceda hopes he can work with the DOF, Department of Trade and Industry and DOF’s Fiscal Incentives Review Board (FIRB) to ensure that BPO firms are able to conduct alternative forms of work arrangements while remaining competitive through tax incentives.

“So we need a concerted effort to craft the package and procedure for that shift, and to make BPOs understand this,” the chairman of the ways and means committee of the House of Representatives stressed.

The reelected Albay congressman disclosed he already informed incoming House speaker Martin Romualdez and “several economists and incoming members of the Marcos cabinet” that the best way to deal with currency depreciation is “to simply earn more dollars.”

“And the BPO sector is a big part of that strategy. We really need to allow them to work from home,” Salceda said.

“Now, BPOs typically register as exporters under the CREATE Law, so that they are entitled to the 10 year five percent on gross income rate and four to seven years of income tax holidays,” he added.

“My proposal is to encourage them instead to register under the enhanced deductions system, either as exporters or as BOI-registered domestic enterprises. Enhanced deductions reward training, knowledge transfer, research, and better worker pay.”

He said the FIRB apparently fears that work-from-home reduces economic benefits from face-to-face setup such as rent and spending on utilities and nearby establishments that serve workers.

“Besides, work-from-home has its own economic benefits such as lower overall fuel and transport consumption,” he said.