BPOs with full work-from-home schemes can keep tax perks in new House bill

MANILA, Philippines — Business process outsourcing (BPO) companies can implement a full work-from-home scheme while retaining their full tax incentives in a new House bill amending the CREATE Act.

House ways and means panel chairperson Rep. Joey Salceda (Albay, 2nd District) said on Tuesday that the proposed CREATE amendments — which is likely to be passed next week — will allow the IT-BPO sector to “fully undertake work-from-home schemes.”

Salceda said: “This will allow one of the country’s most durable sectors to remain globally competitive. The world has moved towards hybrid, and it does not make sense to limit ourselves in this area.”

Currently, companies in the Information Technology and Business Process Management (IT-BPM) industry can implement a work-from-home scheme if it complies with the requirements and registers with the Board of Investments (BOI).

This comes after the Department of Finance last year heeded demands by BPO firms to retain the remote work arrangements implemented during the pandemic by allowing the transfer of BPOs to the BOI, which unlike the PEZA, has no restrictions on area of operations.

But the proposed amendments to CREATE seek to allow BPOs to implement remote work schemes — a favorable setup among call center workers due to its positive impact on productivity and due to traffic in the Greater Metro Manila Area — regardless of their registration with BOI or PEZA.

During the pandemic, IT-BPM companies were allowed to let their employees work from home without worrying about losing their fiscal perks.

The setup, in turn, helped the sector generate $26.7 billion in revenues and create 1.32 million direct jobs in 2020 despite a pandemic-induced recession, data from IT and Business Process Association of the Philippines (IBPAP) showed.

Salceda said that the proposed CREATE amendments will also address “VAT rate and refund issues, especially for exporters.”

There are also amendments to the Corporate Income Tax that reduce it to 20% for those under the enhanced deduction regime, 200% deductions for power costs that can be accumulated during an income tax holiday, a deduction of 200% for trade fairs and trade missions, and a carryover of Net Operating Loss to five years after the end of the ITH period, Salceda said.

Another amendment to the CREATE Act is a uniform 1.5% registered business enterprise local tax collected by investment promotion agencies “in lieu of all local impositions” in order to reduce the point of contact with local government units, the lawmaker said.

A special skills visa will also be granted to highly technical personnel employed in registered business enterprises, Salceda added.

— with reports by Ramon Royandoyan and Ian Nicolas Cigaral

Editor's Note: The image accompanying the story was captured by Charles Deluvio via Unsplash.