MANILA, PHILIPPINES – The IT and Business Process Association of the Philippines (IBPAP) is alarmed to find that local government units (LGUs) are collecting taxes from BPO firms despite the exemptions under the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act.
It must be noted that the CREATE MORE Act was enacted to make the countrys tax incentives “more globally competitive, investment-friendly, predictable, and accountable.” Its set to open up more high-impact foreign and domestic investments, which, in turn, will create more jobs and income for Filipinos, as Secretary of Finance Ralph Recto had said.
Its Effects on PH BPO Firms
IBPAP says that the inconsistent tax policies, which ignore the mandates of the CREATE MORE Act, have an impact on BPO firms operating costs and investment decisions.
- Operational costs could increase between 15% and 20%.
- Global headquarters could reconsider locating their operations in the Philippines.
The group is also concerned about inconsistencies in tax assessments, which could affect the BPO firms tax payments, noting the Bureau of Internal Revenue (BIR) Memorandum Circular 05-2024, which subjects certain cross-border services in some areas to a 25% final withholding tax and a 12% value-added tax (VAT).
