Tax incentives currently enjoyed by business process outsourcing companies will stay even in the proposed comprehensive tax reform program of the government.
This was the assurance made by the Department of Finance in a recent hearing on the proposed tax reform in the Senate stressing that foreign services of BPO companies in special economic zones will remain exempt from VAT.
Meanwhile, those outside special economic zones, including those registered with the Board of Investments, will retain their zero-rated status.
During the hearing, DOF Usec. Antonette Tionko said that there will be no change in their tax policy, and some industry stakeholders have likely misinterpreted the provisions of the bill.
It may be recalled that certain groups from the industry had earlier expressed concern that the removal of the VAT exemption would make the country a less attractive destination among global BPO firms.
Sen. Juan Edgardo Angara, chair of the Senate Way and Means Committee, allayed fears of the BPO after the DOF clarification.
“With the industry's incentives intact, we can continue to attract more BPO investments that would spur economic growth and job creation in the country," Angara said in a press statement.
Angara pointed out that BPO investments have been a big help in sustaining the country's economic growth for the past years.
"We value such contribution and the government has been very supportive of the industry by granting BPO firms various incentives," he added.