The business-process outsourcing (BPO) sector is opposing the tax-reform package of the Department of Finance, dubbed as the Tax Reform for Acceleration and Inclusion (TRAIN) Act, saying this could derail the industry’s competitiveness.
The IT and Business Process Association of the Philippines (IBPAP) urged the government on Wednesday to look into the impact of the TRAIN bill on the country’s second-largest dollar-earning sector, next to overseas Filipino workers.
“We are petitioning the government to consider the negative impact on job creation that may happen if the incentives of the [sector] are removed,” IBPAP said in its position paper.
The group noted that the Philippine BPO sector remains competitive because it could afford to offer high-quality service.
“With the current model there is flexible demand for our services, allowing us to be competitive in the global market,” the position paper read.
“This is because the margin of difference is counterbalanced by the high-quality service and talent the industry offers. However, should the tax-reform bill remove the current incentives of the industry, this will increase the price differential,” the position paper read.
The TRAIN bill is attempting to remove the value-added tax exemption on the sales of input materials for goods, and possibly services, meant for export.
The IBPAP said the move will impact the competitiveness and the growth strategies outlined in its Industry Road map 2022.
The road map targets 1.8 million direct jobs by 2022, and 7.6 million direct and indirect employment, $40 billion in revenues, and a 15-percent share in the global IT-BPM market.