MANILA, Philippines — The Information Technology and Business Process Association of the Philippines (IBPAP) has emphasized the importance of fiscal incentives to the country’s competitiveness as an investment destination and the need to allow information technology - business process management (IT-BPM) firms to implement the work-from-home (WFH) arrangement so as not to lose talent.
IBPAP president and CEO Jack Madrid said in a statement yesterday the Filipino talent, expanding digital infrastructure, and strong government support for a conducive business environment are all factors that enable the country to maintain its global leadership in the IT-BPM industry.
He said decisions made by IT-BPM firms to locate in the Philippines are based on laws, regulations, and policies vetted against competing locations.
“They value fiscal incentives, which often is the tiebreaker in their investment considerations. Continued profitability is key to retain their investments, expand in the country, create more jobs for Filipinos, and contribute to urban and countryside economic development including the generation of significant export revenue,” he said.
IBPAP’s statement comes as Finance assistant secretary Juvy Danofrata said tax perks are not that important to investors doing business in the Philippines, following the decision of business process outsourcing giant Concentrix to waive incentives in exchange for maintaining the WFH setup.
The Fiscal Incentives Review Board (FIRB) allowed up to 90 percent WFH arrangement for IT-BPM firms registered to operate in economic zones without losing their incentives as a temporary measure in light of the COVID pandemic.
After March 31 of this year, the registered IT-BPM firms were directed by the FIRB to operate on-site to keep their incentives.
The IBPAP has raised concerns over the 100 percent return to office (RTO) order citing this poses a threat to the industry’s growth with hybrid work being implemented in competing locations, and employees having a preference for a WFH or hybrid work setup.
Madrid said “a critical risk that industry players face is increased employee attrition if the WFH/hybrid work setup is not available.”
He said this is why even at the risk of being meted with penalties, some registered business enterprises (RBEs) opt to allow employees to continue working from home.
RBEs will face a suspension of income tax incentives as a penalty for every month of its non-compliance to the RTO.
Madrid also said the decision of IT-BPM firms to let go of income tax perks is a difficult interim measure to address the needs of their employees and meet the demand of clients who prefer WFH/hybrid work arrangements.
“As such, the industry hopes that the FIRB will soon reconsider its decision and rule in favor of the IT-BPM industry by allowing its players the privilege of fully implementing the PEZA (Philippine Economic Zone Authority) Letters of Authority (LOA) on WFH,” he said.
While there may be investors such as Concentrix who were reported to have given up tax incentives to continue WFH/hybrid work arrangements, he said the group believes this decision was made to prioritize the needs of the company’s over 100,000 Filipino employees who have expressed an overwhelming preference for a hybrid work arrangement, as well the belief in the benefits of flexible work models in terms of greater productivity and scale for the global customer base and long-term business viability.
“IBPAP, as the flagship organization of the IT-BPM industry in the Philippines, stands by our position on WFH/hybrid work, and the legal basis of the LOAs granted by PEZA to allow 30 percent WFH arrangement until Sept.12,” Madrid said.
He said the LOAs have enabled companies to accommodate the strong preferences of its employees and implement a smooth, phased return to on-site operations in the immediate term before a permanent WFH/hybrid work policy is established.
The IT-BPM industry continues to be a major economic pillar of the country.
Last year, the IT-BPM industry generated $29.49 billion worth of service export revenues, up 10.6 percent from the previous year.
The industry also provided full time employment to 1.44 million last year, 9.1 percent higher than 2020.