BPO group opposes Philippine tax rule on remote work
MANILA, PHILIPPINES — The IT and Business Process Association of the Philippines (IBPAP) has expressed concern over a recent legal opinion released by the Philippine Department of Justice (DOJ) stating that business process outsourcing firms (BPOs) within special economic zones must require employees to work onsite to qualify for tax incentives.
IBPAP President Jack Madrid said the opinion could discourage workers from joining the BPO industry by limiting work flexibility.
“While we welcome the opinion and clarification, the headlines are a bit of a concern because when employees read a headline like that… it could discourage them from the industry,” Madrid stated.
In the legal opinion published last January 3, Justice Secretary Jesus Crispin Remulla cited a provision of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law specifying that zone-based companies must operate within zone boundaries to receive incentives.
However, he clarified that “these enterprises are not prohibited from adopting a [work-from-home] WFH arrangement but will no longer be eligible to continue enjoying the tax incentives.”
Madrid warned the policy could exacerbate talent shortages and damage the reputation of the Philippine BPO industry to foreign investors.
The IBPAP head said legislation like the proposed CREATE More Act could provide clarity.
“Let’s await that to be discussed and approved,” he remarked, while affirming IBPAP support for work flexibility “because that’s what investors want, and it’s what our employees need.”
