Service providers with temporary or outsourced workers are only required to pay local government taxes based on the location of their head office, according to the Department of Finance (DOF).
In a local finance circular effective September 24, the DOF stated that contractors whose clients are located in towns and cities where they do not maintain any office are not liable to pay a mayor’s or business permit fee
This extends on local business taxes, fees and charges imposed on service contractors.
The circular will mainly affect Business Process Outsourcing (BPO) firms with a work-from-home (WFH) arrangement.
DOF Secretary Benjamin Diokno said that they have issued this order to address the taxpayers’ concerns that they have been receiving since 2015, “specifically on the imposition of mayor’s or business permit fee on service contractors deploying temporary and outsourced personnel in the local government outside its principal office.”