BIR and DOF Urged to Make Tax Incentives for BPOs Clearer

In light of firms in the business process outsourcing (BPO) industry changing their registrations to the  Board of Investments (BOI), Rep. Joey Sarte Salceda is asking finance sector regulators to make the tax perks rules more simple and clear.

Rep Salceda wrote to Department of Finance Secretary Benjamin E. Diokno last September 25 and requested to make the rules more clear and simple “in view of the impending shift to the [BOI] by many new and existing BPO [firms].”

In Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (Create) law, all Investment Promotion Agencies (IPAs) would have the same incentives to offer investors and locators alike.

By registering as an IPA like the BOI, under the Create law, BPOs can avail of enhanced deductions on labor costs, training expenses and research and development, and power costs, in place of the special corporate income tax rate of 5%.

Rep. Salceda mentioned that some BPO firms “might actually pay even less tax as a result.”

“But we also get more benefits out of their spending on research, training, and others,”

“But, for BPOs to benefit from such incentives, the BIR has to make the rules simpler and clearer. Otherwise, there’s going to be plenty of room for negotiation and possibly corruption,” says Salceda.

“Foreign BPOs, in particular, are spooked by that.”

In Salceda’s letter to Secretary Diokno, he indicated recommendations such as an online uploading system of the documentary requirement for enhanced deductions, and guidelines for automatic approval of enhanced deductions to name a few.

Source: Business Mirror