The Information Technology and Business Process Association Philippines (IBPAP), which targets to grow its revenue to $39 billion this year and around two million jobs, welcomed the national government's thrusts to help the Information Technology and Business Process Management (IT BPM) grow in the country by pushing for greater work flexibility.
IBPAP President and CEO Jack Madrid told reporters on Jan. 22 that he commends the Marcos administration for calling for efforts to give 100 percent work flexibility to the ITBPM sector "through the paper transfer of locators in PEZA, [majority of our investors are in PEZA], allowing them the capability to transfer to BOI."
The ITBPM industry generated over $35 billion in revenue and created 1.7 million direct jobs for Filipinos in 2023.
In 2024, Madrid said they project to cross 1.84 million jobs and make $39 billion in revenue, and reach two million jobs by 2025.
He expressed its appreciation to the Department of Justice (DOJ) for clarifying the tax incentives eligibility of businesses, which affects many business outsource processing (BPOs) jobs and operations.
Last Jan. 3, the Department of Justice (DOJ) issued a legal opinion regarding the applicability of tax incentives for registered business enterprises (RBEs) that have WFH arrangements since the Covid-19 state of emergency status has been lifted in the country.
Justice Secretary Jesus Crispin C. Remulla cited Section 309 of Republic Act (RA) No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, which states that "any project or activity conducted or performed outside the geographical boundaries of the zone or freeport shall not be entitled to the incentives provided in this Act, unless such project or activity is conducted or operated under another Investment Promotion Agency (IPA)."
This means that RBEs under IPAs such as the Philippine Economic Zone Authority (PEZA) must employ on-site work operations to avail of the tax incentives. RBEs are allowed to adopt WFH arrangements, but are no longer eligible to the tax incentives.
However, this locational prohibition does not apply to RBEs registered with the BOI.
"This was I thought a very good legal solution. I'm happy to receive confirmation that the DOJ opinion will not affect the work flexibility of those currently enjoying 100 percent work flexibility from the paper transfer to BOI. That's a signifiCant clarification," said Madrid.
However, he emphasized his concern over the way the opinion is being shared, pertaining specifically to headlines that "could discourage" employees and investors from entering the industry.
"The Philippines doesn't have a demand problem. What we have is a challenge of talent supply. So when we have a supply problem and they read a headline that constraints them from work flexibility, this could damage the reputation of our industry and country. Our investors also see headlines, and when they see any notion of changing the rules, it damages the country," said Madrid.
Trade Undersecretary and Board of Investments (BOI) Head Ceferino S. Rodolfo said that they also welcome the clarification from the DOJ.
He emphasized that the government wants the transfer Of PEZA locators to BOI "to be seamless and as facilitated as possible."
The opinion just "confirmed that the existing mechanism that we have allowed for the Philippines to continually benefit from the BPO investments, and that we have continued to attract because of this policy of allowing WFH arrangements for BOI-registered companies," he remarked.