June 27th, 2022
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says he hopes to work with the Department of Finance and the Department of Trade and Industry, Chair and Co-Chair of the Fiscal Incentives Review Board (FIRB), to ensure that business process outsourcing (BPO) companies are able to conduct alternative forms of working arrangements, such as work-from-home, while remaining competitive through tax incentives.
Salceda says that “the best way to do this is to manage the transition of BPO companies from PEZA registration to the more flexible enhanced deductions system, either still as exporters, or as BOI-registered domestic enterprises”
“So, we need a concerted effort to craft the package and procedure for that shift, and to make BPOs understand this.”
“I have already pitched with the incoming Speaker and with several economists and incoming members of the Marcos Cabinet that one of the best ways to deal with currency depreciation is to simply earn more dollars. And the BPO sector is a big part of that strategy. We really need to allow them to work from home.”
“Now, BPOs typically register as ‘exporters’ under the CREATE Law, so that they are entitled to the 10 year 5% on gross income rate and 4 to 7 years of income tax holidays. My proposal is to encourage them instead to register under the enhanced deductions system, either as exporters or as BOI-registered domestic enterprises. Enhanced deductions reward training, knowledge transfer, research, and better worker pay.”
“Basically, the fear of the FIRB appears to be that work-from-home reduces economic benefits from face-to-face work such as rent and spending on utilities and nearby establishments that serve workers.”
“My argument is that WFH still allows us to earn dollars and employ workers, which is the point of tax incentives. So, my proposed compromise is this: If you want to do work-from-home, you will be required to register under enhanced deductions, either as exporter or as domestic market enterprise, depending on the level of economic contribution that you can still deliver to the country, despite WFH.”
“Besides, work-from-home has its own economic benefits such as lower overall fuel and transport consumption.”
Salceda says he hopes to work with the incoming Secretary of Finance, Benjamin Diokno, and Secretary of Trade and Industry, Alfredo Pascual, to ensure that the work-from-home arrangement and other flexible work arrangements are kept.
“Both Secretary Diokno and Secretary Pascual are keen on digitalization of the economy. And a natural consequence of digitalization is working remotely. We should not kill a development that is good for Filipino families, who have now reclaimed part of their time together thanks to flexible work arrangements.”