The Information Technology and Business Process Association of the Philippines (IBPAP), representing a major pillar of today’s economy, is opposing provisions in the Duterte government’s tax reform bill seeking to remove fiscal incentives largely responsible for the competitiveness of the industry.
In a position paper sent to Rep. Dakila Cua, a copy of which was obtained by Inquirer, IBPAP urged lawmakers to maintain the same benefits the industry has been enjoying in the last 15 years, cautioning that changes in the middle of the game may drive investors away from the Philippines. Cua is the chair of the House Ways and Means Committee, which earlier approved the tax reform package.
The bill wants to remove these fiscal incentives, particularly the exemption of certain sales and imports from the value added tax (VAT), as part of measures to broaden the revenue base and offset losses from the lowering of the personal income tax.
“Midstream changes in the legal framework will materially affect the positive perception of the Philippine business environment and will impact, in an irreversible way, decisions to remain, expand, or set up new companies in the country,” the paper read.
IBPAP said the changes would make the country “as much less cost competitive compared to India [at approximately 20-30% cost disadvantage] or other outsourcing destinations such as China, Vietnam, Thailand and others.” —ROY STEPHEN C. CANIVEL