ICT sector seeks to keep perks

The umbrella organization of information and communications technology (ICT) councils nationwide has appealed to the government to keep the fiscal incentives enjoyed by the ICT sector in the last 15 years, citing the need to generate jobs and investments especially in the countryside.

Addressing Malacañang and Congress, the National ICT Confederation of the Philippines (NICP) said the continuation, retention and expansion of fiscal incentives for Information and Communications Technology – Business Process Management (ICT-BPM) companies would be needed to sustain the growth of this industry and achieve a more inclusive economic growth.

“It is our most humble appeal that the government retain the current incentive package of the ICT-BPM industry and encourage their expansion in provincial location,” NCIP said in a statement.
“We appeal that these companies be allowed tax deductions for any relevant talent development programs it will invest in to grow and ensure the quality of talent in the countryside,” it added.

Along with overseas Filipino remittances, the ICT-BPM sector is a major contributor to the economy, accounting for $25 billion in revenue in 2016.

“The proposed tax reforms of the current administration are laudable especially insofar as increasing the net income of the middle class by reducing individual income tax base. But taxation is not only a means to generate revenues, it is also a tool to develop and grow industries that are relevant and sustainable especially in areas where there are less jobs and opportunities,” it said.
“Across the globe, developing countries use tax incentives as a means to attract direct foreign investments to solve unemployment, engage in technology transfer and intensify development of preferred industries.”

The group said the ICT industry would become less competitive compared to other cities and increase cost of doing business in the country.

“In a global industry, where cities and no longer countries compete with one another, the chances of Philippine cities to attract ICT investments will be adversely affected by a central tax policy which cities cannot cushion itself from unless we are in a federal system,” NCIP said.

“The inevitable implication for BPO services will be an increase in cost, affecting employees’ current benefits, and any form of expansion and at worst, for them to explore low-cost economies for their BPO operations.”