Tax package gets ‘cautious support’ from Makati traders

The Makati Business Club (MBC) expressed cautious support for the Duterte administration’s first tax reform bill, noting that adjustments have to be made if the proposal would end up negatively impacting the business process outsourcing (BPO) industry.

MBC executive director Peter Angelo Perfecto told reporters yesterday that adjustments have to be made should there be repercussions in the BPO industry, but maintained that it was “very important that at least package one [of the comprehensive tax reform program] moves.”

The House of Representatives was scheduled yesterday to vote on House Bill 5636, the Duterte administration’s first package that promises to lower personal income tax while offsetting the revenue losses by raising taxes in some sectors.
However, the bill, which is backed by the Department of Finance (DOF) and has even been certified as urgent by President Duterte, would include provisions considered harmful to the BPO sector.

These provisions would strip outsourcing firms of their zero value-added tax (VAT) exemption on imports and sales, effectively charging their transactions with the VAT equivalent of 12 percent of gross receipts, a move some fear would come at the cost of the industry’s competitiveness.