Meanwhile, in the Philippines, it is believed that the "key" to attract more business process outsourcing (BPO) firms into the country is the young and English speaking population in the country. Real estate consultancy firm Santos Knight Frank firmly believes in this even if the removal of the value-added tax (VAT) exemption becomes a reality.
According to a report by GMA News, House Bill 5636 or known as the Tax Reform for Acceleration and Inclusion was already given the nod during its second and third reading at the House of Representatives last month. The bill's purpose was to lower income tax rates while removing VAT exemptions from different sectors. Then the bill will compensate by changing the excise tax on fuel and automobile.
When asked about how the removal of the tax exemptions will affect BPO firms in the country as a possible area of investment, Santos Knight Frank Chairman and CEO Rick Santos answered that there are other things that can make the Philippines attractive to investors.
"I think the demographics are key. The Philippines has the people which are the secret sauce to the growth of BPOs," he said as quoted by GMA News.
If the Senate approves of the bill and makes it a law, then BPO companies will be imposed of a 12 on their gross receipts.
"It really comes down to skills, the English, the age of the workforce ... Those are the imperatives for the BPO firms," Santos said as quoted on GMA News.
Nevertheless, the move to remove tax exemptions should be first reviewed to know what exactly the impacts are that it could cause for BPO companies.
"Because I think the incentives are great drivers for growth in that sector. I think that is an important to their expansion agenda," he said as quoted by GMA News.
"Our view? The BPO industry is the biggest private sector employer today, with 1.5 million direct and 3.7 million indirect employees. The sector also contributed 8 percent to GDP (gross domestic product), with export revenues close to $25 billion," he added as quoted by GMA News.
Moreover, Santos noted that there should be a continuous dialogue between the sector and the government so that a "win-win" environment can become an end result of such move.
"We see fiscal incentives are important to encouraging the growth of BPO investments in the country," he added as quoted by GMA News.
It is known that the Philippines is a hot spot for outsourcing operations and BPO companies. However, with the current reading of the House Bill 5636 or known as the Tax Reform for Acceleration and Inclusion in the Senate, contact centre outsourcing companies should be prepared on how this will affect the business, employment, and recruitment.
Sign up to our mailing list for even more great deals! Your personal data is safe with us. You can opt out anytime with just one click.
Want to grow your business? Let us help you.