Whenever organisations are looking for outsourcing providers, the Philippines is always on their shortlist. This is because the country has become famous for being where they can get a skilled workforce with lower costs compared to locals of the country where they’re from. And since the government also supports the expansion of the industry, there are laws that entice businesses to go in the country — and one of this is lower taxes.
However, there are changes happening in the country. According to a report by SunStar Cebu, Contact Center Association of the Philippines (CCAP) president Jojo Uligan said the country is no longer the cheapest outsourcing destination. Uligan said the Philippines is now lagging behind sector competitors in terms of incentive offerings since the decision of removing this due to the second of the five packages under the comprehensive tax reform program (CTRP) can hinder the continuous growth of the industry.
In addition, BMI research said the second package of the government’s tax reform program is seen to make the country less competitive; thus, slower investments. The economic analysis revealed the said the second package of the CTRP indicated the removal of fiscal incentives, the Philippine Star reported.
“While the proposed tax reforms may be fiscally prudent, it will likely make the Philippines less competitive versus its regional peers. Investment could slow over the near-term as the proposed conditional corporate tax reduction and repealing of fiscal incentives create uncertainties for businesses,” it said.
Last December 19, Philippine President Rodrigo Duterte signed the Republic Act 10963, also known as the Tax Reform for Acceleration and Inclusion (TRAIN) law, which reduces personal income tax rates, but increases the excise tax on fuel, motor vehicles, and sweetened beverages.
Meanwhile, CCAP is looking for ways for the incentives to stay in the second reform package so that the Philippines can still be the cheapest BPO and outsourcing destination in the world.
Uligan said the country is “already 10 percent higher than India,” explaining that it was all thanks to the incentives since it is effectively luring in investments in the country, along with other assets, such as talent availability and skills.
“We need to maintain what we can maintain or meet halfway,” said Uligan. “If we have these incentives, we can compete.”
Currently, Uligan and CCAP are in dialogue with the goverment regarding the proposed Train 2 package.
Outsourcing has been a great strategy to access to a skilled workforce while saving on costs. Over the years, organisations have been seeking outsourcing solutions in the Philippines since the country has a large population of flexible, skilled and English-fluent talents ready to work. Ezy Outsourcing Hub provides outsourcing, offshoring, remote staffing, office leasing and seat leasing services to small, medium- and large-scale companies in the Philippines and abroad. For inquiries, call 02-6571872 / +61 419 200 663 or email contact@ezyoutsourcinghub.com.
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