The BPO Industry is one of the Philippines highest contributor to its economy.

In fact, the benefits provided by countless BPO companies setting up shop in the country are tremendous, as it contributes also to the livelihood of its citizens.

Those are common knowledges by now, but for some reason, tax incentives for the industry is being proposed to be removed. Meaning, setting up an outsourcing business here in the country would become harder, and more expensive.

These fiscal incentives are one of the biggest reasons why the industry thrived.

So, removing it, can be bad news, not just for the industry, but for the economy of the country as well.

As per the position paper created by the Information Technology and Business Process Association of the Philippines, or IBPAP, removing the fiscal incentive offer, may result into investors being driven away.

These incentives, specifically, exemption of certain sales and imports from VAT, are being targeted to cover the loses from lowering the personal income tax.

The paper said, “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.”

Job Creation Affected

But apart from driving away investors, removing these incentives would affect the job creation that BPO provides.

As per Business World, should this removal of incentives become a reality due to the pending tax reform bill, the BPO industry may reduce the job it produces by about 40 percent.

With lesser jobs, it means lesser Filipinos who can contribute to the economy. This would have a direct effect on the country’s economic progress, which the BPO industry have been helping for more than a decade now.

With the Philippines’ natural affinity for English, admirable work ethic, and relatively affordable cost of labor, the country has been the top destination for companies looking to outsource.

Which is why should the country make it harder for these companies to invest here, it is more than likely they will go to others that offers lesser prices, and fiscal incentives such as China, Vietnam and others.

The BPO Industry have been one of the major sources of income generation of the Philippines, and removing the fiscal incentives that made it thrive, is a bad idea that will come back and bite in the long run.

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