TRABAHO bill sets P25-B for IT-BPO

MANILA — The Tax Reform for Attracting Better and High-quality Opportunities or TRABAHO bill is allocating PHP25 billion for five years for the information technology and business process outsourcing (IT-BPO) sector to upscale the skills of its employees.

Department of Trade and Industry (DTI) Undersecretary Ceferino Rodolfo told reporters that the government will allocate PHP5 billion annually for five years for the IT-BPO industry once TRABAHO bill is enacted into law.

“We direct this incentive to the source of competitiveness [of the industry], which is your people,” Rodolfo said.

According to House Bill No. 8083, the PHP5-billion annual allocation for the IT-BPO sector “shall be solely used to pay for formal academic or training programs of accredited private or public schools and training centers”.

Rodolfo added that this perk is somehow akin to the voucher system implemented before for the industry to give trainings to those who would like to work in the IT-BPO sector. But this time, the budget is for upgrading the workforce to maintain the competitiveness of the industry.

The industry has aired its concerns in the second package of the tax reform program of the administration, particularly fearing to lose certain perks once this bill on rationalization of fiscal incentives is passed.

It was noted that most of the IT-BPO firms are registered with the Philippine Economic Zone Authority (PEZA), where they are currently enjoying the 5-percent gross income earned (GIE) tax incentives.

Lower corporate income tax rate of 10 percent is also being provided for regional operating headquarters.

Once the version of TRABAHO bill in the lower house is passed, the 5-percent GIE tax incentive will be removed for the next two to five years.

Together with the electronics industry, IT-BPO shares around 20 percent of the country’s gross domestic product.

Rodolfo, said despite the scrapping of the GIE tax perk, TRABAHO bill is offering a menu of incentives that is targeted and relevant to different needs of industries.

Among the incentives that can be provided by the government to specific economic activities include income tax holiday, reduced corporate income tax rate, accelerated depreciation allowance, 50 percent additional reduction on labor, 100 percent additional reduction on research and development, 100 percent additional reduction on training, 100 percent additional reduction on infrastructure, 50 percent additional reduction on domestically sourced inputs, reinvestment allowance, and net operating loss carry over.