Concentrix waived tax perks in favor of WFH setup, says DOF

Business process outsourcing (BPO) firm Concentrix has decided to let go of its tax incentives in favor of continuing remote work setup for its employees, the Department of Finance (DOF) said Friday.

To recall, the government ordered companies operating in special economic zones to require 90% of their workers to return on-site starting April 1 or else they will lose the tax perks they enjoy.

Firms in economic zones enjoy fiscal incentives such as income tax holidays and a 5% tax on gross income earned.

In a statement, the DOF said it welcomes Concentrix's decision to maintain its hybrid work system.

“We support the decision of Concentrix to carry on with its flexible work arrangements. We respect that they are supportive of their employees who want such a work setup in this post-pandemic situation,” said Finance Assistant Secretary Juvy Danofrata.

Danofrata heads the Fiscal Incentives Review Board (FIRB) secretariat.

“This goes to show,” she said, “that tax perks are not that important to investors doing business in the Philippines.”

“This validates the DOF's policy thrust to avoid the grant of unnecessary tax incentives as this is apparently not the main consideration for them to do business in the country, especially for the business process outsourcing (BPO) firms that have been enjoying the exemptions and incentives for a long time,” the Finance official said.

Citing the FIRB secretariat’s assessment, the DOF said the total dividends declared by BPOs exceeded their income tax incentives, signaling that tax incentives are being used to augment shareholder returns.

The IT and Business Process Association of the Philippines (IBPAP) reported that revenues posted by the IT-BPO sector stood at $29.49 billion in 2021, up 10.6% year-on-year amid the implementation of work from home (WFH) setup.

This suggests that the tax benefits received by BPO firms are not that necessary as these only increase their profitability, according to Danofrata.

“By giving up their incentives, the opportunity cost to the government of these incentives will be minimized, which will make us more efficient in utilizing the government’s resources critical in our ongoing economic recovery efforts,” she said.—AOL, GMA News