American BPOs remain bullish on Cebu market

American business process outsourcing (BPO) companies are still looking positive at Cebu’s growth trajectory as an outsourcing hub.

In a recent interview, Santos Knight Frank CEO Rick Santos said American BPO firms have reaffirmed their commitment to Cebu and have continued to expand here.

He said companies continue to see expansion opportunities in Cebu.

This despite fears whether incentives especially those currently enjoyed by economic zone locators including BPOs will remain under the government’s corporate tax reform.

Kash Salvador, associate director for investments and capital markets at the property consultancy firm, pointed out investors generally will not invest solely for tax incentives. More importantly investors look at the growth opportunities present in Cebu, he stressed.

“You don’t enter a market solely relying on tax incentives. Their priority is the growth opportunity. The incentives are just icing on the cake,” Salvador said.

In addition, Santos said that Cebu’s demographics remain encouraging for investors, citing its large pool of young talents and English speaking workforce. He asserted Cebu remains a growth market for investors.

Corporate tax reform comprises Package 2 of the Duterte administration’s Comprehensive Tax Reform Program (CTRP).

The Department of Finance is targeting to introduce this year the rest of the CTRP packages that mainly cover property and capital income taxation.

House Bill 7458, authored by Deputy Speaker Raneo Abu, Deputy Majority Leader Aurelio Gonzales and Rep. Dakila Carlo Cua, who chairs the House ways and means committee, was filed last March 20.

The bill provides for a one-percentage point reduction in the current 30 percent CIT every year for domestic corporations, resident foreign corporations and non-resident foreign corporations starting 2019, provided that the cut would not reach lower than 20 percent, while modernizing fiscal incentives to make them performance-based, targeted, time bound, and transparent.

Similar to the version proposed by DOF and Department of Trade and Industry, the bill also aims to formulate a three-year Strategic Investments Priority Plan (SIPP) to ensure that only industries that provide positive spillover to the economy, based on rigorous cost-benefit analysis, are given incentives.

The measure is currently being deliberated by Congress.

The Philippine Economic Zone Authority (PEZA) currently grants a package of incentives to its registered companies including an income tax holiday of a maximum of eight years and a perpetual 5 percent tax on gross income earned (GIE), zero value-added tax on local purchases, and up to 30 percent of local sales, among others.