Al a bigger threat to BPO, says DOF

The growing use of artificial intelligence (Al) will pose more of a threat to the local business process outsourcing (BPO) sector than the administration’s Comprehensive Tax Reform Program (CTRP), according to the Department of Finance (DOF).

“This is strictly my view. I believe that the BPO industry is more threatened by AI than any tax measures that we will pass,” Finance Secretary Carlos Dominguez said.

Dominguez made the statement amid concerns that the second package of the CTRP, which focuses on lowering corporate income tax and rationalizing fiscal incentives, will remove perks granted to BPO companies.

“The development of AI around the world is very rapid and it is going to certainly hit our BPO industry and I think we have to accept that. I told this to the BPO industry in July 2016. I don’t know how they are preparing for this inevitable hit in the industry,” Dominguez said.

The finance chief also clarified that the proposed rationalization of fiscal incentives will not immediately cut off perks currently being enjoyed by certain industries.

In an earlier statement, Finance Undersecretary Karl Kendrick Chua also said investors should not be concerned over the second CTRP package as they would still be able to enjoy incentives as long as they are qualified and performing well.

“The government is proinvestment, pro-jobs and pro-incentives. We will continue to give incentives to those that perform,” Chua said.

“But we will start to include sunset provisions on the incentives of those that are not performing. So what is there to fear if you are performing, if you are contributing exports, contributing to countryside development, jobs and productivity?” he added.

Package 2 of the CTRP seeks to lower the corporate income tax rate in the Philippines, while overhauling the country’s fiscal incentives system.

It also aims to formulate a three-year Strategic Investments Priority Plan (SIPP) to ensure that only industries that provide positive spillover to the economy are given incentives.

The proposal is also pushing for the harmonization of incentives through the Fiscal Incentives Review Board, and the improvement of the Tax Incentives Management and Transparency Act.

The House of Representatives has approved its own version of the bill, known as Tax Reform for Attracting Better and High-Quality Opportunities, while the Senate is still discussing at the committee level its own version of the tax measure, or the Corporate Income Tax and Incentives Reform Act.

Dominguez earlier expressed hope that Congress would pass CTRP’s Package 2 soon enough, in consideration of President Duterte’s appeal to approve the measure within the year.