By quade
13 November 2023

CREATE Act Will Allow BPOs to Provide Work-from-home Setups With Tax Benefits

As the Philippine House of Representatives amends the CREATE Act, BPOs can offer work-from-home setups and maintain tax benefits. These amendments were intended to improve the working conditions of BPO companies to provide full telecommunications to their employees.

The House Ways and Means Panel chairperson, representing Albay, 2nd District, Rep. Joey Salceda says he is confident these amendments will pass the house and provide many benefits to BPOs.

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CREATE Bill Amendments Explained

The CREATE Bill amendment will allow Businesses operating within the Information Technology and Business Process Management (IT-BPM) sector to establish a telecommuting program. The only requirement is that they must meet all necessary criteria in the bill as well as register with the Board of Investments (BOI).

This development comes after the Department of Finance agreed to the requests by various Business Process Outsourcing (BPO) enterprises that will allow them to continue using their remote work structures introduced during the pandemic. During the pandemic, IT-BPM companies were allowed to let their employees work from home without worrying about losing their fiscal perks.

This is facilitated by the relocation of BPOs to the BOI, a regulatory body that lacks the operational area constraints imposed by the Philippine Economic Zone Authority (PEZA).

“This will allow one of the country’s most durable sectors to remain globally competitive. The world has moved towards hybrid, and it does not make sense to limit ourselves in this area.”
– Joey Salceda, chairperson of the House Ways and Means Panel

The reason these work-from-home schemes are being proposed is that many BPOs have noted an increase in productivity due to not having to deal with traffic in Metro Manila Area.

They believe this setup helped the sector reach $26.7 billion in revenue and create 1.32 million direct jobs in 2020 despite a pandemic-induced recession.

Aside from work-from-home issues, the CREATE amendment will address issues regarding VAT rates and refund issues for exporters. This amendment will reduce

Some amendments will reduce the Corporate Income Tax to 20% for those under the enhanced deduction regime. Some BPOs will also enjoy 200% deductions for power costs during an income tax holiday along with a deduction of 200% for trade fairs and trade missions, and a carryover of Net Operating Loss for five years after the end of the ITH period.