Department of Finance: Tax Perks May Not Involve Call Centers!

[] The Department of Finance (DOF) has this idea that voice services under the Philippine business process outsourcing (BPO) industry should not be prioritized when it comes to the awarding of tax incentives.

Finance Undersecretary Karl Kendrick Chua has claimed that since Philippine voice services are already considered a global leader, then why continue supporting it through tax perks?

Finance Undersecretary Karl Kendrick Chua does not seem to understand that it takes a combination of things that make the Philippines number one: the innate neutral English accent of local agents and their high capacity for trainability, infrastructure… can it be that these tax perks also contribute to our position as a world leader?

Our Lovable Congress

The government is renewing its push to pass its second tax reform package in congress. The “TRABAHO Bill,” aims to lower local corporate income tax and “rationalize” (i.e. lessen or remove) the incentives given to specific industries, BPO’s included.

The Board of Investments (BOI) for its part, will have the power to decide which industries will be or will remain eligible for incentives under the new tax regime.

But, it is the DOF, helmed by Karl Kendrick Chua, that is considered as the central architect of President Duterte’s comprehensive tax reform program.

Karl Kendrick Chua, DOF Undersecretary

“The (voice sector) would be, in my opinion, not a priority. We should give (incentive) priority to those where there is really competition.”

Sacrificing Voice for Non-Voice?

Karl Kendrick Chua, DOF Undersecretary

“They don’t require the agent to speak. So we think they should be (assisted) because they are going to move out of the country, to Vietnam, or China, or even India. But the voice sector, in our view, has no competition at all.”

Non-voice accounts or Non-voice services do not depend on the English speaking skills of an agent. This segment usually involves medical transcriptions, accounting, and finance work.

Karl Kendrick Chua does not realize that AI will affect non-voice more than voice powered services; bots are taking over and they are getting smarter by the day. AI for voice services, while advancing, is yet to compare to an actual human being. Why We are protecting the wrong segment, and shouldn’t we be protecting the entire industry and not parts of it?

Here, have some more nuggets of wisdom from Karl.

Karl Kendrick Chua, DOF Undersecretary

“We’re thinking, why give incentive to this industry when you have comparative advantage? Besides, why also give incentive to an industry that you know is going to be affected by artificial intelligence? They’re going to transform anyway in the future, (so maybe the) incentive (could be allotted) for other more deserving sectors.”