What to consider when opening an IT-BPM entity in PH?

April 26, 2021
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According to IT and Business Process Association Philippines (IBPAP), the Philippines has been leading as the voice Business Process Management (BPM) service provider since 2010. That’s a record that has surpassed all other big wigs like India.

The government even dubbed the Information Technology and Business Process Management (IT-BPM) industry as one of the best-performing and highest employment generator in the Philippines. This could be attributed to several factors like high number of English-speaking labor force, low labor costs, and the Filipino’s high adaptability to Western culture. There is no doubting the several reasons why the country is the best option to find highly efficient labor force but what are the other enticing opportunities that you can consider before registering an IT-BPM like a back-office support or a Business Process Outsourcing (BPO) office in the Philippines?

Lower corporate income tax & availability of tax incentive schemes

The Philippines has recently approved the CREATE law which significantly lowered the corporate annual income tax for income generating entities. From 30%, below is the new schedule of corporate annual income tax rate:

  • 20% tax rate for all domestic corporations with a net taxable income not exceeding Php 5 million and with total assets not exceeding Php 100 million
  • 25% tax rate for all other domestic corporations including resident foreign corporations

Apart from the lowered corporate annual income tax, there are now more attractive tax incentives being offered to local companies providing services to overseas clients.

Cancellation of the paid-up capital requirement

Export market enterprises or companies whose 60% of the revenue are coming from overseas clients can enjoy the new zero capital requirement. There is no more minimum paid-up capital required even if they are fully foreign owned so long as they don’t belong in the Foreign Investment Negative List (FINL). Domestic market enterprises or those who mostly cater to the local market can also enjoy lower capitalization requirement if they allow the assignment of at least 60% of the company ownership to Filipino/s.

The launch of SEC’s Online Submission Tool (OST)

The Securities and Exchange Commission (SEC) has finally launched an online portal which will allow the online submission and facilitation of certain annual filings like General Information Sheet (GIS) and Audited Financial Statement (AFS).

The online process is expected to curb the delays that can be caused by on-and-off implementation of community quarantines because of the on-going pandemic.


*DISCLAIMER: While the revised corporation code has allowed zero paid-up capital requirement for export market enterprises or those that are majority owned by Filipinos, Triple i Consulting, Inc still recommends the setting up of an initial paid-up capital comparable to the expected operational expenses to be incurred in the beginning of the company operations.

Ready to register an IT-BPM, a back-office support or a Business Process Outsourcing (BPO) office in the Philippines? Send us a message at info@tripleiconsulting.com or call us at +63 (02) 8540-9623 to book an initial consultation with one of our market entry strategy experts.

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