Information-technology and business-process management (IT-BPM) firms may find it difficult to adapt proposed labor reforms, as they brace for the impact of the rationalization of tax incentives.

In a recent interview with reporters, Rey E. Untal of the IT and Business Process Association of the Philippines (Ibpap) said labor reforms will be hard pills to swallow for IT-BPM firms at a time the government is keen on rationalizing incentives. Under the proposed Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill, corporate income tax (CIT) will be brought down, but tax perks granted to locators will be overhauled.

“We need to be looking into many things that are developing. There is this conversation—in fact, I am invited in a hearing in Congress—on [legislating] 14th- month pay,” Untal, president of Ibpap, said in a mix of English and Filipino.

He claimed several IT-BPM firms do give 14th-month pay, but some do not. Untal argued it would be better for the government to maintain the status quo, wherein it is in the discretion of companies to give out the monetary benefit.

“Some companies do, some companies don’t [give 14th month pay]. However, now we are talking about legislated adjustments that are structural. It is difficult because once you started legislating cost, it becomes difficult to manage. Once again, you take a step back and you take that in the context of all other cost pressures,” he explained.

Untal pointed out “the tax-reform bill alone is already a cost pressure” for IT-BPM firms.

“Costs are piling one after the other. The costs get higher every day, but no additional relief was provided to us,” he lamented.

The Trabaho bill is seen to injure the IT-BPM industry, as it will remove several incentives that are crucial for locators in operating here. One tax perk that will be removed under the measure is the 5-percent gross income earned, which firms in economic zones pay in lieu of local and national taxes.

“My point is that, while people are worried that the impact of uncertainty will happen when the tax reform is crafted, in reality, the uncertainty is already upon us. While all of us are waiting for exactly what that eventual regime will be, we are all reeling from the uncertainty already,” Untal earlier said.

This uncertainty brought about by the Trabaho bill make it doubly hard for IT-BPM firms to recalibrate its work force policies in line with labor reforms, Untal said. However, he vowed the industry will continue to respect the rights of its workers, particularly women, in the face of the extenstion of maternity leave benefit.

A congressional bicameral conference last week approved the expansion of maternity leave with pay to 105 days from 60 days regardless of the type of childbirth.

Another labor reform pending congressional deliberation is the institutionalization of bereavement leave, which will allow workers to go on leave with pay in the event of death of an immediate family member. House Bills (HBs) 4071, 6043 and 6581 seek to grant workers in mourning bereavement leave with pay of up to 10 days, while HBs 5711 and 6119 propose five days of paid leave.