Developers of buildings for BPO operators get tax incentives

ILOILO CITY — In a move to attract more business process outsourcing (BPO) investments, the local government here is granting a 100-percent exemption from Real Property Tax (RPT) for developers constructing buildings exclusively for BPO operations.

The Iloilo City Council approved the ordinance granting the tax incentives on Wednesday. The measure was authored by Councilor Miguel Treñas.

Under the ordinance, the full exemption applies during the period when the BPO's application for accreditation with the Philippine Economic Zone Authority (PEZA) is under review.

This incentive remains valid during the pendency of the PEZA application and should not exceed five years or until PEZA registration is granted, whichever comes first.

"The BPO industry is a vital contributor to the economic growth of Iloilo City, providing substantial employment opportunities and driving urban development," said Treñas.

"To sustain and further attract BPO investments, it is imperative to create a favorable business environment by offering incentives that encourage the construction of dedicated BPO facilities," he added.

He noted that the measure addresses the usual lengthy PEZA accreditation process, offering financial relief and encouraging the swift establishment of BPO operations in the city.

"Granting an RPT incentive during the pendency of PEZA accreditation would provide much-needed financial relief to developers and encourage the early establishment of BPO operations in the city," Treñas said.

To qualify for these incentives, developers must submit proof of their PEZA accreditation application, including acknowledgment receipts or proof of filing, along with other documentation as required by the City Assessor's and City Treasurer's Offices to verify the building's exclusive use for BPO activities.

This initiative comes in the wake of Iloilo City's implementation of a significant increase in real property taxes in 2024, the first adjustment in 18 years.

The long-overdue adjustment was made to align tax rates with the city's substantial economic growth and booming real estate market.

In response to public concerns on the significant rise, the city government approved a 40-percent RPT payment for land until 2026, allowing taxpayers to pay only 60 percent of the assessed RPT from 2024 to 2026, with the full rate set to resume in 2027.