Digital Economy Is Moving Faster Than Policy: Philippine IT-BPM Sector Pushes for Tax Certainty, Modern Customs and Smarter Regulation
MANILA, Philippines — As the global digital-services industry rapidly shifts toward artificial intelligence and higher-value global capability centers, the Philippines must ensure that tax administration, Customs processes and economic policy evolve just as quickly to protect its competitiveness as a global investment destination.
That was the key message of Global Tax Policy Expert and ACGlobal Chief Tax Advisor Mon Abrea, CPA, MBA, MPA (Harvard) during the 18th International IT-BPM Summit on September 23 at Okada Manila, themed “Intelligence at Scale: Accelerating the PH Pivot.” IBPAP describes the summit as a platform for navigating the next era of AI-enabled global services.
The policy discussion brought together Abrea, Customs Commissioner Ariel F. Nepomuceno, and IBPAP President and CEO-Designate Celeste Ilagan to discuss regulation and ease of doing business. Presidential Legislative Liaison Office Undersecretary Christian Dy, representing PLLO Secretary Joey Salceda, also discussed the benefits and implementation challenges of CREATE MORE. Malacañang confirmed Salceda’s appointment as PLLO chief in July.
A US$42-billion industry needs policy that can keep pace
The policy stakes are significant. The Philippine IT-BPM sector generated US$40.3 billion in 2025, employed about 1.9 million Filipinos, and is targeting roughly US$42 billion in revenue in 2026. The industry has contributed approximately 8.2% of Philippine GDP, while global capability centers continue to drive new investment interest.
“The digital economy is moving faster than economic policy. For an industry contributing more than 8% of GDP and supporting nearly two million Filipino workers, regulatory certainty is no longer just a compliance issue—it is a competitiveness issue.”
Abrea highlighted Commissioner Nepomuceno’s assurance to IT-BPM companies that Customs understands the evolving operational requirements of the sector and is pursuing modernization to make legitimate trade faster, more predictable and increasingly digital.
The Bureau of Customs is currently rolling out a new Customs Processing System and National Single Window aimed at creating a more automated, integrated and paperless trade environment. It is also pursuing digital initiatives covering cargo documentation, payments and risk assessment.
“What matters to investors is the mindset that government should not function only as a regulator. It must also enable legitimate businesses to invest, innovate and expand while maintaining proper safeguards and accountability.”
Tax certainty must become part of ease of doing business
For the IT-BPM industry, one recurring issue is the tax treatment of cross-border services and intercompany transactions, particularly for multinational companies and global capability centers.
BIR RMC No. 24-2026 clarified that cross-border services are not automatically subject to Philippine income tax simply because they are classified as cross-border services, and that taxpayers do not need a prior BIR ruling as a condition for claiming the correct tax treatment when the factual and legal basis is properly established.
Abrea said ACGlobal will collaborate with IBPAP in engaging the Department of Finance, BIR and lawmakers on recurring cross-border tax issues and the implementation of risk-based audits affecting the IT-BPM sector.
“Risk-based audit must generally classify MSMEs as low risk unless there is evidence of fraudulent transactions or credible information indicating a tax violation—not a mere compliance issue. Businesses already granted tax exemptions or incentives should also be removed from the mandatory audit list.”
He added that scarce enforcement resources should instead be concentrated on higher-risk areas such as unexplained wealth, deliberate tax evasion, smuggling, money laundering, and transactions linked to graft and corruption, subject to applicable law, evidence and due process.
“Risk-based enforcement should follow the risk—not simply target taxpayers who are easiest to audit.”
From incentives to investment certainty
Abrea said CREATE MORE can strengthen the Philippines’ investment proposition, but incentives alone will not determine where multinational companies locate or expand.
Foreign investors also look at how consistently tax rules are interpreted, how quickly goods and equipment move through Customs, whether government requirements are predictable, and how efficiently disputes can be resolved.
Industry leaders have previously identified tax assessments, ease-of-doing-business issues and regulatory requirements among the structural concerns affecting IT-BPM competitiveness.
“An incentive is valuable only if an investor can use it with certainty. The Philippines already has the talent, scale and global track record. Our next competitive advantage must be predictable policy and efficient government.”
Government and industry working together
Abrea also recognized Celeste Ilagan and IBPAP for convening policymakers and industry leaders around the reforms needed as the sector transitions toward AI-enabled, higher-value global services.
The next phase of collaboration will focus on clearer cross-border tax guidance, industry-specific examples, consistent documentation requirements, better examiner training and genuine risk-based enforcement—with the aim of reducing unnecessary disputes and giving investors greater confidence before they deploy capital.
“World-class Filipino talent deserves world-class governance. Our objective is to protect government revenue while removing unnecessary friction for legitimate investment. If we get that balance right, the Philippines can remain one of the world’s most competitive destinations for technology, global services and high-value jobs.”
About ACGlobal | www.acg.ph
Asian Consulting Group (ACGlobal) is a Philippine-headquartered international tax advisory and investment consulting firm with a growing global presence. Serving multinational corporations, foreign investors and global brands, it specializes in international tax strategy, cross-border taxation, transfer pricing and market entry advisory—including guidance on the OECD Global Minimum Tax. ACGlobal connects local expertise with global perspectives, serving as a gateway to Southeast Asia and a partner for businesses expanding internationally.
