Philippine companies seek tax, work-from-home relief as costs rise

By Beatriz Marie D. Cruz, Senior Reporter

THE Philippine private sector is urging the government to grant temporary tax relief measures and expand work-from-home arrangements to help businesses and workers cope with rising costs linked to the escalating war in the Middle East.

“The important thing is that supply is available; the problem is on the price,” Jose Rene D. Almendras, private sector representative to the Legislative-Executive Development Advisory Council, told the ABS-CBN News Channel on Tuesday.

“During this period, let’s be more lenient. Let’s allow businesses to do things that help employees save money,” he said, referring to proposals raised during a recent meeting of private sector representatives with Executive Secretary Ralph G. Recto at the Presidential Palace.

Mr. Almendras said the group had pushed to raise the ceiling on the number of employees allowed to work remotely, arguing that broader work-from-home arrangements would help workers cut transport and fuel expenses as prices climb.

The Philippine Economic Zone Authority last week sought to increase the allowable share of remote workers from 50% to as much as 100% for registered enterprises operating inside economic zones, giving firms greater flexibility to manage higher operating costs driven by fuel price increases.

Mr. Almendras said the private sector also appealed for tax relief for employees to protect purchasing power as inflation accelerates.

Government economic managers have begun studying the possibility of raising the minimum deductible level under the income tax system, a move that would raise workers’ take-home pay and provide more buffer against higher prices.

Headline inflation accelerated to 4.1% in March from 2.4% in February, reflecting the impact of higher oil prices and peso weakness associated with geopolitical tensions in the Middle East.

Business representatives also called for adjustments to the tax treatment of employee benefits. Mr. Almendras said the group proposed raising the threshold on “de minimis” benefits, which are noncash perks employers provide to workers. These benefits are subject to caps, beyond which they may be taxed.

The Bureau of Internal Revenue increased the ceiling on nontaxable de minimis benefits in October last year. The rules exempted rice subsidies of up to P2,500 and medical cash allowances for employees’ dependents of up to P333 a month from income tax, withholding tax on compensation and fringe benefit tax.

Other items covered by the regulation include actual medical assistance, laundry allowances, daily meal allowances and benefits granted under collective bargaining agreements and productivity incentive programs, subject to prescribed limits.

Beyond taxes, the private sector urged the government to ease nonfuel friction costs, which business groups said disproportionately affect micro, small and medium enterprises. These include various local government fees that raise the cost of doing business but are not directly related to production or energy use.

Energy costs remain a key concern as fuel prices continue to rise. The Department of Energy has warned that diesel prices could reach as high as P172 per liter, while gasoline could climb to P120 per liter, after major oil companies announced another round of increases starting April 7.

Private sector representatives also promoted the wider use of alternative energy sources, including solar power, especially in small power utility group areas, to soften the impact of fuel-driven electricity price increases.

Businesses also asked the government to designate a specific official or office to receive industry feedback and proposals, a move they said would help speed up policy responses as cost pressures persist.