BPO sector says no to new tax - Players say proposed CIT could set back economic projections
Despite being warned of the irreparable harm that could be done, the Government appears set to table a bill to affix a 12.5 per cent corporate income tax (CIT) on the fast-growing business process outsourcing (BPO) sector.
The local BPO sector, which is now valued at US$350 million and employs approximately 17,000 agents, is seen as a major economic driver, as based on Jamaica's proximity to North America, the attractive English-speaking pool of talent and the modern telecommunications infrastructure, it is considered quite attractive to investors.
In fact, the sector is earmarked to produce a significant percentage of the more than 100,000 jobs promised by Finance Minister Dr Peter Phillips should the current Government retain power after the next general election.
"I am very disappointed because a CIT will only create uncertainty and make Jamaica unattractive, ... while other countries are rolling out the red carpet, we seem to be rolling out the red tape," said Davon Crump, the chief executive officer (CEO) of the Montego Bay-based BPO entity, Global Outsourcing Solution Limited.
"We have not grown. In fact, we lost 1,500 seats to other countries in 2015, because of our lack of competitiveness. We were able to break even after a combined effort saw us attracting 1,500 new seats, with the bulk of it coming from Xerox Jamaica and Sutherland Global Services that resulted in the sector breaking even, at a time when other countries are growing their numbers by the thousands," added Crump.
"Take a look at the other countries; the record speaks for itself. We are not as competitive as the other regions," continued Crump. "There is already the issue of energy cost, so telling prospective investors that they will have to fork out an additional 12.5 per cent to operate here could not be a wise move by the Government."
Crump was among several key stakeholders, including Business Process Industry Association of Jamaica (BPIAJ) boss Yoni Epstein; assistant vice-president of operations at the Port Authority of Jamaica, Gloria Henry; and Claude Duncan, vice-president of Investments and promotions at JAMPRO, who were called to a meeting at the Ministry of Industry, Investment and Commerce on Tuesday, where Industry Minister Anthony Hylton advised them of the Government's plan.
Henry, who is in charge of the Montego Bay Freezone, which houses 17 of the BPO operations locally; and Epstein, who is the top voice in the sector, refused to comment on the discussion with Hylton.
However, in March, when the issue of the CIT was first raised, the BPIAJ, through Epstein, objected to the Government's proposal.
"I don't support what is being tabled," Epstein said at the time. "This is untimely, and if imposed and written into law, it would make us uncompetitive. Countries that are seeing far more success than Jamaica have not done it, so it would put us at a disadvantage (because) Jamaica is a trading commodity, as is the Dominican Republic, Mexico, Honduras, Panama, Costa Rica, Brazil and the other countries in the region."
He warned: "If Jamaica is serious about growing this industry, the barriers to entry need to be removed in order to give it the wings and strength it needs to grow. We talk about 30,000 jobs (by 2020), but we won't get to 30,000 jobs if the CIT is imposed."