Should economic zone-based business process outsourcing (BPO) companies implementing a work-from-home (WFH) scheme get tax incentives? The Department of Labor and Employment (DOLE) thinks so.
According to DOLE Secretary Silvestre Bello III, Information Technology and Business Process Management (IT-BPM) companies on work-from-home arrangements should still be eligible to receive government incentives prescribed in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
Section 309 of the CREATE law provides that qualified registered product or activity “exclusively conducted or operated within the geographical boundaries of the zone or Freeport" are entitled to corporate recovery and tax incentives.
"But we maintain that companies that do not produce physical goods and that are well-suited to remote work must also enjoy the benefits of the tax incentives provided in the law," Bello said.
The DOLE secretary underscored that the IT-BPM operate within the ecozones even while under WFH arrangements. "Such special working arrangements are recognized under existing DOLE guidelines."
He was referring to various DOLE issuances, such as DOLE Department Order No. 202, Series of 2019 (Implementing Rules and Regulations of the Telecommuting Act) and Labor Advisory No. 17 and 17-B, Series of 2020 (Guidelines on Employment Preservation Upon the Resumption of Business Operation).
"We need to provide the industry the support it needs to reach its growth targets and potentials, especially now that we recover from the effects of the pandemic," Bello stressed.
The department is particularly keen on expanding the benefits granted to firms operating in economic zones.
DOLE has also issued Department Advisory No. 02- 09 (Guidelines on the Adoption of Flexible Work Arrangements) and Department Advisory No. 04-12 (Guidelines on the Implementation of Flexible Work Arrangements), which recognize and regulate alternative work arrangements.
Noting that the pandemic has accelerated the Fourth Industrial Revolution, and the adoption of new technologies are now transforming the labor market in the new normal, Bello said, "telecommuting has emerged as a viable and safe alternative work mode."
The IT-BPM industry sought DOLE’s position after the Departments of Finance and Trade and Industry released the Implementing Rules and Regulations (IRR) of the CREATE Law.
While the IRR provides temporary measures for exceptional circumstances, specifically the current pandemic, the provisions still require the approval of the Fiscal Incentives Review Board upon the recommendation of the Investment Promotion Agency.
"As one of the country's key employment generators, the IT-BPM industry is one of the most important drivers of our economy," Bello said, adding that the sector generated 1.32 million jobs in 2020, with $26.7 billion in revenues.