FIRB stands firm against BPO’s WFH setup

The Fiscal Incentives Review Board (FIRB) is not bowing down to pressure as the interagency body stood firm on its decision that the work-from-home (WFH) setup for registered information technology-business process outsourcing (IT-BPO) firms was only temporary.

In a statement on Thursday, April 28, Finance Assistant Secretary Juvy C. Danofrata said that FIRB had allowed the WFH setup for IT-BPO companies only as a time-bound temporary measure to address the “work constraints” at the height of the pandemic.

Danofrata explained that the FIRB needed to allow the WFH arrangement before given the strict lockdowns or mobility restrictions imposed nationwide to contain the spread of the Covid-19 infection.

The government has exercised significant caution in balancing the economy’s needs and the health requirements of the IT-BPO industry to address concerns the pandemic caused, she pointed out.

“However, we believe that the current situation already allows us to direct our policies towards fully reopening the economy,” said Danofrata, who also heads the FIRB Secretariat.

“Given the increasing vaccination rate of Filipinos nationwide, we can now undertake safety measures for the physical reporting of employees,” she added.

Danofrata also cited President Duterte’s order that “all government agencies and instrumentalities to adhere to the 100 percent on-site workforce under Alert Level 1.”

Danofrata issued the statement amid calls from certain sectors for the continued adoption of flexible or off-site work arrangements for IT-BPO without them losing their tax perks.

Tax holiday is a privilege of registered business enterprises (RBEs) operating in special economic zones (SEZs) or freeports.

She pointed out that under Section 309 of the National Internal Revenue Code (NIRC) of 1997, as amended by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, registered projects or activities must be conducted within the geographical boundaries of the ecozone or freeport to be entitled to fiscal incentives.

Danofrata noted that, as separate customs territories, economic zones and freeports were established to promote export activities and allow the free flow of goods and services (including IT-BPM services) within the boundaries of said zones or freeports.

Towards this end, she said tax incentives are granted to priority projects or activities located in these zones.

“Hence, under the law, allowing companies to have their activities be conducted from their homes or anywhere outside the zone territory while enjoying their tax incentives is an utter disregard and violation of the aforementioned provision of law,” she said.

Meantime, the Philippine Economic Zone Authority (PEZA) said they are allowing their companies to operate a hybrid work arrangement of 70 percent onsite and 30 percent WFH. More than 400 IT-BPO firms have already availed of the hybrid work model.