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Manila Bulletin devider Business devider FIRB approves 70:30 hybrid work for IT-BPMs

FIRB approves 70:30 hybrid work for IT-BPMs

Published Jul 24, 2022 10:20 pm

The Fiscal Incentives Review Board (FIRB) has approved the continued hybrid work arrangement for IT-business process management (IT-BPM) enterprises registered with government investment promotion agencies (IPAs) without fear of losing their tax and fiscal incentives.

FIRB Resolution No. 017-22 approved on June 21, 2021, resolved that IT-BPM firms are allowed to operate temporarily under 70:30 ratio (70 percent onsite/physical office and 30 percent work from home (WFH), from April 1, 2022 until Sept. 12, 2022.

The resolution was signed by then Socio-Economic and Development Authority Secretary Karl Kendrick T. Chua, then Budget and Management Officer-in-Charge and Undersecretary Tina Rose Marie L. Canda, and Assistant Executive Secretary Lorajean A. Alamin.

The Resolution further warned that registered business enterprises (RBEs) in the IT-BPM sector that exceed the 30 percent threshold will lose their fiscal and non-fiscal incentives for each month/s of non-compliance. The 30 percent WFH threshold refers to the percentage of total workforce of the RBE, but excludes third party contractors rendering janitorial or security services and other similar services.

But FIRB emphasized that such approval is a temporary measure under Rule 23 of the CREATE Act Implementing Rules and Regulations implemented in view of Proclamation No. 1218, s. 2021, which extended the State of Calamity proclamation in the country due to the Covid-19 pandemic up to September 2022.

With the Proclamation No. 1218, FIRB allowed PEZA-registered enterprises to operate 90 percent WFH and 10 percent onsite without losing their tax incentives, but only until March 30, 2022.

However, PEZA appealed to the FIRB to allow its (RBEs) to operate 70:30 hybrid work arrangement at least until September 30, 2022.

The FIRB, however, then chaired by now former Finance Secretary Carlos G. Dominguez was bent on implementing the registration contract of IT-BPM RBEs which requires them to locate in the economic zone approved by their respective IPAs.

In fact, the Bureau of Internal Review had conducted some monitoring of IT-BPMs operations to ensure they return to their physical offices.

In passing the resolution, FIRB emphasized that under Rule 23 of the CREATE Act IRR it has the power to approve the implementation of temporary measures by IPAs in the event of an exceptional circumstances such as a pandemic.

The FIRB also recognizes the contribution of the IT-BPM sector as a key to employment generator in the country, and that the adoption of WFH arrangements in that sector has contributed to the creation and preservation of jobs during the pandemic.

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