The Philippine Economic Zone Authority (PEZA) has urged the Department of Finance (DOF), which co-chairs the Fiscal Incentives Review Board (FIRB), not to be “too legalistic” about the hybrid work policy as this arrangement means more jobs creation and further investments inflow into the country.

This was emphasized by PEZA OIC Deputy Director General Tereso O. Panga as the revenue maximizing agency of the government stood pat against the extension of the 30 percent work-from-home (WFH) and 70 percent onsite operation of PEZA registered business enterprises (RBEs) stating there is no legal basis for such. The 30-70 hybrid work ratio for PEZA RBEs will lapse next week, Sept. 12, but PEZA said they are extending it until March 2023.

The DOF insisted that PEZA RBEs will lose their tax incentives if they continue operating under the hybrid work arrangement because the granting and availment of tax incentives hinge on their compliance to the CREATE law’s requirement that they operate in an economic zone.

“This is not the time for government to be legalistic with its interpretation of the law especially if it involves implementation of a policy that is well within the purview of the investment promotion agencies (IPAs),” stated Panga in a post in its social media page.

“At this time when the country is opening up the economy to accelerate its recovery, FIRB should give some leeway to the IPAs in crafting policies (consistent with their rule-making powers under their charter) that will enhance their ability to promote/facilitate investments within the ambit of the law,” Panga further stated.

If there is any doubt on the legality of the PEZA WFH policy vis-a-vis the CREATE law, which governs the tax incentives regime, Panga advised the FIRB to consult with the framers of the law or ask the Department of Justice or the Office of the Solicitor General for a legal opinion. Otherwise, he said, the aggrieved PEZA locators have the option to seek redress in the court to question the conflicting provisions of the laws.

Panga reiterated that more than business continuity plan, the 30:70 ratio policy of PEZA has basis under CREATE and the Telecommuting Act. In fact, FIRB allowed the 90:30 (WFH:Onsite) ratio during the pandemic, which it later agreed to adjust to 30:70 ratio up to Sept. 12, 2022 or the end of the declaration of National State Calamity then President Duterte.

In addition, Panga pointed out that President Ferdinand Marcos Jr. himself announced his inclination to extend the declaration of national state of calamity until end of the year.

While Congress is discussing a proposal to institutionalize hybrid work arrangement for PEZA RBEs, Panga urged the FIRB to allow the extension of the current work arrangement up to March next year.

Bangko Sentral ng Pilipinas Governor Felipe Medalla also cited during the Philippine Economic Briefing on Wednesday, Sept. 7 for President Marcos’ state visit in Singapore, the bullish outlook for the business process outsourcing (BPO) sector as an advantage for the Philippines.

“We are very optimistic about the BPO,” said Medalla.

Medalla relayed his discussion with the IT-BPO industry where he was inform that if the government is a “bit more flexible on tax incentives to apply to WFH” they can easily grow their revenues by 12 percent to $32.4 billion this year.