All IT-business process management firms (IT-BPMs/BPOs) seeking incentives or seeking to continue their availment of government tax perks while adopting 100 percent work-from-home (WFH) arrangement must register with the Board of Investments (BOI).
This developed as the Fiscal Incentives Review Board (FIRB) resolved to allow Information Technology and Business Processing Management or Business Processing Outsourcing (IT-BPM/BPO) firms registered with the Philippine Economic Zone Authority (PEZA) to adopt up to 100 percent WFH arrangement and still enjoy tax incentives as long as they transfer registration to the BOI.
As agreed at the FIRB meeting on September 14, IT-BPM/BPO firms can become eligible for increased WFH setup by shifting their registration from the Philippine Economic Zone Authority (PEZA) to the Board of Investments (BOI).
“The procedure for transfer of registration from PEZA to BOI will be seamless – to be carried out expeditiously,” Trade and Industry Secretary Fred Pascual said in a statement. Pascual is co-chair of FIRB and chair of both PEZA and BOI.
Registered firms must signify with PEZA their intention to shift registration to the BOI. PEZA will then endorse the request to the BOI for the issuance of a Certificate of Registration, which will indicate the remaining incentives.
PEZA shall administer the incentives and continue monitoring the transferee firms’ compliance.
Pascual further added that the up to 100 percent WFH scheme would also be available to future IT-BPM/BPO firms that will be registered for tax incentives. This means that future projects have to register with the BOI but they locate in any of PEZA-accredited economic zones.
The agreed arrangement was one of the options presented by the DTI to the FIRB, which is chaired by Finance Secretary Benjamin Diokno. The DOF has stood pat on their ground that WFH or hybrid work arrangement are not allowed under the law, particularly the CREATE law, for PEZA-registered enterprises. These firms must operate 100 percent in their approved ecozone location to continue enjoying their tax incentives.
In recognition of the IT-BPM/BPO sector’s contributions to generating jobs and foreign exchange revenues for the country, Pascual said, “From the beginning, our priority has been to secure a solution for the sector’s WFH setup, which has become the new normal post-pandemic.”
In terms of investment credit following the transfer of PEZA registration to BOI, Pascual indicated it does not matter which investment promotion agency gets the credit for the IT-BPM projects. “We are one nation,” Pascual concluded.
In a text message, PEZA OIC Deputy Director General Tereso O. Panga said they support the FIRB solution to WFH as the agency also got the assurance that they will be “kept whole” and that the “paper transfer” is just an interim arrangement to preserve the incentives of the IT locators while availing of WHF and retaining their full incentives.
“A more permanent solution is the proposed bill that will allow the PEZA IT locators to avail of WFH with incentives that will put them on an equal footing with the BOI registered enterprises and following the lead of India to make the Philippines more attractive especially to global ICT investors,” said Panga.
Meantime, the DTI also said that IT-BPM Process Association of the Philippines (IBPAP) President Jack Madrid hailed the decision of the FIRB.
“IBPAP enthusiastically welcomes this FIRB resolution and thanks DTI for advocating the WFH scheme as a new business reality, and the FIRB for approving the recommendation. The association and its members vow to work even more closely with the government in bring-in more BPO investments, particularly in the higher value-added segments,” Madrid was quoted in the DTI statement.