The Bureau of Internal Revenue (BIR) will monitor the compliance of outsourcing companies in economic zones with the onsite work policy of the Fiscal Incentives Review Board (FIRB), the Department of Finance (DOF) said.

A BIR task force has been created to ensure that registered business enterprises (RBEs) in the Information Technology-Business Process Management (IT-BPM) sector currently enjoying tax incentives are complying with the requirement under the law, the DOF said.

According to BIR Deputy Commissioner Arnel Guballa, the bureau has issued mission orders allowing the conduct of ocular inspections of the place of business of RBEs, to determine if they are complying with the conditions for the grant of incentives.

To recall, IT-BPM firms were temporarily allowed by the FIRB to resort to “work-from-home” arrangements without losing incentives granted to them as ecozone locators so they could continue doing business offsite at the height of the pandemic. The WFH arrangements for RBEs were allowed up to March 31, 2022.

Under Section 309 of the National Internal Revenue Code (NIRC) of 1997, as amended, RBEs and/or registered activities must be conducted within the geographical boundaries of the ecozone or freeport where they are located to be entitled to fiscal incentives.

Finance Secretary Carlos G. Dominguez III, who is also FIRB chairman, earlier clarified that RBEs in the IT-BPM sector are free to adopt WFH arrangements beyond the March 31 deadline, noting it is a "corporate management discretion.”

“No one is prohibiting them or impinging on their management prerogative to continue implementing their WFH setups. However, they must give up the tax incentives they currently enjoy because the law is clear on this,” Dominguez said.

Finance Assistant Secretary and FIRB Secretariat Head Juvy Danofrata has pointed out 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.

“The government has exercised significant caution in balancing the economy’s needs and the health requirements to address concerns the pandemic caused. However, we believe that the current situation already allows us to direct our policies towards fully reopening the economy,” said Danofrata.