IT-BPOs should transfer to BOI—FIRB

Information Technology and Business Processing Outsourcing (IT-BPO) enterprises registered with the Philippine Economic Zone Authority (PEZA) need to transfer to the Board of Investments (BOI) to retain their tax incentives and continue their work from home (WFH) arrangement, the Department of Finance (DOF) said.

Finance Secretary Benjamin E. Diokno, who chairs the Fiscal Incentives Review Board (FIRB), said Thursday, Sept. 15, that this was the resolution of the FIRB to address the concerns of PEZA IT-BPOs, which have insisted on operating 70 percent on site and 30 percent WFH.

“The FIRB met yesterday , and we decided there will be a smooth transfer of benefits from the PEZA to BOI and so that problem is solved,” Diokno said during the Development Budget Coordination Committee Briefing at the Senate.

According to the DOF, retaining the 70 percent onsite and 30 percent WFH arrangement for PEZA-registered IT-BPOs is not possible because it is not allowed under the PEZA rules.

To skirt that rule requiring IT-BPOs to operate 100 percent physically within the economic zone to enjoy tax incentives, Finance Undersecretary Antonette Tionko said they need to transfer registration to the BOI, which allows enterprises to receive tax perks even they operate under WFH as the BOI rules do not require their enterprises to locate in an economic zone.

“During the interim between now and December, the BPO companies that are registered with PEZA will be allowed to transfer their registration to BOI. However, even if they transfer to the BOI they will be enjoying the same incentives they've been enjoying,” Tionko said.

Under BOI jurisdiction, Tionko said IT-BPOs will no longer be subject to limitations on location by PEZA. “It's just a registration. They don't have to physically move.”

“It’s very clear that they should be operating onsite. We don't need to amend it because the ones that are caught in this are the ones that were registered, pre-CREATE ,” the finance official said.

Earlier, FIRB extended the WFH arrangement for the IT-BPO enterprises “until we finalize a resolution addressing the issue.”

Last Sept. 1, the DOF issued a statement that PEZA’s decision to extend the WFH arrangement of the IT-BPM enterprises until March next year lacks legal basis.

Finance Assistant Secretary Juvy Danofrata also clarified that the WFH arrangement for the IT-BPM companies within the economic zones was only until Sep. 12, 2022.

Danofrata, who is also the FIRB secretariat head, had issued the clarification following reports that WFH arrangement for PEZA’s IT-BPM locators had been extended.

Danofrata, however, said the planned extension was still up for discussion.