DOF: IT-BPM Companies May Opt to Continue WFH Setup

The Department of Finance (DOF) clarified in a statement made by Finance Secretary Carlos Dominguez III that information technology business process management (IT-BPM) companies located in ecozones and are registered with investment promotion agencies (IPA) are free to maintain in adopting the work from home (WFH) arrangements that they have made made when the. COVID-19 pandemic started.

Dominguez added that no agency is prohibiting IT-BPM companies in maintaining WFM setups. However, the finance chief reiterated that companies will have to give up their tax incentives because of laws.

“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.

Firms that are registered with an IPA such as the Philippine Economic Zone Authority (PEZA) enjoy tax incentives such as income tax holidays, or a 5 percent special corporate income tax in lieu of all taxes such as value-added taxes, income taxes, and local business taxes.

However, according to Section 309 of the Tax Code, ““a qualified registered project or activity under an Investment Promotion Agency administering an economic zone or freeport shall be exclusively conducted or operated within the geographical boundaries of the zone or freeport being administered by the Investment Promotion Agency in which the project or activity is registered,” to which IT-BPM who will continue to implement WFH arrangements will effectively cede to comply with as employees who are on a WFH setup are working outside the confines of the geographical boundaries of the ecozone or freeport.

IT-BPM companies are currently protected from giving up on their tax incentives as the Fiscal Incentives Review Board (FIRB) released Resolution No. 19-21, dated Aug. 2, 2021 allowed for registered business enterprises of the IT-BPM sector to continue implementing WFH arrangements without adversely affecting their fiscal incentives under Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.

However, the resolution will only be effective until March 31, 2022, with the FIRB rejecting the request to extend the resolution.

The finance chief then reiterated on how IT-BPM firms would not only help the economic recovery of the country by working in offices again, but also micro, small, and medium enterprises (MSMEs) as workers will provide small businesses such as convenience stores, food and service providers, and transport services in the ecozone’s vicinity.

“We hope that IT-BPM companies registered with the IPAs can support us in this whole-of-nation effort of helping Filipinos recover from the pandemic and easing the impact on them of the current crisis,” Dominguez added. (GFB)