The Fiscal Incentives Review Board (FIRB) maintained its resolution that allows registered business enterprises of the Information Technology and Business Process Management (IT-BPM) sector to continue implementing work from home (WFH) arrangements without adversely affecting their fiscal incentives until the end of the first quarter in 2022, the Department of Finance (DOF) said in a statement yesterday.
Under FIRB Resolution No. 19-21, up to 90 percent of the registered business enterprises’ total workforce may work from home because of the pandemic, subject to conditions provided by the FIRB.
During the October 15 meeting of the FIRB, Trade Secretary Ramon Lopez, who is also Philippine Economic Zone Authority (PEZA) Board chairman and vice-chair of the FIRB, noted that at the onset of the pandemic, the IT-BPM sector was consulted even prior to its August 2021 meeting where Resolution 19-21 was adopted.
Lopez acknowledged the sector’s adoption of WFH arrangements contributed to the creation and preservation of jobs during the pandemic.
Enterprises exceeding the 90-percent threshold cannot enjoy income tax incentives during the months of their non-compliance with the FIRB resolution.
Charito Plaza, PEZA director-general, previously appealed to the FIRB to allow the investment promotion agency to implement its previous policy of allowing WFH for all employees, with the limitation that only 90 percent of the enterprise’s revenues may be granted tax incentives, even if its registered enterprises are supposed to operate within the ecozones.
Carlos Dominguez, DOF secretary and FIRB chairperson, said PEZA’s proposal is not consistent with the government’s strategy to gradually and safely reopen the economy.
“The idea of opening the economy is allowing the people to go out and spend money in the restaurants and other businesses in the area. This (proposal) won’t achieve the goal of opening the economy,” he said.
Dominguez also reminded members of the FIRB that the activities registered with PEZA are supposed to be conducted within ecozones.
Juvy Danofrata, DOF assistant secretary and FIRB secretariat head, said the 90 percent WFH arrangement is only a temporary measure for exceptional circumstances approved by the FIRB, as authorized by the implementing rules and regulations of the Corporate Recovery and Tax Incentives for Enterprises Act.
“The PEZA rule that 90 percent of total revenue from the registered activity is entitled to incentives — revenue, rather than workforce, as basis for the 90 percent — has no reasonable connection to COVID-19 prevention and mitigation,” Danofrata added.
The FIRB also approved in its October 15 meeting penalties to be imposed on IT-BPM registered business enterprises that exceed the 90-percent threshold of the workforce allowed to work from home. – Angela Celis
