Hybrid setup for RBEs temporary

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The Fiscal Incentives Review Board (FIRB) secretariat has reiterated  the work-from-home (WFH) setup for registered business enterprises (RBEs) was only allowed as a time-bound temporary measure to address the work constraints arising from the COVID-19 induced mobility restrictions imposed at the height of the pandemic.

“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,” finance assistant secretary Juvy Danofrata, who also heads the FIRB secretariat, said.

“Given the increasing vaccination rate of Filipinos nationwide, we can now undertake safety measures for the physical reporting of employees. In fact, the President has ordered all government agencies and instrumentalities to adhere to the 100 percent on-site workforce under Alert Level 1,” she added.

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Danofrata issued this statement amid calls from certain sectors for the continued adoption of flexible or off-site work arrangements for the information technology-business process management (IT-BPM) sector without them losing their tax perks, which is a privilege of RBEs operating in special economic zones or freeports.

She pointed out  under Section 309 of the National Internal Revenue Code of 1997, as amended by the Corporate Recovery and Tax Incentives for Enterprises Act, registered projects or activities must be conducted within the geographical boundaries of the ecozone or freeport to be entitled to fiscal incentives.

“Under the law, allowing companies to have their activities be conducted from their homes or anywhere outside the zone territory while enjoying their tax incentives is an utter disregard and violation of the aforementioned provision of law,” she said.

In an earlier statement, finance secretary and FIRB chairman Carlos Dominguez clarified that RBEs in the IT-BPM sector are free to adopt WFH arrangements moving forward, and that the decision on which particular work arrangement to approve is an exercise of 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.

Meanwhile, the IT-BPM said applying a long-standing policy that dates back to pre-pandemic times, the Philippine Economic Zone Authority (PEZA) has enabled the sector to apply for 30 percent  WFH by requesting for Letters of Authority (LOA).

With a LOA, IT-BPM players may continue to allow part of their workforce to WFH, particularly those who have greater difficulty returning to the office, the Information Technology Business Process Association of the Philippines said in a statement.

So far, PEZA has issued a LOA to over 430 companies, which allows them to continue WFH arrangements, albeit at a reduced level until September 2022. Angela Celis

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