PEZA, ecozone firms want longer 30% WFH

We have been implementing this policy since 2017 that benefited our locators with a marked increase in productivity

September 9, 2022

Business enterprises inside special business sites and the Philippine Economic Zone Authority has reiterated the clamor for the extension of the 30 percent work from home set-up until March 2023.

For industries under the information technology-business process management are not only binding but safe and practical, disproving the claims of the Fiscal Incentives Regulatory Board that it has no legal basis.

In his Facebook post, PEZA OIC-director general Tereso Panga reiterates its position that the 30 percent WFH policy is a permissible activity under the PEZA, Telecommuting, and CREATE laws.

“In fact, we have been implementing this policy since 2017 that benefited our locators with a marked increase in productivity as they engaged in WFH, especially during the pandemic,” he said.

“As this PEZA WFH policy preceded the Telecommuting and CREATE laws, it is covered by the sunset provision of the CREATE. As long as ecozone IT locators are able to meet the minimum 70 percent export threshold (as most of them are 100 percent export-oriented) and a minimum of 70 percent work on-site, they should be entitled to full incentives even if they do 30 percent WFH,” Panga explained.

Earlier FIRB secretariat head Juvy Danofrata, in a letter to Finance Secretary Benjamin Diokno, insisted that the PEZA’s decision to extend the WFH arrangement of the IT-BPM enterprises until March 2023 lacks legal basis.

“To date, the current and effective resolution issued by the FIRB states that the WFH arrangement for the IT-BPM companies within the ecozones is only until 12 September 2022. Neither the Corporate Recovery and Tax Incentives for Enterprises Act nor the previous FIRB resolution gives any of the investment promotion agencies, such as PEZA, the power to unilaterally allow the adoption of WFH arrangements,” according to Danofrata.

Impact of no WFH

Panga disclosed that 16 IT locators have already canceled their registrations due to the uncertainties in the implementation of the WFH/hybrid set-up.

He said that based on their initial meetings with registered business enterprises which opted to cancel their registration, the penalties imposed by the Bureau of Internal Revenue are already burdensome for the company.

“However, they would not want to risk losing their seasoned employees as they are already having a hard time hiring people with the necessary skill set.”

A total of 478 RBEs were issued letters of authority to implement the 70/30 WFH arrangement, employing 225,038 Filipinos doing WFH, and accounting for a cumulative total investment of P825.819 billion.

Their combined export sales from January to July 2022, meanwhile, amounted to $15.242 billion, a monthly average of $5.729 million per RBE, equivalent to P320.264 million per month per RBE.

If the WFH set-up will not be extended, RBEs, according to Panga, may be forced to implement WFH set-up with risks such as payment of the onerous penalties under various revenue memorandum circulars issued by the BIR.

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