WFH scheme extended to December

September 17, 2022

The cabinet-level Fiscal Incentives Review Board has greenlighted the extension of the 70 percent onsite and 30 percent work-from-home arrangement for employees working in the business process outsourcing sector until December 2002, following the declaration of President Ferdinand “Bongbong” Marcos Jr. to stretch the State of Emergency for Covid 19 pandemic until the end of the year.

This, after the FIRB Board convened last 14 September to give light on the proposal of the Philippine Economic Zone Authority for the extension of WFH setup until March 2023.

“What was agreed upon first by the FIRB was that the work-from-home arrangement, because of the extension of the declaration of the state of calamity moved to December, it’s also moved to December,” said Finance undersecretary Juvy Danofrata during a Senate hearing.

The FIRB maintained that it decided to extend the 70-30 WFH arrangement for the IT-BPM sector until 31 December 2022, pursuant to Presidential Proclamation 57 which extends the declared state of calamity throughout the country until year-end.

Asked for comments, PEZA OIC-director general Tereso Panga said they are reserving their comments as they haven’t received a copy of the resolution and its guidelines.

Transfer to BoI

Also during the said meeting, FIRB agreed to allow the transfer of registered Information Technology and Business Process Management companies to the Board of Investments in an effort to resolve the sector’s long-standing issue on tax incentive claims while performing business activities outside their zone limits.

“We recognize that the WFH arrangement is the new business model of most of the registered business enterprises. Hence, it is high time to resolve this issue faced by IT-BPM enterprises,” said Finance Secretary and FIRB Chairperson Benjamin Diokno during the Board’s meeting on Wednesday.

Further, Diokno explained that the decision of the Board establishes a more permanent solution to the issue, allowing the RBEs to continue availing of fiscal incentives without violating Section 309 of the National Internal Revenue Code of 1997, as amended by the Corporate Recovery and Tax Incentives for Enterprises Act.

The provision specifically states that to be entitled to incentives, the conduct of registered projects or activities must be within the geographical boundaries of the ecozone or freeport administered by the concerned investment promotion agency. The BoI is the only IPA not affected by boundary constraints or zone limits.

Secretary Diokno underscored that the extension will allow the seamless transfer of RBEs in the IT-BPM sector to the BoI.

Additionally, the availability of the tax incentives should be continued subject to the transitory provisions under the CREATE Act, which has no express or implied prohibition against this scheme.

“We expect the cooperation and utmost commitment of all concerned IPAs and RBEs on this matter as we carry out the transition and conclusively address the enduring WFH problem,” Secretary Diokno said.

Apart from the discussion on the WFH arrangement, the FIRB approved the two tax incentives applications of companies in the telecommunications and cement manufacturing industries, as endorsed by the BoI.

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