FIRB: PEZA WFH reprieve for IT-BPM has no basis

THE Cabinet-level Fiscal Incentives Review Board (FIRB) said Philippine Economic Zone Authority’s (PEZA) decision to extend work-from-home arrangements (WFH) for the information technology and business processing management (IT-BPM) sector until March next year “lacks legal basis.”

IT and Business Process Association of the Philippines (IBPAP) members were earlier told by PEZA that they can extend WFH arrangements until March 2023. However, the FIRB clarified on Thursday that the extension of the WFH arrangement of the sector is “still up for discussion.”

The FIRB is the government agency that oversees the administration and grant of tax incentives by the Investment Promotion Agencies (IPAs).

In a position paper submitted to Finance Secretary and FIRB Chairperson Benjamin E. Diokno, Finance Assistant Secretary and FIRB Secretariat Head Juvy Danofrata said, “neither the Corporate Recovery and Tax Incentives for Enterprises [CREATE] Act nor the previous FIRB resolution gives any of the investment promotion agencies [IPAs], such as PEZA, the power to unilaterally allow the adoption of WFH arrangements.”

She added: “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 September 12, 2022.”

Any move to extend the WFH arrangement beyond September 12 would need the approval of the Cabinet-level interagency body through a resolution, Danofrata said.

Moreover, she said the resolution must be anchored on the extension of the State of Calamity or a declaration of the President of an exceptional circumstance, with Rule 23 of the CREATE Act IRR prevailing as its legal basis.

Nonetheless, Danofrata said the FIRB Secretariat is already coordinating with the Board of Investments (BOI) in studying options to allow the WFH arrangements for the PEZA’s locators in the IT-BPM sector, adding that the matter will be deliberated in the FIRB’s next meeting in mid-September.

In a previous meeting, Diokno stressed the importance of ensuring compliance with the CREATE Act among FIRB stakeholders, including the IT-BPM locators, to achieve an effective tax incentives regime in the country.

“It is crucial that the locators in economic zones comply with the ongoing terms and conditions of their registration in order to continue receiving tax incentives as IPA-accredited businesses,” Diokno said.

To recall, the FIRB earlier allowed registered business enterprises (RBEs) in the IT-BPM sector to continue implementing WFH arrangements without adversely affecting their fiscal incentives from April 1 until September 12 this year subject to certain conditions.

These conditions include having the number of employees under a WFH arrangement not exceeding 30 percent of the RBE’s total work force.

Image credits: Jayme Gershen/Bloomberg

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