September 1, 2022

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FIRB says extension of WFH scheme lacks legal basis

THE PHILIPPINE Economic Zone Authority’s (PEZA) decision to extend the work-from-home (WFH) arrangement for Information Technology and Business Processing Management (IT-BPM) firms does not have any legal basis, according to the Fiscal Incentives Review Board (FIRB).

“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 Sept. 12, 2022,” Finance Assistant Secretary and FIRB Secretariat Head Juvy C. Danofrata said in a statement released by the Department of Finance (DoF).

In a position paper submitted to Finance Secretary Benjamin E. Diokno, the FIRB Secretariat said PEZA’s decision “lacks legal basis.

Ms. Danofrata said the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, as well as existing FIRB resolutions, do not give investment promotion agencies (IPAs) such as the PEZA the power to unilaterally approve WFH arrangements.

Under FIRB Resolution No. 017-22, registered IT-BPO firms are allowed to have a 70% on-site and 30% WFH arrangement, while still enjoying fiscal incentives guaranteed by the CREATE Act for ecozones, but only until Sept. 12.

Ms. Danofrata said that any extension requires the approval of the FIRB, which will issue a resolution.

The resolution should comply with CREATE’s implementing rules, which require the extension of the state of calamity or a declaration by the President of an exceptional circumstance such as the coronavirus disease 2019 (COVID-19) pandemic.

Ms. Danofrata said that the FIRB is working with the Board of Investments (BoI) to come up with options to allow a WFH setup for IT-BPM firms in economic zones.

The issue will be discussed at the FIRB’s next meeting in mid-September, she added.

Last week, PEZA Officer-in-Charge and Deputy Director-General for Policy and Planning Tereso O. Panga said the WFH extension for IT-BPM enterprises until March 2023 has been “approved in principle” but pending “further clarification” from the DoF and the Board of Investments (BoI).

IT-BPO industry stakeholders such as the IT and Business Process Association of the Philippines have been pushing for the WFH arrangement while keeping their tax incentives, citing benefits to employees and productivity.

Meanwhile, the FIRB recently adopted a new set of guidelines for the submission of reports by IPAs, and approved the rationalization of guidelines on fees collected by IPAs.

The FIRB reduced the number of reports to be submitted by IPAs to eight, from the current 10.

“This initiative of the FIRB to harmonize the fees set by the IPAs relating to the business enterprises’ application and availment of tax incentives ensures uniformity and promotes equity, which in turn serves the best interest of our stakeholders and potential investors,” Mr. Diokno said.

The FIRB will consult with the IPAs in the fourth quarter, with guidelines such as the final rates set to be released before yearend.

The FIRB is chaired by the DoF, along with the Department of Trade and Industry, and also includes the Office of the President-Executive Secretary, the Department of Budget and Management, and the National Economic and Development Authority. — D.G.C.Robles