The Fiscal Incentives Review Board chaired by Finance Secretary Benjamin Diokno allowed Information Technology and Business Process Management companies to transfer their registration to the Board of Investments from the Philippine Economic Zone Authority to resolve the sector’s long-standing issue on tax incentive claims while performing business activities outside their zone limits.
“We recognize that the work-from-home 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,” Diokno said during the board’s meeting on Sept. 14.
Diokno said the decision of the board established 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 states that to be entitled to incentives, the conduct of registered projects or activities should be within the geographical boundaries of the ecozone or free port administered by the concerned investment promotion agency. The BOI is the only investment promotion agency not affected by boundary constraints or zone limits.
The Cabinet-level inter-agency body also decided to extend the 70-30 WFH arrangement for the IT-BPM sector until Dec. 31, 2022 pursuant to Presidential Proclamation No. 57 which extends the declared state of calamity throughout the country until year-end.
Diokno said the extension would allow the seamless transfer of RBEs in the IT-BPM sector to the BOI.
The availment 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,” he said. Julito G. Rada
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.