Business process outsourcing firms located in the country’s ecozones may now carry on with the work from home (WFH) arrangement for up to 30 percent of their workforce until the end of this year, while they work on the transfer of their registration to the Board of Investments (BOI) from the Philippine Economic Zone Authority (PEZA), which the Fiscal Incentives Review Board (FIRB) has agreed to allow in a recent meeting.
Allowing the transfer of registration of Information Technology and Business Process Management or BPO companies between the two incentive-giving bodies is the solution the FIRB settled upon to resolve the sector’s long-standing issue on tax incentive claims while conducting business activities outside ecozone limits.
BPOs had been allowed to have part of their workforce outside the ecozones through WFH because of the pandemic that imposed mobility constraints of millions of Filipinos due to health and safety concerns.
A state of calamity allowed a temporary respite from the requirements of the National Internal Revenue Code of 1997, as amended by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act of 2021 that required registered projects or activities to be within the geographical boundaries of the ecozone or freeport.
The FIRB solution, which establishes a more permanent solution to the issue, allowing companies to continue availing fiscal incentives without violating the law, is a recognition of the WFH arrangement as a feasible business model which, at the very least, needs to be considered and explored as the country emerges from the devastating effects of the pandemic that has also resulted in the evolution in the way humans do businesses and the workforce.
The flexibility that government has shown through the FIRB decision to allow BPOs to adopt WFH arrangement for a portion of their employees without needing to lose incentives or be shut down is a quality that is sorely needed in a world that is still adjusting to the devastating effects of a global pandemic.*
