BPO firms can keep work-from-home option until yearend, gov't says

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Metro Manila (CNN Philippines, September 16) — Finance officials have confirmed that business process outsourcing (BPO) firms registered with the Philippine Economic Zone Authority (PEZA) can continue with their hybrid work set-up until December 2022 without fear of losing their tax perks.

Finance Undersecretary Antonette Tionko on Thursday said the Information Technology and Business Process Management (IT-BPM) sector can continue their 30 percent work-from-home arrangement following the extension of the state of calamity due to COVID-19.

She added that the decision was made during the meeting of the Fiscal Incentives Review Board (FIRB), headed by Sec. Benjamin Diokno, on Wednesday.

"Because the extension of the declaration of state of calamity is moved to December, that it’s also moved to December," she told senators during the briefing by the Development Budget Coordination Committee on the proposed 2023 national budget.

Around 2,000 BPO companies registered with PEZA are set to transfer to the Board of Investments (BOI) to avoid jurisdictional requirements.

"Registered firms must signify with PEZA their intention to shift registration to the BOI," the Department of Trade and Industry (DTI) said in a statement released Saturday. "PEZA will then endorse the request to the BOI for the issuance of a Certificate of Registration, which will indicate the remaining incentives. PEZA shall administer the incentives and continue monitoring the transferee firms' compliance."

Trade Secretary Fred Pascual -- who is also co-chair of the FIRB and heads both PEZA and BOI -- also emphasized that the procedure for transfer of registration "will be seamless -- to be carried out expeditiously."

Diokno assured BPO companies that they will continue to receive their full tax incentives under the CREATE Act, like income tax holiday or a five percent special corporate income tax in lieu of all taxes, such as the VAT, income tax, and local business tax.

"The tax incentives will continue but they can opt to do it work from home," the finance chief said.

The hybrid set-up allowing 70 percent on-site and 30 percent work-from-home arrangement in BPO firms was extended earlier this month until further notice until the transition period ends.

IT-BPM Process Association of the Philippines (IBPAP), for its part, welcomed the FIRB's decision.

"IBPAP enthusiastically welcomes this FIRB resolution and thanks DTI for advocating the WFH scheme as a new business reality, and the FIRB for approving the recommendation," IBPAP president Jack Madrid said. "The association and its members vow to work even more closely with the government to bring in more more BPO investments, particularly in the higher value-added segments."