DOF chief asks BPOs: WFH setup or tax incentives?

Metro Manila (CNN Philippines, March 23) — Information Technology and Business Process Management (IT-BPM) firms may continue implementing a work-from-home setup but they must give up the tax incentives given to them, the Department of Finance said on Tuesday.

“No one is prohibiting them or impinging on their management prerogative to continue implementing their WFH setups. However, they must give up the tax incentives they currently enjoy because the law is clear on this,” Finance Secretary Carlos Dominguez III said.

The IT & Business Process Association of the Philippines (IBPAP) has been pushing for a hybrid work setup amid rising oil prices that make transportation more expensive for workers.

Their call to extend the implementation of WFH setup beyond March 31 was rejected by the Fiscal Incentives Review Board chaired by Dominguez, noting that working from home is "only a time-bound temporary measure" that was adopted "amid surging COVID-19 infections."

READ: NEDA maintains BPO workers must work on-site after March

Companies registered with investment-promotion agencies, such as the Philippine Economic Zone Authority, are granted incentives like income tax holiday or a 5% special corporate income tax in lieu of all taxes, such as the VAT, income tax and local business tax.

In return, they are required to comply with Section 309 of the Tax Code which states that “a qualified registered project or activity under an Investment Promotion Agency administering an economic zone or freeport shall be exclusively conducted or operated within the geographical boundaries of the zone or freeport being administered by the Investment Promotion Agency in which the project or activity is registered.”

Dominguez said implementing the work-from-home setup while enjoying tax incentives is unfair to other companies located outside ecozones since they pay regular taxes.

He also noted that employees can now safely return to the offices due to increased vaccination rate, and on-site work will help boost economic recovery from the COVID-19 pandemic and offset the risks caused by the Russia-Ukraine crisis.

“We hope that IT-BPM companies registered with the IPAs can support us in this whole-of-nation effort of helping Filipinos recover from the pandemic and easing the impact on them of the current crisis,” he added.