Politics

IT-BPM firms’ move to BoI will be seamless, says Trade department

3 Mins read
CHARANJEET DHIMAN-UNSPLASH

By Revin Mikhael D. Ochave, Reporter

TRADE SECRETARY Alfredo E. Pascual vowed a seamless transfer of the registration of information technology and business process management (IT-BPM) firms from the Philippine Economic Zone Authority (PEZA) to the Board of Investments (BoI).   

“The procedure for transfer of registration from PEZA to BoI will be seamless — to be carried out expeditiously,” Mr. Pascual said in a statement sent to reporters over the weekend.

Mr. Pascual, who is also the chair of both PEZA and BoI, said up to 100% work-from-home (WFH) arrangements would also be available to IT-BPM firms that will be registered for tax incentives in the future.

“From the beginning, our priority has been to secure a solution for the sector’s WFH setup, which has become the new normal post-pandemic,” Mr. Pascual said.

His assurance comes after the Fiscal Incentives Review Board (FIRB) announced last week that registered IT-BPM firms in economic zones (ecozones) can implement full WFH arrangements and still enjoy fiscal incentives by transferring their registration to the BoI, in a bid to address the issue without violating existing laws. 

Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) mandates registered business enterprises (RBEs), including IT-BPM firms, to conduct activities within the ecozone in order to avail of fiscal incentives.

The FIRB earlier announced that the 70% on-site work and 30% WFH arrangement ratio currently enjoyed by IT-BPM firms has been extended until Dec. 31 this year to give time for the transfer. This is also in accordance with the state of calamity extension under Proclamation No. 57 recently signed by President Ferdinand R. Marcos, Jr. 

Registered IT-BPM firms should inform the PEZA of their intention to transfer registration, the Department of Trade and Industry (DTI) said.

“The 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,” the DTI said. 

Tereso O. Panga, PEZA officer-in-charge and deputy director-general for policy and planning, said that a law should be passed to make this permanent.

“The paper transfer is just an interim arrangement to preserve the incentives of the IT locators while availing of WFH arrangement in their designated IT centers,” Mr. Panga said in a Viber message. 

“A more permanent solution is the bill that will allow the PEZA IT locators to avail of WFH with incentives that will put them on an equal footing with the BoI RBEs and following the lead of India to make the Philippines more attractive especially to global ICT investors,” he added.

Mr. Panga cited pending measures such as Senate Bill (SB) No. 135 filed by Senator Emmanuel Joel J. Villanueva and SB No. 643 filed by Senator Maria Imelda “Imee” R. Marcos that seek to amend Section 309 of the CREATE Act to allow WFH while allowing IT-BPM firms to enjoy tax incentives. 

He also mentioned SB No. 175 filed by Senator Francis N. Tolentino which seeks to amend Republic Act No. 11165 or the Telecommuting Act to expand the law’s coverage and to require employers to provide a P1,000 nontaxable allowance per month to employees.

Both the PEZA and the BoI offer the same incentives for interested locators, according to Mr. Panga.

“Under CREATE, all investment promotion agencies including PEZA and BoI offer the same incentives. For export enterprises in the case [of] IT-BPM firms, their qualified projects will enjoy four to seven years of income tax holiday, plus 10 years of special corporate income tax or enhanced deduction,” Mr. Panga said.

But the BoI does not have a one-stop shop center for registration, he noted.

“Under the paper transfer scheme, PEZA will continue to provide the BoI RBEs operating in IT centers the same one-stop service. BoI registration will simply allow the IT locators to keep their incentives while doing WFH,” he added.

Further, Mr. Panga urged the FIRB to consider the previous PEZA proposal to extend the 30% WFH for IT-BPMs until March 2023.

“We will abide by the FIRB decision and support any initiative that will keep, expand and grow our IT sector,” he said, adding that the agency is working closely with FIRB “as we align to our current policies and the best interest of our industries that will keep, expand and grow our IT sector in the country.” 

Emman D. David, Alliance of Call Center Workers co-convenor, said that the extension of the 30% WFH arrangement until end-December is a “small victory.”

“It proves that when workers speak with one voice, their employers and the government should listen,” Mr. David said in a Facebook chat.

“While we are concerned that employers might be hassled by this transfer and find it easier to have their employees to report on-site, we hope that the pertinent government agencies would make this process seamless,” he added.

Jack Madrid, IT and Business Process Association of the Philippines (IBPAP) president, said that the FIRB’s recent pronouncement is a welcome development for the industry.

“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. The association and its members vow to work even more closely with the government in bringing in more BPO investments, particularly in the higher value-added segments,” Mr. Madrid said in a statement.