IT-BPM firms must give up tax incentives if WFH – FIRB

MANILA, Philippines — The Cabinet-level Fiscal Incentives Review Board (FIRB) said information technology and business process management (IT-BPM) firms can adopt work from home (WFH) setups as long as they surrender their tax perks in exchange.

Finance Secretary and FIRB chairman Carlos Dominguez III said IT-BPM firms are free to practice remote work arrangements in spite of the FIRB directive to return to office by April 1.

However, he said this would require them to give up the fiscal incentives they enjoy from the government.

Dominguez said IT-BPM investors will have to forfeit their income tax holiday or the five percent tax on gross income earned in lieu of all local and national taxes.

He said Section 309 of the Tax Code mandates all recipients of incentives to conduct or operate their businesses exclusively within the geographical boundaries of an economic zone.

“IT-BPM companies in ecozones are allowed to adopt WFH [work from home] arrangements, [as] no one is prohibiting them or impinging on their management prerogative to continue implementing their WFH setups,” the finance chief said.

“However, they must give up the tax incentives they currently enjoy because the law is clear on this.”

He said it would be unfair to micro, small and medium enterprises (MSMEs) operating on site and paying 20 percent in corporate income tax (CIT) if government allows the IT-BPM firms to push through with their WFH setups at discounted rates.

“Other companies, such as MSMEs, pay the regular CIT rate of 20 percent, while big corporations pay 25 percent,” Dominguez said.

Under FIRB Resolution 19-21, the IT-BPM industry was allowed to maintain as much as 90 percent of its labor force under remote work arrangements until March 31 only.

Dominguez, as head of FIRB, said the return to office of IT-BPM firms would support the national goal of reopening the economy to the benefit mostly of MSMEs, especially those in the food and transport sectors.

Further, the government wants to reopen the economy to its fullest to increase productivity.