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PEZA accepting applications for hybrid work arrangement

  • The Philippine Economic Zone Authority is accepting hybrid work arrangement applications from registered IT-BPO companies and business enterprises
  • The hybrid work arrangement may be in place until September 2022
  • Since April 1, PEZA-registered IT-BPOs have reverted to the 70-30 work policy: as long as enterprises’ export sales do not go below 70%, 30% of the workforce may work from home

The Philippine Economic Zone Authority is accepting applications for hybrid work arrangement from registered information technology-business process outsourcing (IT-BPO) companies and business enterprises (RBE).

The hybrid arrangement may be in place until September 2022, or when the state of calamity declared by President Rodrigo Duterte to contain the pandemic lapses, according to PEZA director general Charito Plaza in a statement.

Those intending to avail of the hybrid arrangement should apply in writing to PEZA.

The announcement comes after Fiscal Incentives Review Board Resolution No. 19-21 ceased to be applicable from April 1. The resolution allowed registered IT-business process management (IT-BPM) enterprises to continue with their work-from-home (WFH) arrangements until March 31 without adversely affecting their fiscal incentives under Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

FIRB last February denied requests to extend the WFH arrangement under Resolution 19-21, citing that the WFH arrangement is a time-bound temporary measure adopted during the surge of the COVID-19 pandemic and the return to office order was necessary to help the economy bounce back.

PEZA and the IT & Business Process Association of the Philippines had earlier requested FIRB to allow a hybrid work scheme until December 2022 due to concerns of investors and workers amid the ongoing pandemic.

PEZA said it has been issuing letters of authority to RBEs applying for hybrid operation even prior to the COVID-19 pandemic. “PEZA’s work from home scheme for its registered IT-BPOs and RBEs has been conceptualized even before the passage of Republic Act No. 11165, also known as the Telecommuting Act, on 20 December 2018,” Plaza noted.

She added: “PEZA, therefore, is just restoring the regular ratio of not more than 30% domestic sales allowance and WFH work ratio. PEZA is giving the institutionalization of the hybrid work scheme to include DOLE’s [Department of Labor and Employment] protection, safety, and security of tenure of workers engaged in the virtual or WFH schemes to the next administration.”

Plaza said since April 1, PEZA-registered IT-BPOs have been “going back to our regular policy ratio of 70-30 on sales allowance and not more than 30% of WFH.” This means enterprises exporting 70% of their sales may adopt a WFH arrangement for not more than 30% of its staff.

PEZA Policy and Planning deputy director general Tereso Panga said the provisions of CREATE Act “do not prohibit PEZA-registered RBEs [and IT-BPOs] from conducting remote work or performing a portion of their activity outside the economic zones.”

“As long as our ecozone locators doing hybrid work are complying with the minimum 70% export sales and minimum 70% on-site reporting by their workers, they are [and should be] entitled to enjoy our tax incentives,” Panga pointed out.

He explained that the 30% WFH arrangement is a permissible activity under PEZA, CREATE and Telecommuting laws.

Meanwhile, Plaza emphasized that even before the pandemic, the hybrid work model was already being practiced worldwide, specifically in India, the Philippines’ top competitor in the IT-BPO sector.

She said recognizing and adapting to this global trend is needed to maintain the country’s competitiveness and flexibility in the “new normal”.

On alleged claims that some IT-BPOs and RBEs will withdraw from PEZA if the hybrid work model is discontinued in ecozones, Plaza said: “There is no truth that our registered IT-BPOs and RBEs have left our ecozones. Despite having the same fiscal incentives with the BOI, it is not easy to cancel an operation. We also have a protocol that prohibits double registration by an enterprise.”

Panga added that moving out of economic zones “can be tedious and costly” and that “IT center developers will be greatly affected by the sudden loss of rental revenue from exiting IT locators.”

Panga assured that PEZA is working closely with the BOI on institutionalizing the WFH arrangement in the Strategic Investment Priority Plan (SIPP) to further promote growth of the IT sector and to ensure regulatory coherence, especially on the WFH policy”.

The SIPP will determine the priority industries, projects and activities that can be granted fiscal incentives by the government under the CREATE Act.

As of December 2021, PEZA had 1,274 IT locator companies operating in 297 IT centers/parks, providing 1.018 million jobs nationwide and producing exports worth $15.797 billion.

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