-
The Philippine Economic Zone Authority wants IT-BPO locator enterprises to be temporarily exempt until September 12, 2022 from the rule requiring 10% of their workforce to report on-site
-
PEZA also wants to ditch penalties for not meeting the 10% onsite capacity requirement with IT-BPO companies still coping with the impact of the pandemic
-
For now up to 90% of the workforce of registered business enterprises in the IT-BPO sector may work from home
The Philippine Economic Zone Authority (PEZA) Board wants IT-business process outsourcing locator enterprises to be temporarily exempt from the rule requiring 10% of their workforce to report on-site.
The board in a statement said it asked the Fiscal Incentives Review Board (FIRB) to allow such a scheme without loss of fiscal incentives to enterprises until September 12, 2022.
Currently under FIRB Resolution 19-211, up to 90% of the workforce of registered business enterprises (RBEs) under the IT-business process management (IT-BPM) sector may work from home until March 31, 2022 because of the pandemic, without adversely affecting their fiscal incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. This means at least 10% of the workforce should be on-site.
The PEZA request to FIRB cites Rule 23, Section 3 (d) of the implementing rules and regulations of Republic Act No. 11534 or the CREATE Act. Rule 23 (Temporary Measures for Exceptional Circumstances) states that an investment promotion agency (IPA) may implement temporary measures to support the recovery of registered business enterprises (RBEs) from exceptional circumstances, upon prior approval by the FIRB.
Exceptional circumstances include pandemic, epidemic, war, armed conflict, state of national health emergency, outbreak of diseases, international or regional financial crisis, major disaster such as volcanic eruption, earthquake and super typhoon, or analogous circumstances.
FIRB last year had already denied PEZA’s request to exempt IT-BPO companies from implementation of FIRB Resolution No. 19-21 and to maintain the WFH arrangement PEZA implemented at the beginning of the pandemic.
READ: PEZA appeal to exclude IT-BPM firms from WFH rules denied
The IT & Business Process Association of the Philippines (IBPAP) called on the national government to allow as many employees as possible to work from home to avoid catching COVID-19 at work.
Aside from this suggestion, the PEZA management also proposed the following temporary measures, approved by the PEZA Board on January 7, 2022:
- Allow movement of IT equipment and assets as long as these are covered by surety bond and appropriate PEZA permits. There should be no limitation on the number of IT equipment for moving as long as the RBEs comply with the surety bond and permits.
- Authorize PEZA to craft its own WFH guidelines that would be peculiar only to PEZA and not applicable to other IPAs and/or economic zone authorities. This is because PEZA is the biggest IPA in terms of number of enterprises and it has multiple IT centers/buildings under its jurisdiction.
“The proposal of PEZA is merely temporary in consideration of the ongoing pandemic,” PEZA director general Charito Plaza said in a statement.
“The approval of the PEZA Board of our proposed temporary measure was submitted to the FIRB for further approval as required under the rules. We have yet to receive formal notice on the FIRB’s decision regarding our recommendation,” Plaza added.
PEZA is also asking FIRB not to impose penalties under FIRB Resolution No. 19-21 given their possible implications. “PEZA-registered companies are coping with or recovering from the impacts of the pandemic. If it’s supposed to be a relief measure, we should not penalize the companies; rather, we must continue to assist our registered companies as much as possible given that protecting livelihoods of millions of Filipinos is an important national interest,” noted Plaza.
Amending CREATE’s Section 309
Aside from the recommended temporary measures, PEZA and the Board of Investments (BOI) suggest amending Section 309 of the CREATE Act, which provides prohibitions on registered activities.
Plaza said both PEZA and BOI support proposed Senate Bill (SB) No. 2306, which seeks to amend Section 309.
SB 2306 proposes that WFH arrangements or “telecommuting” be considered as activities conducted or operated within the geographical boundaries of the zone or freeport being administered by the IPA since such arrangements do not exceed 50% of the total revenue.
“However, instead of the 50% WFH arrangement which is based on revenue, both IPAs [PEZA and BOI] agreed that the percentage should be addressed in the proposed SIPP (Strategic Investment Priority Plan) as the allowable threshold may even be increased to more than 50% but this time, it shall be based on total workforce or manpower of the IT enterprises instead of the revenue,” Plaza explained.
Tereso Panga, PEZA deputy director general for policy and planning, said that with the suggestion, “I think, moving forward, we can have a more permanent solution to this, recognizing, based on the McKinsey [and Company] report, that WFH is really part of the new normal post-pandemic… It’s one way we can enhance our competitiveness as an IT destination.”
IBPAP president and chief executive officer Jack Madrid said the association looks forward to industry growth in the years to come but this “would not be possible without the full support of our government partners; and I can’t think of a more strategic and important partner than our partners in PEZA.”
As of November 2021, a total of 297 IT parks and centers and 1,273 IT-BPO companies were registered with PEZA.
These companies and economic zones contributed a total of 12.33% or P328.559 billion of investments, generated US$11.537 billion of exports, and created 962,304 direct jobs as of September 2021.
