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The Philippine Economic Zone Authority will assist IT-BPM operators who wish to transfer their registration to the Board of Investments so their staff can work from home
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PEZA made the statement after the Department of Trade and Industry issued on October 18 Memorandum Circular No. 22-19, which sets guidelines on the transfer of registration of IT-BPM companies to BOI
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The transfer would mean IT-BPM operators can continue to avail of investment incentives
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To supplement DTI MC 22-19, PEZA issued MC 2022-067, which guides its locator companies on their transfer
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PEZA still hopes a new law or policy that will institutionalize a hybrid workplace for ecozone IT locators that will allow them increased WFH threshold with incentives
The Philippine Economic Zone Authority (PEZA) has assured information technology-business process management (IT-BPM) operators of support if they transfer their registration to the Board of Investments (BOI).
PEZA’s statement comes as the Department of Trade and Industry issued on October 18 Memorandum Circular No. 22-19, which sets guidelines on the transfer of registration of IT-BPM companies to BOI so their staff can avail of the 100% work-from-home arrangement.
The Fiscal Incentives Review Board (FIRB) earlier agreed to allow the transfer of registration of IT-BPM companies from PEZA to BOI to finally resolve the issue on WFH arrangement.
READ: IT-BPM staff may work from home beyond December
This will allow IT-BPM operations to implement WFH arrangements and continue availing of fiscal incentives without violating Section 309 of the National Internal Revenue Code (NIRC) of 1997, as amended by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Under Republic Act No. 11534 or CREATE Act, PEZA-registered business enterprises (RBE) and/or activities must be conducted within the geographical boundaries of the ecozone or freeport where they are located to be entitled to fiscal incentives.
The BOI is the only investment promotions agency (IPA) that is not affected by boundary constraints or zone limits.
DTI MC 22-19 covers all affected RBEs in the IT-BPM sector that have remaining incentives under Section 311 of the NIRC, as amended, or those with approved incentives from the concerned IPA on or before September 14, 2022 under the CREATE Act, particularly those registered with PEZA that intend to register with the BOI.
To supplement DTI MC 22-19, PEZA has issued MC 2022-067 to guide its locator companies on their transfer.
The guidelines provide, among other things, that the eligible IT locators will have until December 31, 2022 to avail of the paper transfer of registration.
Under this arrangement, BOI will issue a certificate of registration to the transferee RBEs for their conduct of 100% WFH arrangement and PEZA will continue providing their fiscal and non-fiscal incentives for the sunset period.
Moreover, PEZA will get to retain the monitoring and reporting of the subject locators’ performance and for other compliance requirements. As these covered RBEs will not cancel their registration with PEZA, the agency will be kept whole with its investment facilitation and revenue generation functions.
PEZA has indicated additional reminders for its IT-BPM companies availing of the transfer that include maintaining an office inside PEZA-registered IT centers/buildings.
“This is necessary in order for PEZA to retain its authority/jurisdiction over the transferee RBEs, which are required under the rules to operate inside the economic zone,” said PEZA officer-in-charge and deputy director general for policy and planning Tereso Panga.
Failure to comply with this mandatory requirement will result in the cancellation of registration with PEZA as an IT enterprise and, subsequently, the registration with BOI.
“We consider the IT locators’ paper transfer of registration from PEZA to BOI as an interim measure to preserve their export enterprise status as they avail of 100% WFH arrangement with full incentives,” Panga said.
“We hope that in the immediate term, a new law or policy will be put in place to institutionalize hybrid workplace for ecozone IT locators to avail of increased WFH threshold with incentives and for the transferee RBEs to retain their PEZA status so they can benefit from the agency’s one-stop service and the IT centers’ conducive business environment,” Panga said.
“In all these, we expect that PEZA will retain its mandate to promote and facilitate investments and keep the separate customs territory status vested in the ecozones to ensure the competitiveness of our IT sector.”
During the Contact Center Association of the Philippines’ recent forum, PEZA noted that the IT sector had called on the government to come up with an institutionalized policy on hybrid/flexi-work arrangements that will ease the burden on the companies that play a crucial role in attracting foreign direct investments into the country.
Likewise, the sector hopes that the government will unite all agencies and put the IPAs like BOI and PEZA on equal footing in facilitating tax incentives and business models to further enhance the ease of doing business in the Philippines and achieve the goal of strong and inclusive economic development.
