GOV’T OKS TRANSFER OF IT-BPM FIRMS TO BOARD OF INVESTMENTS

THE Fiscal Incentives Review Board (FIRB) has agreed to allow the transfer of registered information technology and business process management (IT-BPM) companies to the Board of Investments (BOI) in an effort to resolve the sector’s long-standing issue on tax incentive claims while performing business activities outside their zone limits.

“We recognize that the work-from-home (WFH) arrangement is the new business model of most of the registered business enterprises (RBEs). Hence, it is high time to resolve this issue faced by IT-BPM enterprises,” Finance Secretary and FIRB Chairperson Benjamin Diokno was quoted as saying during the board’s meeting on Sept. 14, Wednesday, in a DOF-released statement.

Diokno said that the decision of the board establishes a more permanent solution to the issue, allowing the RBEs to continue availing fiscal incentives without violating Section 309 of the National Internal Revenue Code of 1997, as amended by the Corporate Recovery and Tax Incentives for Enterprises or Create Act.

The provision specifically states that to be entitled to incentives, the conduct of registered projects or activities must be within the geographical boundaries of the ecozone or freeport administered by the concerned investment promotion agency (IPA). The BOI is the only IPA not affected by boundary constraints or zone limits.

Further, the Cabinet-level inter-agency body has decided to extend the 70-30 WFH arrangement for the IT-BPM sector until Dec. 31, 2022. This is pursuant to Presidential Proclamation 57, which extends the declared state of calamity throughout the country until year-end.

Diokno explained that the extension will allow the seamless transfer of RBEs in the IT-BPM sector to the BOI.

Additionally, the availment of the tax incentives should be continued subject to the transitory provisions under the Create Act, which has no express or implied prohibition against this scheme.

“We expect the cooperation and utmost commitment of all concerned IPAs and RBEs on this matter as we carry out the transition and conclusively address the enduring WFH problem,” said Diokno.

Apart from the discussion on the WFH arrangement, the FIRB approved the two tax incentives applications of companies in the telecommunications and cement manufacturing industries, as endorsed by the BOI. /