FIRB stands firm on ecozone onsite work

THE Fiscal Incentives Review Board (FIRB) said it will continue to require registered business enterprises (RBEs), including information technology–business process management (IT-BPM) firms, to make their employees work onsite.

Finance Assistant Secretary Juvy C. Danofrata, who also heads the FIRB Secretariat, said in a statement on Thursday that the work-from-home (WFH) arrangement previously enjoyed by RBEs was a time-bound measure that expired when quarantine conditions eased.

“Given the increasing vaccination rate of Filipinos nationwide, we can now undertake safety measures for the physical reporting of employees. In fact, the President has ordered all government agencies and instrumentalities to adhere to the 100% on-site workforce rule allowed by Alert Level 1,” Ms. Danofrata said.

“The government has exercised significant caution in balancing the economy’s needs and the health requirements to address concerns the pandemic caused. However, we believe that the current situation allows us to direct our policies towards fully reopening the economy,” she added.

Under FIRB Resolution 19-21, registered IT-BPM companies can implement WFH arrangements for up to 90% of their workforce while still enjoying tax incentives. However, the resolution expired on April 1, with employees having since been directed to return to onsite work.

According to Ms. Danofrata, the FIRB was taking in requests for the continued adoption of flexible or off-site work arrangements for the IT-BPM sector while still enjoying their tax breaks. She said tax breaks are a privilege of RBEs operating in special economic zones or freeports.

She said registered projects or activities should be done within the geographical boundaries of the economic zone (ecozones) or freeports to be entitled to fiscal incentives, as provided under the National Internal Revenue Code as amended by Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

Ms. Danofrata said tax incentives are given to priority projects or activities located within ecozones and freeports, which were established to promote export activity and allow the free flow of goods and services, including IT-BPM services, within the zones.

“Under the law, allowing companies to have their activities be conducted from their homes or anywhere outside the zone territory while enjoying their tax incentives is in utter disregard and violation of the aforementioned provision of law,” Ms. Danofrata said.

Recently, the Philippine Economic Zone Authority announced that it is allowing registered firms to conduct a 70% on-site and 30% WFH arrangements in the face of the government’s return to office order. —