A way to work from home

THE Covid-19 pandemic has revolutionized work habits. It made work-from-home (WFH) arrangements viable and even preferred by certain sectors and employees. Employers, particularly those in the information technology-business process management (IT-BPM) sector, were subsequently challenged after the government required that 100 percent of their work force return to the office. By law, those registered to operate in economic zones should only conduct their registered activities within ecozones.

To address a clamor for the continuation of WFH arrangements, the Fiscal Incentives Review Board (FIRB), in Resolution 02622 dated Sept. 14, 2022, allowed the “transfer” of registration of affected registered IT-BPM business enterprises (RBEs) to the Board of Investments (BoI) from the investment promotion agency (IPA) administering the economic zone or freeport where they are located (on the premise that BoI incentives are available regardless of location). This is to allow firms to implement up to 100-percent WFH arrangements without their tax incentives being adversely affected. The transfer can be done until Dec. 31, 2022.

However, despite the so-called transfer of registration and perhaps to not unduly overburden the BoI, monitoring of the transferee RBEs’ compliance and availment of their remaining incentives were required to remain with IPA concerned.

In line with the FIRB resolution, meanwhile, the Department of Trade and Industry issued registration guidelines via Memorandum Circular (MC) 22-19 dated Oct. 18, 2022. The guidelines cover all affected IT-BPM RBEs that have remaining tax incentives under Section 311 of the National Internal Revenue Code or those with approved incentives on or before Sept. 14, 2022 under the Corporate Recovery and Tax Incentives for Enterprises Act.

To initiate the transfer, the RBE should file its request to register with the BoI with the IPA concerned using a prescribed form. The IPA will then endorse the request to the BoI Infrastructure and Services Industries Service (ISIS) using a prescribed template and provide scanned copies of the RBE’s original certificate of registration (CoR) with terms and conditions or agreement and the duly accomplished request to register with BoI form. This endorsement certifies that the IPA does not object to the transfer and that the RBEs being endorsed are compliant with the terms and conditions of registration, and are in good standing.

After the RBE obtains the required endorsement and pays the applicable fee to the BoI, the ISIS will issue the CoR and specify the remaining incentives and the period of entitlement. The CoR is issued on a per project/activity basis

and not on a per enterprise basis.

Meanwhile, the Philippine Economic Zone Authority (PEZA) issued MC 2022-067 dated Oct. 21, 2022 prescribing further instructions regarding registration with the BoI. In a supplementary issuance, it also required the submission of the application forms to the PEZA on or before Dec. 16, 2022 to ensure that it would have sufficient time to review the application before endorsement to the BoI.

MC 2022-067 provides that the RBE should submit the accomplished request to register with BoI form, together with scanned copies of its PEZA COR and registration and supplemental agreements, to itbpm.transfer@ peza.gov.ph.

The PEZA will then furnish the RBE with its endorsement to BoI through email. Once the RBE receives the email, it may pay the applicable fees to BoI. The date indicated in the official receipt will be the date of the effectivity of the BoI registration. MC 2022-067 also provides that the PEZA will continue to administer the RBEs’ fiscal incentives.

Upon the BoI’s issuance of the CoR, the RBEs are required to furnish the PEZA a copy of the same for annotation. Within 30 days from the issuance, the RBEs should submit a list of all equipment and/or other assets, with required details, and the total number of their employees and number of those under the WFH arrangement to the PEZA.

While it is laudable for government agencies to have provided an alternative solution to meet the desire of IT-BPM RBEs to adopt WFH arrangements, all the foregoing definitely entails additional processes and layers of approval. It is certainly not a plus from the ease-of-doing business viewpoint. Also, as mentioned, the window for the “transfer” is only until Dec. 31, 2022. A long-term and permanent resolution will have to be legislative. Congress needs to pass a law that allows registered enterprises to operate outside economic zones and thus allow their workers to WFH legitimately and with ease.

Euney Marie J. Mata-Perez is a CPA-lawyer and managing partner of Mata-Perez, Tamayo and Francisco (MTF Counsel). She is a corporate, M&A and tax lawyer who has been ranked as one of the top 100 lawyers of the Philippines by the Asia Business Law Journal. She acknowledges the contribution of Gladys Jane M. de la Cruz to this article. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment, you can email the author at info@mtfcounsel.com or visit the MTF website at www. mtfcounsel.com.