THE Bureau of Internal Revenue (BIR) will place under the microscope registered business enterprises (RBEs) in the information technology-business process management (IT-BPM) sector on their compliance with the order to return to physical offices.
According to a report to the Department of Finance (DOF) by Internal Revenue Deputy Commissioner Arnel SD. Guballa, the BIR has issued mission orders to undertake ocular inspections of RBEs’ place of business. These personnel would determine whether the RBE is following the on-site work rules, which were part of the conditions for the grant of their incentives under the Corporate Recovery and Tax Incentives for Enterprises (Create) law (Republic Act 11534).
Interestingly, the DOF issued the statement a week after the Philippine Economic Zone Authority (Peza) said it received reports that registered IT-BPM companies are losing their employees to “underground” entities in the same sector operating in a work-from-home (WFH) setup.
Many workers have resigned from their jobs following government’s order for RBEs in the IT-BPM sector to return to their respective workplaces, Peza Director General Charito B. Plaza earlier said. The Peza has appealed to the Finance Secretary and Fiscal Incentives Review Board (FIRB) to extend the 100-percent WFH arrangement for RBEs in the IT-BPM sector until September 12.
The Cabinet-level FIRB, which temporarily allowed the WFH scheme only up to March 31, denied Peza’s appeal. The FIRB said it would only be up to this day that IT-BPM firms can use such scheme without losing incentives granted to them as eco-zone locators.
Under Section 309 of the National Internal Revenue Code (NIRC) of 1997, as amended by RA 11534, operation of RBEs and/or registered activities must be conducted within the geographical boundaries of the ecozone or freeport where they are located to be entitled to fiscal incentives.
FIRB Chairman Carlos G. Dominguez III has said RBEs are free to adopt WFH arrangements beyond the March 31 deadline. However, Dominguez said, these entities must give up the tax incentives they currently enjoy.
Finance Assistant Secretary and FIRB Secretariat Head Juvy C. Danofrata said tax incentives are granted to priority projects or activities located in these economic zones and freeports since these were established to promote export activities and allow the free flow of goods and services within the boundaries of the said zones or freeports.
Danofrata argued the government can now undertake safety measures for the physical reporting of employees given the increasing vaccination rate of Filipinos in the country.
“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 already allows us to direct our policies towards fully reopening the economy,” Danofrata said.
“In fact, the President has ordered all government agencies and instrumentalities to adhere to the one hundred percent on-site workforce under Alert Level 1,” she added.