THE IT and Business Process Association of the Philippines (IBPAP) said the long-term implementation of work from home (WFH) or hybrid work can be better addressed through the amendment of a provision in the Corporate Recovery and Tax Incentives for Enterprises (Create) Law.
In a statement on Wednesday, IBPAP President Jack Madrid emphasized that the “continued study and eventual amendment of Section 309 of CREATE” could be addressed through the revision of the applicable portions of the law’s Implementing Rules and Regulations (IRR).
Madrid pointed out that it will be an important undertaking for IBPAP and its partners in the government to collaboratively work on the global competitiveness of the IT-Business Process Management (IT-BPM) industry in the Philippines.
Section 309 of Republic Act No. 11534 or CREATE law states: “A qualified registered project or activity under an Investment Promotion Agency administering an economic zone or free port shall be exclusively conducted or operated within the geographical boundaries of the zone or free port being administered by the Investment Promotion Agency in which the project or activity is registered.”
Under such provision in the law, there is a proviso that any project or activity conducted or performed outside the geographical boundaries of the zone or free port shall not be entitled to the incentives provided in this Act.
Two weeks ago, the IBPAP, in a statement, urged the Fiscal Incentives Review Board (FIRB) to reconsider its decision suspending income tax incentives for every month of a registered business enterprise (RBE)’s non-compliance with the 100-percent return-to-office (RTO) directive, which it said threatens the growth of the IT-BPM industry.
Even at the risk of being meted out penalties imposed by the FIRB on companies that are non-compliant with the RTO directive, some of these RBEs will opt to allow employees to continue working from home, the IBPAP stressed.
The flagship organization of the IT-BPM industry noted earlier in its statement that the decision of IT-BPM RBEs to forego their income tax perks is a “difficult interim measure” to address the needs of their employees and meet the demand of clients who prefer work-from-home (WFH) or hybrid work arrangements.
IBPAP said earlier that while some investors like Concentrix were reported to have given up tax incentives altogether to continue WFH/hybrid work arrangements, such a difficult decision was built on the company’s commitment to prioritizing the needs of its 100,000+ Filipino employees who expressed an overwhelming preference for a hybrid work arrangement.
Moreover, the said BPO stood its ground that flexible work models will ultimately result in greater productivity and scale for its global customer base and long-term business viability.
In March, the Bureau of Internal Revenue (BIR) warned that income tax incentives granted to RBEs in the IT-BPM sector will be suspended if they violate the work-from-home threshold set by the Fiscal Incentives Review Board (FIRB).
The FIRB is authorized by the IRR of CREATE law to oversee the administration and grant of tax incentives by the Investment Promotion Agencies (IPAs).
Meanwhile, a 2022 report by Colliers cited a survey conducted by the IT Business Process Association of the Philippines (IBPAP) showing that 80 percent of Filipino employees prefer WFH over working on-site.
The survey also revealed that 90 percent of employees are more productive in a hybrid model.
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