THE American Chamber of Commerce of the Philippines (AmCham) said it is looking forward to the passage of a new tax law after getting most of provisions the US business group lobbied for, particularly on work-from-home system and red tape.
AmCham Executive Director Ebb Hinchliffe told reporters on the sidelines of a meeting last week that the bill that would enhance the Corporate Recovery and Tax Incentives for Enterprises (Create) law, the Create to maximize opportunities for reinvigorating the Economy (Create More), “is another big one.”
“It’s got most of the provisions we wanted… to help improve the work-from-home situation, to improve the elimination of red tape and some of it,” Hinchliffe said at the General Membership Meeting of the Management Association of the Philippines (MAP).
However, the AmCham official noted that there are certain tax provisions that could be better such as the work arrangement in the country and reducing the powers of the Fiscal Incentives Review Board (FIRB), which he deemed as another “level of red tape.”
“We would prefer to have a 100-percent WFH. Then there are certain tax provisions there that could be better,” Hinchliffe said. “[The] WFH situation probably is the biggest one. But the elimination of FIRB, that’s another level of red tape that we’d like to see removed and that’s in there. So overall it’s a good bill (Create More).”
Alternative work arrangements
AMONG the amendments noted in the unnumbered substitute “Create More” bill is a provision that paves the way for a more flexible work arrangement.
“Provided, finally, that registered business enterprises in the Information Technology-Business Process Outsourcing sector, compliant with on-site work requirements set by the respective investment promotion agencies may be allowed to conduct business under alternative work arrangements,” the bill read.
This provision aims to provide more flexibility to the work arrangement within the IT and Business Process Management (IT-BPM) industry as cited in Section 309 of the Create law or Republic Act (RA) 11534.
“A qualified registered project or activity under an Investment Promotion Agency (IPA) administering an economic zone or freeport shall be exclusively conducted or operated within the geographical boundaries of the zone or freeport being administered by the Investment Promotion Agency in which the project or activity is registered,” the section read.
The section further stated that “a registered business enterprise may conduct or operate more than one qualified registered project or activity within the same zone or freeport under the same” IPA.
BOI, not PEZA
THE section also provides further “that any project or activity conducted or performed outside the geographical boundaries of the zone or freeport shall not be entitled to the incentives provided in this Act, unless such project or activity is conducted or operated under another [IPA].”
Section 309 of RA 11534 previously attracted criticisms particularly from IT and Business Process Association of the Philippines (IBPAP) President and CEO Jack Madrid, among others. Madrid had said that long-term implementation of the WFH or hybrid work can be better addressed through the continued study and eventual amendment of this provision. (Related story: https://businessmirror.com.ph/2022/08/24/perks-registry-may-shift-to-boi-in-wfh/)
Hinchliffe underscored the importance of addressing the flexibility issue on the work arrangement as he cited an instance where a certain IT-BPM firm is in the middle of hiring about 6,000 to 7,000 employees but stressed that they want to be with the Philippine Economic Zone Authority (PEZA) instead of the Board of Investments (BOI).
“Certain companies—I can’t name because one of them is in the midst of hiring—don’t want to be in BOI. They want to be in PEZA,” the AmCham official said. “And they can’t do it because of WFH— those 6,000 employees don’t want to come to the office; they want to work from home.”
Reduction of FIRB’s powers
ACCORDING to Hinchliffe, the PEZA “does a very good job working” at the local government unit level and the BOI “does an excellent job at the national level.”
“Both of them are really okay. It just depends if you’re looking for the local market, BOI’s good. If you’re looking for export, PEZA’s really good,” Hinchliffe said. The “PEZA’s very responsive.”
Meanwhile, Hinchliffe also lauded the reduction of powers of the FIRB in the proposed “Create More” bill.
The bill seeks to amend Section 292 of RA 11534 (Extent of Authority to Grant Tax Incentives).
The “Create More” bill provides that IPAs or the FIRB, “as the case may be, shall grant the appropriate tax incentives provided in this Title to be granted to registered business enterprises only to the extent of their approved registered project or activity under the Strategic Investment Priority Plan.”
“Any matter pending with the FIRB particularly applications for registration, requests for reconsideration and/or appeal, shall be immediately referred back to the concerned [IPA] for proper and immediate resolution,” the amendment also noted. (Related story: https://businessmirror.com.ph/2023/10/18/slashing-firb-powers-boosting-ipas-eyed/)