The Fiscal Incentives Review Board (FIRB) has released the guidelines on FIRB Resolution No. 19-21, which allows Information Technology Business Process Management (IT-BPM) enterprises in economic zones to adopt a 90-percent work-from-home (WFH) arrangement up to March 31, 2022 because of the COVID-19 pandemic.
Under the said resolution, the WFH arrangement shall be allowed until January 1, 2022, afterwhich a 75-percent ceiling shall be imposed until March 31, 2022, provided, that if the state of calamity is extended beyond January 1 next year, the ceiling shall be maintained at 90 percent until the end of March 2022.
President Rodrigo Roa Duterte recently extended the state of calamity in the country until September 12, 2022.
The policy was set by the FIRB to address the work constraints brought about by the pandemic in accordance with the provision in the implementing rules and regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which gives an IPA the authority to implement temporary measures as long as these are approved by the FIRB to help RBEs recover from a pandemic, national emergencies, or major disasters.
Signed by Finance Secretary and FIRB Chairman Carlos Dominguez III, the memo gave registered business enterprises (RBEs) in the IT-BPM sector up to September 30, 2021 to submit to their respective investment promotion agencies (IPAs): 1) their total number of employees and the number of employees under the WFH arrangement; and 2) a detailed list of the laptops, desktops, and other equipment and assets brought out of the economic or freeport zones.
This list should include the quantity of the assets, their acquisition cost and book value, and the amount of bond paid to cover 150 percent of the amount of taxes and duties (if imported) and value-added tax (VAT) (if locally sourced) of the equipment and assets taken outside the ecozones.
“Bonds shall be posted for all equipment (e.g. desktops and laptops) deployed by the RBE to their employees’ homes, to ensure payment of taxes and duties if any such equipment is not returned to the site of the RBE after the WFH arrangement,” as stated in the memo addressed to all heads of IPAs and RBEs in the IT-BPM sector.
The guidelines likewise require that within 5 days after the end of each month, RBEs should submit to their IPAs a report on any additional equipment and other assets brought out of the economic or freeport zones, and the current total number of employees and number of employees under the WFH arrangement.
The RBEs are given up to Sept. 30, 2021 to submit to their IPAs a certification that the export requirement and the number of employees will be maintained.
“Non-compliance with the conditions prescribed under FIRB Resolution 19-21 may result in suspension, withdrawal, or cancellation of tax incentives of the RBEs,” according to the memo.
The concerned IPAs, for their part, should submit to the FIRB Secretariat on or before Oct. 15, 2021, and 15 days after the end of each month, their respective lists of registered IT-BPM enterprises availing of the WFH arrangement.
Each IPA list should include details on the quantity of assets brought by the IT-BPM firm or firms out of the economic zone or freeport, including their acquisition costs and book values; and the amount of surety bond paid to cover 150 percent of the amount of taxes and duties (if imported) and VAT (if locally sourced) on such assets.
IPAs are also required to submit to the FIRB Secretariat within 30 days from the expiration of the period of the WFH arrangement, their respective lists of registered IT-BPM enterprises, including the quantity, acquisition costs and book values of the laptops, desktops, or other equipment they brought out of the economic or freeport zones; and the proof of payment of taxes and duties or forfeiture of surety bond on such assets that were not returned to the economic or freeport zones.
If an RBE violates any of the conditions set forth in the guidelines, the concerned IPA must notify the FIRB within 5 days from the knowledge of the violation.
“The notice will include the name of the RBE, address, registration number, the nature of the violation, and action taken by the IPA, if any,” the memo wrote.
The FIRB allowed IPAs to adopt other measures to ensure compliance with the conditions allowing the WFH arrangement.