BIR task force inspects companies incentivized with back-to-office work

MANILA – The Bureau of Internal Revenue (BIR) has established a task force to ensure that Registered Business Enterprises (RBEs) in the information technology and business process management (IT-BPM) sector currently benefiting from tax incentives comply with the requirement of the law to allow them to do business in the special economic zones (SEZs) or free ports where they are located and registered.

In a report to Finance Secretary Carlos Dominguez III, BIR Deputy Commissioner Arnel Guballa said the office had issued Mission Orders (MOs) allowing the conduct of eye inspections of the RBE’s place of business for determine whether they meet the conditions of the grant. incentives under the CREATE law (Corporate Recovery and Tax Incentives for Enterprises), in particular those relating to on-site work rules.

IT-BPM companies have been temporarily allowed by the Fiscal Incentives Review Board (FIRB) to use “work from home” agreements without losing the incentives granted to them as ecozone locators so they can continue doing business offsite at the height of the pandemic.

WFH provisions for RBEs were authorized until March 31, 2022.

Under Section 309 of the National Internal Revenue Code (NIRC) of 1997, as amended by CREATE, RBEs and/or registered activities must be conducted within the geographic boundaries of the ecozone or freeport where they are located. located to qualify for tax incentives.

Dominguez, who is also chairman of the FIRB, clarified earlier that RBEs in the IT-BPM sector are free to adopt telework agreements beyond the March 31 deadline, and that the decision on the agreement to particular work to be approved is an exercise of the discretionary power of the management of the company.

“No one is banning them or encroaching on their managerial prerogative to continue implementing their WFH setups. However, they must forfeit the tax incentives they currently enjoy because the law is clear on this,” he said. he declares.

DOF Deputy Secretary and Head of FIRB Secretariat Juvy Danofrata said separate customs territories, economic zones and free ports have been established to promote export business and allow free movement of goods and services. , including IT-BPM services, within the limits of said free zones or ports. .

She indicated that tax incentives are granted to priority projects or activities located in these areas.

“The government has been very careful in balancing the needs of the economy and health requirements to address the concerns caused by the pandemic. However, we believe that the current situation already allows us to direct our policies towards a full reopening of the economy,” Danofrata said.

She added that “given the increase in the vaccination rate of Filipinos nationwide, we can now take safety measures for the physical reporting of employees. In fact, the President has ordered all government agencies and institutions to 100% onsite workforce compliance under Alert Level 1.”

Danofrata released this statement earlier amid calls from some industries for the continued adoption of flexible or off-site working arrangements for the IT-BPM industry without them losing their tax benefits, which is a privilege. RBEs operating in SEZs or free ports. (PR)

Jose C. Birney