IT-BPO Firms May Continue WFH Scheme But Without Tax Incentives

The Philippine Economic Zone Authority (PEZA) urged the Information Technology and Business Process Outsourcing (IT-BPO) industry to follow the government’s return-to-office order if they want to keep their tax breaks. 

Meanwhile, Department of Finance (DOF) Secretary Carlos Dominguez clarified in a CNN Philippines report that no one is prohibiting IT-BPO firms from implementing work-from-home setups. But by doing so, they must give up the tax perks given to them. 

IT-BPO employees are expected to return to their workplaces starting April 1, based on the Fiscal Incentives Review Board (FIRB) resolution issued on March 9. 

Perks for On-Site Operations

In a GMA News report, Secretary Dominguez said that tax incentives are provided to IT-BPOs operating within the boundaries of investment-promotion agencies or economic zones like PEZA. Firms in these ecozones are given income tax holidays and a 5% tax on gross income earned.

Dominguez noted that removing tax perks for IT-BPO firms with a WFH setup is only fair. For other companies outside ecozones, he said that micro, small and medium enterprises (MSMEs) have a regular corporate income tax of 20%, while big businesses pay 25%.

PEZA Director General Charito Plaza also supports FIRB’s decision on 100% on-site work for IT-BPOs. She mentioned that the 90:10 ratio for the WFH setup was just a temporary measure during the height of the pandemic. Adding that they cannot change the ratio for now, Plaza urged the involved parties to abide by the existing laws. 

A Call for Gradual Return to Work 

Earlier, BPO workers called for the suspension of the return-to-office order after FIRB rejected the WFH extension. In another GMA news report, the Inter-Call Center Association of Workers mentioned that BPO workers within ecozones and freeports were not consulted prior to the decision. 

Meanwhile, the Alliance of Call Center Workers noted the “significant number” of BPO workers considering resigning if the on-site work order pushes through. Some of them are appealing for an option to work from home on certain days. Others ask for enough time to transition, especially those who returned to the province and gave up their living arrangements in Metro Manila. 

Transition to Normalcy 

On the other hand, some of the biggest business groups in the country are in full support of the back-to-office order. The business groups also urged the public to contribute to economic activities while still following minimum health standards, as per an Inquirer article.

Likewise, top property developers back the government’s return-to-office policy, seeing it as a measure to achieve economic wellness. With this move, real estate expert Colliers expect building owners and landlords to look forward to having their properties occupied again. This, in turn, would emphasize the need to improve employee experience, putting the focus on their physical health, mental health, and overall wellness.

For the government, the return-to-office policy is part of its whole-of-nation approach to help Filipinos recover from the health crisis. The on-site work order is also expected to increase foot traffic for transportation, restaurants, and other commercial areas. 

Amendment of Laws for WFH 

Although PEZA supports the back-to-office strategy and reopening of the economy, it acknowledges the merits of WFH setups, according to an Inquirer article. PEZA Director General Plaza agrees that the hybrid work scheme has been effective, urging the next administration to amend laws supporting WFH.

The work arrangement propped up the industry in 2020, creating 23,000 new jobs when the country had its highest unemployment rate in 15 years. Additional data from the IT and Business Process Association of the Philippines (IBAP) also cited an 8% increase in the workforce and a 12% increase in revenue last year. 

Plaza added that they hope to follow the practice of BPO firms abroad, wherein policies and tax breaks have been adjusted for WFH arrangements. In the meantime, PEZA is working on revising its approach to include hybrid work schemes and proposing changes to the next admin.

Sources: CNN Philippines, GMA News, Inquirer, Colliers Philippines

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