The Philippine Economic Zone Authority warned over the weekend that the transfer of registration by business process outsourcing companies to the Board of Investments may result in double dipping on multiple tax incentives.
“We don’t see any value with paper transfer. They are prepared to bend the rules on no double dipping in incentives in support of BOI, but why can’t they do the same for PEZA,” PEZA officer-in-charge Tereso Panga said, referring to the support given by the Fiscal Incentives Review Board to the BOI.
The Department of Trade and Industry issued the guidelines for the transfer of IT-business process management firms to BOI under Memorandum Circular No. 22-19.
BPOs were given an option to transfer their registration to BOI from PEZA to skip the requirement of having most of their employees return to offices. BPOs registered with PEZA were given a leeway on work-from-home setup at the height of the pandemic, but are now required by the law to house their operations in registered IT centers or economic zones.
The BOI and PEZA separately provide tax incentives to registered enterprises.
The IT Business Process Association of the Philippines underscored the importance of favorable government policies on incentives and remote work, more reliable digital infrastructure, talent development and improved ease of business.
The group said reliable policies would help the industry achieve its goal of adding 1.1 million employees to the IT-BPM talent pool.
“We cannot do anything if the FIRB and BOI will issue the guidelines on paper transfer. We are bound to implement it. However, we will continue to present as option the PEZA board-approved WFH 30 percent limit until March 2023 to IT locators who would want to keep their PEZA status while availing of the designated IT centers and without need for paper transfers,” Panga said.
The circular provides that PEZA will continue to administer the fiscal incentives of the registered business enterprises, including the validation of their income tax holiday incentives and issuance of value added tax certification and other applicable certificates.
It said that while simultaneously registered with the BOI, the RBEs are still under the administrative supervision and monitoring of PEZA.
PEZA, aside from endorsing the request of the RBEs to the BOI, will continue to provide non-fiscal incentives such as PEZA visa, automated importation, issuance of building permits, among others.
PEZA rules and regulations will still apply to transferee RBEs such as approval of start of commercial operations, submission of reportorial requirements, movement of equipment, applications for letter of authority, including local sales, importation of equipment, reduction of lease and disposal of assets.
The circular also reminds transferees that they are still required to maintain an office inside PEZA-registered IT centers and buildings, and failure to comply with the mandatory requirement will result in the cancellation of registration with PEZA.
Trade Secretary Alfredo Pascual said the transfer of IT-BPM firms to the BOI was a mere paper transfer and assured that the transfer would be seamless and would not complicate operations of the transferee and PEZA.
MC 22-19, signed by Pascual, provides that all IT-BPM firms interested to transfer from PEZA to the BOI may process their application not later than end of December 2022.
The FIRB will facilitate the smooth paper transfer of the registration of IT-BPM enterprises that will not involve physically relocating their operations or giving up the incentives that they are enjoying at PEZA.