IT-BPM firms to lose tax perks if they insist on work-from-home: Finance chief

ABS-CBN News

Posted at Mar 22 2022 08:55 PM

MANILA - The Department of Finance on Tuesday said IT and Business Process Management firms that insist on work-from-home schemes for their employees stand to lose their tax perks.

Finance Secretary Carlos Dominguez III said IT-BPM firms in ecozones and freeports can adopt WFH arrangements but must give up their tax incentives under the law. 

Dominguez said that companies registered with an IPA such as the Philippine Economic Zone Authority (PEZA) enjoy incentives such as an income tax holiday or a 5 percent special corporate income tax in lieu of all taxes, such as the VAT, income tax, and local business tax. 

But to enjoy these incentives, they also have to comply with Section 309 of the Tax Code, which says that these companies “shall be exclusively conducted or operated within the geographical boundaries of the zone or freeport.” 

“No one is prohibiting them or impinging on their management prerogative to continue implementing their WFH setups. However, they must give up the tax incentives they currently enjoy because the law is clear on this,” Dominguez said in a statement. 

The Financial Incentives Review Board, an attached agency of the DOF, has given IT-BPM firms until the end of the month to get their employees back to their offices. 

Industry leaders however have appealed to the government to allow them to keep remote work and WFH arrangements until August saying it will not be easy to move a million employees and their equipment back to their offices within the March deadline. 

The sector is also appealing to the government to let it adopt hybrid work schemes where employees are not required to be in the office during the entire workweek. 

Government economic managers however have said that employees must return to their workplaces to help MSMEs that depend on them, and thus spur economic recovery.