NextGen Day

MANILA – The Bureau of Internal Revenue (BIR) has formed a task force to ensure that registered business enterprises (RBEs) in the information technology-business process management (IT-BPM) sector are complying with the law’s requirement that they do business in the special economic zones (SEZs) or freeports where they are registered.

BIR Deputy Commissioner Arnel Guballa said the bureau has issued mission orders (MOs) allowing ocular inspections of RBEs’ places of business to determine if they are complying with the conditions for the grant of incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, particularly those relating to on-site work rules, in a report to Finance Secretary Carlos Dominguez III.

The Fiscal Benefits Review Board (FIRB) temporarily enabled IT-BPM enterprises to use “work-from-home” arrangements without losing their ecozone locator incentives, allowing them to continue doing business offshore throughout the pandemic.

The RBE WFH arrangements were extended until March 31, 2022.

RBEs and/or registered activities must be done within the geographical boundaries of the ecozone or freeport where they are located to be eligible for financial incentives under Section 309 of the National Internal Revenue Code (NIRC) of 1997, as amended by CREATE.

RBEs in the IT-BPM industry is permitted to adopt WFH arrangements beyond the March 31 deadline, according to Dominguez, who is also the FIRB chairman. The decision on which particular work arrangement to authorize is an exercise of corporate management discretion.

“No one is preventing them from continuing to execute their WFH systems, and no one is interfering with their management discretion.” They must, however, give up the tax breaks they currently have since the law is unambiguous,” he said.

Economic zones and freeports were established as separate customs territories to promote export activities and allow the free flow of goods and services, including IT-BPM services, within the boundaries of said zones or freeports, according to DOF Assistant Secretary and FIRB Secretariat head Juvy Danofrata.

Tax advantages are given to priority projects or activities in these zones, she said.

“To address the pandemic’s worries, the government has exercised great prudence in combining the economy’s needs with health regulations.” “However, we feel that the current scenario permits us to begin directing our policies toward a complete reopening of the economy,” Danofrata added.

“We can now take safety measures for the physical reporting of staff,” she noted, “given the increased vaccination rate of Filipinos countrywide.” In fact, under Alert Level 1, the President has directed all government departments and instrumentalities to maintain a 100 percent on-site staff.”

Danofrata made this comment in response to appeals from some sectors for the IT-BPM sector to continue to use flexible or off-site work arrangements without losing their tax benefits, which are a benefit of RBEs operating in SEZs or freeports. (

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