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Since these taxes can only be levied on an employee’s employer, the Department of Finance (DOF) will issue an order to local government entities to stop collecting business tax from employees who work from home.

The Department of Finance (Dof) recently learned that some local government units (LGUs) have been collecting local business tax from business process outsourcing (BPO) personnel in work-from-home setups, according to Finance Undersecretary Antonette Tionko.

At the 7th joint economic briefing hosted by European business chambers late Monday, Tionko claimed some of these BPO employees were also required to obtain a mayor’s authorization.

Tionko claimed that “it causes difficulties for some” BPO employees, although she did not specify which LGUs were involved.

According to the Finance official, BPO workers who operate from home shouldn’t be subject to municipal taxes. She claimed that “certain LGUs have a faulty view” of tax regulations.

As a result, the DOF will release a circular on local finance through the Bureau of Local Government Finance (BLGF) that will explain to LGUs how BPOs with work-from-home setups are taxed.

According to Tionko, the firm or business, not its employees, remained the situs or site of taxation of the local business tax.

An LGU may charge business tax on a corporation that is located within its jurisdiction but not on an individual employee, according to a DOF official. “It’s not where the person resides. According to Tionko, the situs of local taxes is still the location where the corporation does its business.

Tionko mentioned the forthcoming BLGF circular she wrote and that Finance Secretary Benjamin Diokno would sign, claiming that “this will help a lot of the BPOs who have a work-from-home arrangement so their staff doesn’t get disturbed” by pointless local taxation.

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