Pasay City – The Philippine Economic Zone Authority (PEZA) Board proposed to the Fiscal Incentives Review Board (FIRB) the approval of a policy that will allow its registered IT-BPO enterprises to operate under a Work-From-Home (WFH) Arrangement without the requirement of 10% onsite capacity until 12 September 2022, without diminution of fiscal incentives.
This comes as the PEZA Management recommended to the Board the approval of the Temporary Measure, citing Rule 23, Section 3 (d) of the Implementing Rules and Regulations of Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Rule 23 of CREATE Law’s IRR
Rule 23 entitled Temporary Measures for Exceptional Circumstances, provides that an IPA may implement temporary measures to support the recovery of registered business enterprises (RBEs) from exceptional circumstances, upon prior approval of the FIRB.
Exceptional circumstances include pandemic, epidemic, war, armed conflict, state of national health emergency, outbreak of diseases, international or regional financial crisis, major disaster such as volcanic eruption, earthquake and super typhoon, or analogous circumstances.
PEZA Board Resolution No. 2022-001
Aside from the suggestion regarding the WFH scheme, PEZA also submitted the following proposed temporary measures to the Board on 06 January 2022:
- Allow the movement of IT equipment and assets as long as the same is covered by surety bond and appropriate PEZA Permits. There shall be no limitation on the number of IT equipment as long as the RBEs comply with the surety bond and permits.
- Authorize PEZA to craft its own guidelines for the WFH arrangement under this recommendation as this is peculiar only to PEZA, being the biggest IPA in terms of number of enterprises and owing to multiple IT Centers/Buildings under its jurisdiction which is not applicable to other IPAs and/or economic zone authorities.
According to PEZA Director General Charito ‘Ching’ Plaza, “The proposal of PEZA is merely temporary in consideration of the ongoing pandemic. We are happy to inform everyone that the PEZA Board approved, through a referendum, the management’s proposal under BR No. 2022-001 dated 07 January 2022.”
She added, “The approval of the PEZA Board of our proposed temporary measure was submitted to the FIRB for further approval as required under the rules. We have yet to receive formal notice on the FIRB’s decision regarding our recommendation.”
PEZA is also appealing for the non-imposition of the penalties under FIRB Resolution No. 19-21 given its possible implications.
“PEZA-registered companies are coping with or recovering from the impacts of the pandemic. If it’s supposed to be a relief measure, we should not penalize the companies; rather, we must continue to assist our registered companies as much as possible given that protecting livelihoods of millions of Filipinos is an important national interest,” noted Plaza.
IBPAP held an Industry Briefing last February 02, 2022 wherein PEZA provided updates on various matters and addressed concerns especially on the WFH arrangements
PEZA-BOI suggestion re WFH arrangements
Aside from the recommended temporary measures, PEZA and the Board of Investments (BOI) also suggest the amendment of Sec. 309 of the CREATE Law to come up with a win-win solution to all affected parties given the three-year pandemic and its implication to the economy.
“Both PEZA and BOI support the enactment into law of Senate Bill No. 2306 proposed by Senator Imee Marcos, which seeks to amend the aforementioned section of the law,” said the PEZA Chief.
Plaza explained, “However, instead of the 50% WFH arrangement which is based on revenue, both IPAs agreed that the percentage should be addressed in the proposed SIPP as the allowable threshold may even be increased to more than 50% but this time, it shall be based on total workforce or manpower of the IT enterprises instead of the revenue.”
Deputy Director General for Policy and Planning Tereso Panga said that with the suggestion, “I think, moving forward, we can have a more permanent solution to this, recognizing, based on McKinsey [and Company] report, that WFH is really part of the new normal post-pandemic (…) It’s one way we can enhance our competitiveness as an IT destination.”
Unity for the growth of the industry and revival of economy
Director General Plaza assured, “We will do our best for the benefit our country, our people, and of course, our beloved investors. After all, we are united in our goal of reviving our thriving economy and create a more inclusive growth for our nation.”
For their part, IT and Business Process Association of the Philippines (IBPAP) President and CEO Jack Madrid assures that “we will look forward to continue the growth of the industry in the years to come. But this would not be possible without the full support of our government partners; and I can’t think of a more strategic and important partner than our partners in PEZA.”
As of November 2021, there are a total of 297 IT parks and centers and 1,273 IT-BPO companies registered with PEZA. These companies and ecozones have contributed a total of 12.33% or Php 328.559 Billion of investments, generated $11.537 Billion USD of exports, and created 962,304 direct jobs as of September 2021. #