Responding to the demand to retain the tax incentives of information technology-business process management (IT-BPM) firms with work-from-home (WFH) setup, the Philippine Economic Zone Authority (PEZA) has announced that the agency is now accepting applications for 30% hybrid work arrangement from registered companies.
PEZA-registered IT-BPMs and registered business enterprises (RBEs) that cannot immediately return to office (RTO) even after April 1 can request a Letter of Authority (LOA) from PEZA with the needed requirements.
“Now that we are returning to normal, our government wants economic activity to also return to normal so this the solution of the PEZA – the 70-30 hybrid work scheme,” PEZA director-general Charito Plaza said.
Plaza said the hybrid work setup is until 12 September 2022 only, the declared end of state of Covid-19 calamity by Pres. Rodrigo Duterte.
IT-BPO companies and RBEs intending to avail this work arrangement should individually apply by sending their applications to PEZA.
Plaza said PEZA’s WFH scheme for its registered IT-BPOs and RBEs has been conceptualized even before the passage of Republic Act No. 11165, also known as the Telecommuting Act, on Dec. 20, 2018.
“PEZA therefore is just restoring back to the regular ratio of not more than 30 percent domestic sales allowance and WFH work ratio. PEZA is giving the institutionalization of the hybrid work scheme to include DOLE’s (Department of Labor and Employment) protection, safety, and security of tenure of workers engaged in the virtual or WFH schemes to the next administration,” she said.
Plaza said that since 2020 when pandemic began, one of PEZA’s Bayanihan business assistance and reprieves was the temporary increase of WFH arrangements which was the 90 percent WFH and 10 percent onsite.
“But starting 01 April 2022, PEZA-registered IT-BPOs are now going back to our regular policy ratio of 70-30 on sales allowance and not more than 30 percent of WFH,” she added.
PEZA deputy director general for policy and planning Tereso Panga said that on the provisions of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, it does not prohibit PEZA-registered RBEs and IT-BPMs from conducting remote work or performing a portion of their activity outside the economic zones.
“As long as our ecozone locators doing hybrid work are complying with the minimum 70 percent export sales and minimum 70 percent on-site report by their workers, they are (and should be) entitled to enjoy our tax incentives,” he said.
Panga said the 30 percent work from home is permissible activity under PEZA, CREATE, and Telecommuting laws.
Plaza said that even prior to the pandemic, the hybrid work model was also being practiced worldwide, specifically in India, the Philippine’s top competitor in the IT-BPM sector.
Thus, recognizing and adapting to this global trend is needed to maintain the country’s competitiveness and flexibility in the ‘new normal’, she added.
As of December 2021, PEZA has 1,274 IT locator companies operating in 297 IT centers/parks and providing 1,017,559 jobs nationwide with exports of $15.797 billion.
