Hundreds of BPOs with WFH setup may lose tax perks in 2023

More than half of business process outsourcing (BPO) firms under the Philippine Economic Zone Authority (Peza) which adopted work-from-home (WFH) arrangements may lose their tax incentives next year as the majority have not fully complied with government requirements days after the deadline.

In a statement released on Tuesday, the Peza said that only 41 percent—or 446 registered business entities with 1,292 projects—were able to send their applications in time for the Dec. 16 deadline to transfer to the Board of Investments (BOI).

“Peza is still currently in the process of endorsing all applications to BOI. As of today, 70 percent of the applications have been endorsed already to BOI,” read a statement from the investment promotion agency.

Sought for comment, Peza officer in charge and Deputy Director General Tereso Panga told the Inquirer that another application was received past the deadline but was accepted anyway by the investment promotion agency.

This leaves nearly 640 other firms still not fully compliant, which means they would have to either recall employees back to the office to remain eligible for tax perks or to continue with the said work setup without government incentives.

Panga previously said that Peza-registered firms that are currently under a WFH setup will be ineligible to continue receiving tax perks next year if they fail to transfer their registration to the other investment promotion agency.

Asked if they will ask for an extension from the Fiscal Incentives Review Board (FIRB), Panga expressed reluctance, citing that even the BOI was “not keen on asking” to stretch out the application period

Past deadline

Dec. 16 was the deadline set by Peza to receive submissions, but the original deadline in the FIRB resolution is Dec. 31.

Peza Deputy Director General for Operations Vivian Santos told reporters last week that they needed to set the Dec. 16 deadline so they would have enough time to prepare and make the submission to the BOI.

Since April of this year, Peza-registered business firms were given temporary leeway in their work arrangement until Sept. 12, continuing to enjoy tax incentives despite 30 percent of their employees working from home because of difficulties caused by the pandemic.

One of the requirements under Peza is for registered firms to conduct their business operations inside designated zones to avail themselves of tax perks.

Last September, the FIRB decided to require these companies to transfer to the BOI if they want to remain eligible for tax incentives while letting their employees work from home, giving them until the end of the year to make the transition.

It was the solution offered by the government to the BPO sector, which had been urging the government for months to allow them to maintain remote working arrangements while still remaining eligible for government tax incentives.