Now that business processing outsourcing (BPO) firms have 100% return-to-onsite work orders, the Bureau of Internal Revenue (BIR) has formed a task force to check them for compliance, especially if the firm wants to retain their fiscal incentives.
Deputy Revenue Commissioner Arnel Guballar reported to Finance Secretary Carlos Dominguez that the BIR had released inspection mission orders. BIR officers are set to conduct spot checks and ocular inspections at BPO facilities registered with Investment Promotion Agencies (IPA). The assessments will ascertain that all employees are indeed in attendance onsite.
Last April, the BIR collected monthly income tax from BPOs, even if their workforce still fell short of total capacity. Because of the pandemic, the interagency Fiscal Incentives Review Board (FIRB), which handles granting tax breaks to qualified companies, ruled that work-from-home BPO employees operating inside economic zones were granted specific tax incentives.
However, the FIRB said that these incentives for remote work are only temporary amidst the lockdown imposed in the past two years amidst the coronavirus pandemic. Henceforth, BPO companies can only keep their incentives when 100% of their employees return to onsite work.
The Finance Assistant Secretary and FIRB head Juvy Danofrata cited that under Section 309 of the Tax Code (with amendments by the CREATE ACT), IPA-registered projects and activities like BPOs must conduct their business within the geographical boundaries of the ecozone freeport if they want to continue enjoying fiscal incentives. Work-from-home does not fall within the stipulated geographical requirement.
Secretary Dominguez, who also chairs FIRB, noted that return to work or continuous remote work is up to the discretion of BPO companies. It is the management’s prerogative to decide how BPO operations will progress. But those who will continue their work-from-home operations are no longer entitled to tax incentives.
The reprieve during the pandemic is only temporary. Secretary Dominguez noted that it would be grossly unfair to businesses operating outside the ecozone that pay full taxes. As such, those BPO firms who want to enjoy tax incentives must comply with the law and operate within the geographical boundaries of the ecozone. Those who do not have 100% attendance will lose their fiscal perks as mandated by the Philippine tax laws.