The Fiscal Incentives Review Board (FIRB) has denied the request of the Philippine Economic Zone Authority (PEZA) seeking the lifting of the moratorium on the declaration of ecozones in Metro Manila.
The FIRB also rejected PEZA’s request for an extension of the work-from-home (WFH) arrangement to the information technology-business process management (IT-BPM) sector without affecting their incentives.
In a letter to PEZA director-general Charito Plaza dated March 7, 2022, FIRB chair and Finance Secretary Carlos Dominguez warned of possible penalties on companies that do not comply to the WFH regulations of the body.
Dominguez said the moratorium on the establishment of ecozones in Metro Manila was implemented to ensure economic activities are dispersed in the countryside and equal opportunities are accorded to those outside the metropolitan areas.
Dominguez also refuted claims of PEZA that the Corporate Recovery and Tax Incentives for Enterprises (CREATE) has impliedly superseded and lifted the moratorium as provided under Administrative Order (AO) No. 18.
“The CREATE Act has neither replaced nor superseded AO No.18. They are consistent with each other. On the one hand, the law complements the strategy of the administration by providing longer period of incentives for registered activities located outside the National Capital Region. On the other, AO No. 18 aims to promote rural development, ensure inclusive growth in the countryside, and create robust economic activity and wealth generation in areas outside Metro Manila. The moratorium imposed by AO 18 is still in effect,” Dominguez added.
Dominguez said the members of the FIRB in their meeting last February 21 were all in unison for the continuation of the moratorium.
In the same meeting, FIRB thumbed down PEZA’s request to allow PEZA to implement a temporary measure of 100-percent WFH arrangement by IT-BPM registered business enterprises (RBES) initially until Sept. 12, 2022, without diminution of fiscal incentives.
The body also rejected a PEZA management request for authority to craft its own guidelines for the WFH arrangement.
Dominguez said the current policies and programs of the government allowing the pilot opening of face-to-face classes, adopting granular lockdown measures, and expanding the vaccination to include those between 5 and 17 years old, are all geared towards improving mobility and enhancing greater economic activity.
Dominguez cited the Office of the President’s Memorandum Circular No. 93 which provides at least 40 percent, 60 percent, and 80 percent on-site workforce in government offices are required under Alert Levels 4, 3, and 2, respectively.
Dominguez added the FIRB’s thrust towards reopening the economy promotes higher utilization rates in infrastructure, specifically in office spaces, among concerned RBES. An increase in infrastructure utilization within ecozones or freeports will encourage further expansion and diversification of investments in the area and support the government’s initiative of making the country a safe investment and work destination
“Considering all surrounding circumstances as well as the relevant issues and points, the FIRB members were unanimous in that the approval of PEZA’s request with regard to WFH arrangement is not consistent with the economic strategy of the government of reopening the economy gradually and safely,” Dominguez said.
Dominguez said PEZA should advise and remind its registered IT-BPM enterprises to comply with the existing provisions of FIRB Resolution No. 19-21.
“Non-compliance therewith during its effectivity (September 2021 to 31 March 202 subjects the non-compliant entity to penalties during the month/s of non-compliance,” he added.
Under the resolution, up to 90 percent of the RBE’s total workforce may work from home because of the pandemic, subject to conditions provided by the FIRB. Enterprises exceeding the 90-percent threshold cannot enjoy income tax incentives during the months of their non-compliance with the FIRB resolution. – Irma Isip
