The Bureau of Internal Revenue (BIR) has created a task force to run after registered business enterprises in the Information Technology-Business Process Management (IT-BPM) sector currently enjoying tax incentives but are not complying with the government return-to-office order.
BIR Deputy Commissioner Arnel Guballa said the agency has issued mission orders allowing the conduct of ocular inspections to determine if registered business enterprises are complying with the conditions for the grant of incentives under Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, particularly those relating to on-site work rules.
IT-BPM firms were temporarily allowed by the Fiscal Incentives Review Board (FIRB) to resort to ‘work-from-home’ arrangements until March 31 without losing incentives granted to them as ecozone locators so they could continue doing business offsite at the height of the COVID-19 pandemic.
Under Section 309 of the National Internal Revenue Code (NIRC) of 1997, as amended by CREATE, registered business entities or registered activities must be conducted within the geographical boundaries of the ecozone or freeport where they are located to be entitled to fiscal incentives.
Finance Secretary Carlos Dominguez, who is also FIRB chairman, earlier clarified that registered enterprises in the IT-BPM sector are free to adopt WFH arrangements beyond the March 31 deadline, and that the decision on which particular work arrangement to approve is an exercise of corporate management discretion.
“No one is prohibiting them or impinging on their management prerogative to continue implementing their WFH setups. However, they must give up the tax incentives they currently enjoy because the law is clear on this,” Dominguez said.