BPO workers in ecozones must work on-site – DOJ

BPO workers in ecozones must work on-site – DOJ

Business process outsourcing firms (BPOs) within special economic zones that adopt work-from-home (WFH) arrangements for their employees are no longer entitled to tax incentives, according to the Department of Justice (DOJ).

In a legal opinion dated Jan. 3, Justice Secretary Jesus Crispin Remulla contradicted the position taken by the Department of Trade and Industry (DTI), Philippine Economic Zone Authority (Peza) and the office of the presidential adviser on investment and economic affairs.

“Section 309 of the Tax Code still prevails,” said Remulla, referring to Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

“Until the enactment of a new legislation amending th(at) law, business enterprises located in the economic or freeport zone must continue to conduct their activities within the zone boundaries if they wish to continue availing of their tax incentives under the CREATE Act,” he stressed.

“These enterprises are not prohibited from adopting a WFH arrangement, but will no longer be eligible to continue enjoying the tax incentives,” he went on.

Section 309 of the CREATE Act states that “any project or activity conducted or performed outside the geographical boundaries of the [economic] zone or freeport shall not be entitled to the incentives provided in this Act.”

Conflicting positions

Malacañang’s Presidential Management Staff Undersecretary Rodolfo Palattao IV sought the DOJ’s opinion due to the “conflicting” positions of government agencies on the continuation of a work-from-home arrangement for information technology and business process management (IT-BPM) firms in economic zones and those registered under the Board of Investments (BOI) after the lifting of the COVID-19 pandemic state of public health emergency.

The DTI recommended a 30-percent WFH threshold for registered business enterprises in ecozones and freeport zones and maintained the 100-percent WFH arrangement for BOI-registered IT-BPM companies.

Peza supported the 30-percent WFH threshold based

… Read more