Tax Notes: Extension of WFH arrangements for Peza IT-BPM entities

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The Philippine Economic Zone Authority (Peza) has released Memorandum Circular (MC) Nos. 2021-049 and 2021-051 to extend work-from-home (WFH) arrangements for registered business enterprises (RBEs) engaged in Information Technology – Business Process Management (IT-BPM) until March 31, 2022.

Instead of revenue, the threshold shall now apply to the total workforce under the stated conditions:

The WFH arrangement is extended without adverse effect on the incentives of registered enterprises until March 31, 2022;

From September 13, 2021 to December 31, 2021, the total number of employees under WFH arrangement shall not exceed 90 percent. For Peza-registered IT enterprises, this shall be on a per site basis;

Beginning January 1, 2022, the total number of employees under WFH arrangement shall not exceed 75 percent.

Should the State of Calamity under Presidential Proclamation No. 1021 be extended beyond January 1, 2022, the threshold shall be maintained at 90 percent until March 31, 2022; and

Revenue from export shall be maintained and there shall be no reduction of workforce despite majority of employees under the WFH Arrangement.

In addition to the aforementioned conditions, RBEs shall also observe the following:

A. Ecozone IT Enterprises shall submit to the PEZA Zone Managers/Office the details below:

On or before

30 September 2021:

A list of equipment and other assets brought out of the economic or Freeport zones with the following details:

a. Quantity of laptops, desktops, or other assets;

b. Acquisition cost and book value; and

c. Amount paid to cover 150 percent of the amount of taxes and duties (if imported) and VAT (if locally sourced).

2. Total number of employees and the number of employees under WFH arrangements; and

3. A certification that the export requirement and number of employees will be maintained.

Within five days after the end of each month, report on the following:

Additional equipment and other assets brought out of the economic or Freeport zones; and

The total number of employees and the number of employees under WFH arrangements.

The number of laptops/other equipment of an RBE outside the ecozone should not exceed the number of its employees who are under WFH setup.

The required information shall be emailed to the Peza Zone Administrators, Zone Manager and/or Officer-In-Charge. Non-compliance with the conditions may result to suspension, withdrawal, or cancellation of tax incentives of ecozone IT enterprises. Peza is also directed to report to the Fiscal Incentives Review Board within five days from knowledge of any violation of these conditions. The notice must include the name of the ecozone enterprise, address, registration number, the nature of the violation, and action taken by the Peza, if any.

Source:

P&A Grant Thornton

Certified Public Accountants

P&A Grant Thornton is the Philippine member firm of Grant Thornton International Ltd.

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