163 IT-BPM firms transferring registration from PEZA to BOI

MANILA – To implement a 100-percent work-from-home arrangement, some 163 information technology and business process management (IT-BPM) companies initially registered with the Philippine Economic Zone Authority (PEZA) are transferring their registration to the Board of Investments (BOI).

The BOI said PEZA has endorsed 163 registered business enterprises (RBEs) in the IT-BPM sector to the agency, with total investments amounting to PHP13.9 billion.

“BOI is currently processing 55 out of 163 projects that have already paid the administrative fee,” it said in a statement.

The transfers are merely “paper-transfer”, which means these IT-BPM companies do not have to relocate outside economic zones or IT parks under PEZA and will still enjoy their current tax perks as long as they complied with the terms and conditions.

“Those who did not exercise the option shall no longer be allowed to register and shall be covered by Sec. 309 of CREATE (Corporate Recovery and Tax Incentives for Enterprises),” BOI added.

RBEs are given until Dec. 31, 2022 to shift their registration from PEZA to BOI.

“After the lapse of the period of the remaining tax incentives, the existing registered project of the covered RBEs shall not be entitled to additional incentives, unless the activity qualifies as a new investment or qualified expansion under the Strategic Investment Priority Plan (SIPP), subject to a separate application for registration,” BOI said.

The Fiscal Incentive Review Board (FIRB), under the previous administration, ordered IT-BPM firms registered with PEZA to return to full on-site operation, scrapping the work-from-home arrangement starting April 1.

Firms that maintained the hybrid set-up lost their tax perks, such as income tax holiday or a 5-percent special corporate income tax in lieu of value-added tax, income tax, and local business tax.

Last Sept. 14, FIRB ruled in favor of allowing 100-percent work-from-home arrangements for PEZA IT-BPM firms as long as they will shift their registrations to BOI.

Property advisory firm Colliers has welcomed the new guidelines that provided clarity to the industry.

“This can serve as a positive way forward for these stakeholders as many were concerned about the potential challenges with talent attrition and retention had there been no compromise on PEZA’s current back-to-office mandates and more flexible work-from-home policies,” Colliers commentary said.