FIRB extends deadline for IT-BPM firms to transfer registration to BOI

Information Technology and Business Process Management (IT-BPM) companies registered under special economic zones have more time to transfer their registration to the Board of Investments (BOI) in order to keep enjoying tax perks while still implementing work-from-home (WFH) arrangements. 

The Fiscal Incentives Review Board (FIRB) extended the deadline for the transfer of existing registered business enterprises (RBEs) in the IT-BPM sector to the BOI until January 31, 2023, the Department of Finance (DOF) said in a statement on Wednesday.

Last September, the FIRB allowed IT-BPM companies to be transferred from the jurisdiction of economic or freeport zones to the BOI, as it is the only investment promotion agency not affected by boundary constraints or zone limits for the availment of incentives by registered businesses. 

The decision allows firms to continue availing themselves of fiscal incentives while implementing hybrid work arrangements without violating Section 309 of the National Internal Revenue Code of 1997, as amended by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

The provision states that to be entitled to incentives, registered projects or activities must be conducted within the geographical boundaries of the ecozone or freeport administered by the concerned investment promotion agency (IPA). 

The FIRB resolution resolved the WFH issue of the IT-BPM sector by accepting the hybrid arrangement as the new business model of most RBEs.

The resolution allows those that have already completed their registration transfer with the BOI to adopt a 100% WFH arrangement without losing incentives such as income tax holidays and a 5% tax on gross income earned. 

The DOF said the FIRB, in its Resolution No. 033-22, cited the need to extend the initial December 31, 2022 deadline, as only about 40% of the affected RBEs have successfully submitted the requirements on time. 

Around 640 RBEs have yet to submit their requirements for the transfer, according to the DOF.

Finance Secretary and FIRB chairperson Benjamin Diokno reaffirmed the FIRB’s continued support for IT-BPM enterprises by recognizing the need to adopt flexible work arrangements without adverse effects on the tax incentives they receive.

"We fully support our stakeholders in the IT-BPM sector and grant their request for more time to complete their transfer to the BOI," said Diokno.

"The FIRB is committed to providing any form of assistance to effectively and expeditiously carry out the transfer of the concerned IT-BPM enterprises," he added. —VBL, GMA Integrated News