Philippines seeks to address incentive issues in WFH models

Managing body says it recognises how remote is the new HR model for the sector

Philippines seeks to address incentive issues in WFH models

The Philippine Fiscal Incentives Review Board (FIRB) has allowed Information Technology and Business Processing Management (IT-BPM) companies to be transferred to the Board of Investments (BOI). This is in an attempt to resolve the sector's tax incentives issues confounded by remote working arrangements.

In the Philippines, the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act only entitles registered business enterprises to tax perks if they are conducting activities within the boundaries of the ‘ecozone’. However, the pandemic has prompted the FIRB to allow IT-BPM enterprises to carry out WFH arrangements for employees without losing their fiscal incentives.

Read more: Philippine senator: Remote work should stay

This scheme was only intended to be in place until March 31 this year – however, a series of extensions urged by lawmakers permitted IT-BPM firms to implement the policy until September 2022.

"We recognise that the work-from-home arrangement is the new business model of most of the registered business enterprises (RBEs). Hence, it is high time to resolve this issue faced by IT-BPM enterprises," said Finance Secretary and FIRB Chairperson Benjamin Diokno.

Read more: New Philippines bill wants ecozone firms to adopt WFH

In the meantime, FIRB said it’ll be extending these policies for the IT-BPM sector until December 31, 2022, following the uncertainty in the region.  

"We expect the cooperation and utmost commitment of all concerned IPAs and RBEs on this matter as we carry out the transition and conclusively address the enduring WFH problem," added Diokno.

Lessons for HR

The sector's continuous pressure on the government to iron out their fiscal incentives amid WFH arrangements highlights the importance of remote models in Asia. The extension of this policy underscores how remote work has been, and will continue to be, essential in maintaining productivity.

HR leaders should note how these businesses decided to drop the traditional way of working in the office and go remote, in exchange of potentially losing tax incentives, just so they could generate more jobs, retain their employees, and take care of workers' wellbeing.

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