PEZA is now open to allowing IT and BPOs located within ecozones an extension of their work from home arrangements of up to 30 percent until March 2023.
The ruckus that began in the previous administration requiring BPO companies and other IT locators in ecozones to have 100 percent onsite work was resolved when the Philippine Economic Zone Authority agreed to extend WFH up to 30 percent of their operations until March 2023.
The PEZA said its management is prepared to extend the Letters of Authority allowing the 30 percent WFH limit to IT locators registered with it prior to the CREATE law. (CREATE stands for Corporate Income Tax and Incentives Reform Act effective on April 11.2021 which reduced the corporate income tax from 30 percent to 25 percent beginning July 1, 2020).
These were the locators that were initially issued work-from-home LOAs in March 2022 with a validity period up to September 12 this year.
PEZA said the matter is up for discussion in its upcoming board meeting.
With the pronouncement of President Marcos Jr. to extend the national state of calamity until end-2022, PEZA expects the Cabinet-level Fiscal Incentives Review Board (FIRB) to issue a supporting resolution allowing the extension of 30 percent work-from-home limit for the same period.
The PEZA said the extension of the 30 percent work-from-home limit until March 2023 is in support of the IBPAP’s (or the IT and Business Process Association of the Philippines) request for a longer work-from-home authority so that the locators can plan better for the work schedule of their employees vis-a-vis increasing market demands.
PEZA is working closely with the Board of Investments (BOI) and FIRB on how to institutionalize the hybrid workplace, particularly for ecozone export-oriented locators that are required to operate in their designated IT centers.
“We feel that the government can be more proactive and responsive to the needs of ecozone locators if it will extend to them the WFH privileges under a hybrid work set-up,” PEZA said.
“This solution will not only put PEZA on equal footing with the BOI since both agencies offer the same incentives to their registered business enterprises (whether domestic or export-market oriented) but will also make the Philippines apace with India and other forward-thinking economies that have adopted WFH and hybrid work as the new normal,” it added.
Why WFH was almost scuttled
Last March 28, then Trade Secretary Ramon Lopez explained that because of the pandemic and need to support the recovery of RBEs, FIRB—as a form of temporary measure under CREATE Act, provided last year an exception to allow up to 90 percent work-from-home (WFH) arrangement and even extended it until 31 March 2022.”
“Given the significant reduction in COVID-19 cases and the general economic recovery strategy to enjoin all businesses to do more onsite operations to encourage the revival of the other sectors, particularly the micro, small, and medium-sized enterprises (MSMEs) around offices, there has been a decision not to extend the 90-10 WFH arrangement. This rule applies only to business enterprises registered with PEZA pursuant to the PEZA law,” he said.
Thus, companies registered with PEZA are required to resume onsite operations. Meanwhile, companies operating outside the ecozones have more flexibility as to the degree of WFH arrangements that is suitable to their operations.
If PEZA-registered companies intend to adopt a hybrid WFH arrangement, especially if justified by the nature of their operations, like service-exports, the same can only be adopted by revising the PEZA Law and CREATE Act.
In the meantime, PEZA-registered companies will have to abide by the applicable regulations in the definition of “export enterprise” under the PEZA Law and the CREATE Act.
On the 50/50 WFH arrangement under the Strategic Investment Priority Plan (SIPP), there is no such arrangement in the CREATE Act. Thus, the SIPP cannot allow what is not allowed under the Law.
Tags: #PEZA, #IT-BPOlocators, #ecozones, #WFH, #CREATEAct