PEZA updates saying it now allows 30% WFH arrangement

Philippines – Companies registered with the Philippine Economic Zone Authority (PEZA) can apply for a hybrid work arrangement that permits 30 percent of their employees to work from home (WFH) until September this year.

PEZA Director General Charito Plaza announced on Friday in a statement that the agency is now accepting applications from information technology-business process outsourcing (IT-BPO) firms and registered business enterprises (RBE) that will be unable to return to work after April 1.

She stated that they can ask PEZA for a letter of authorization that includes necessary conditions. IT-BPO firms and RBEs interested in taking advantage of this work arrangement must apply separately to the investment promotion agency.

Plaza stated that this 70:30 hybrid work setup will only be in place until Sept. 12, 2022, when President Rodrigo Duterte declares the state of calamity to be over.

PEZA’s WFH scheme for its registered IT-BPOs and RBEs, she said, was conceptualized even before Republic Act 11165, or the “Telecommuting Act,” was passed on Dec. 20, 2018.

“PEZA therefore is just restoring back to the regular ratio of not more than 30-percent domestic sales allowance and WFH work ratio. PEZA is giving the institutionalization of the hybrid work scheme to include DoLE’s protection, safety and security of tenure of workers engaged in the virtual or WFH schemes to the next administration,” Plaza noted, referring to the Department of Labor and Employment.

For her part, PEZA Deputy Director General for Policy and Planning Tereso Panga said the provisions of the Corporate Recovery and Tax Incentives for Enterprises Act do not prevent PEZA-registered RBEs and IT-BPOs from doing remote work or performing a portion of their activity outside the economic zones.

“As long as our ecozone locators doing hybrid work are complying with the minimum 70-percent export sales and minimum 70 percent on-site report by their workers, they are [and should be] entitled to enjoy our tax incentives,” he said.

Commenting on this PEZA statement, Trade Secretary Ramon Lopez said: “The 70/30 export to domestic revenues as definition of export enterprises can also be applied on [onsite/WFH] arrangement. Registered Enterprises who keep to this will continue to enjoy incentives.”

However, he cautioned that the Bureau of Internal Revenue may later question whether the incentives should apply to all project’s earnings or just those linked with the 70 percent done onsite.

Meanwhile, Plaza refuted reports that several IT-BPOs and RBEs will leave the agency if the hybrid work model in the economic zones cannot be maintained.

“There is no truth that our registered IT-BPOs and RBEs have left our ecozones. Despite having the same fiscal incentives with the BoI (Board of Investments), it is not easy to cancel an operation. We also have a protocol that prohibits an enterprise for double registration.”

PEZA reported that as of December of last year, it had 1,274 IT locator companies working in 297 IT centers/parks, employing 1.017 million people and generating $15.797 billion in exports.