ONLY 41% of business process outsourcing (BPO) companies met the deadline to apply for the transfer of their registration to the Board of Investments (BoI), a senior legislator said.
Albay Rep. Jose Ma. Clemente S. Salceda, the House ways and means committee chairman, said 640 companies have yet to file for a registration transfer with the Philippine Economic Zone Authority (PEZA), putting these companies at risk of losing the ability to offer work-from-home (WFH) arrangements to their employees.
He called for an extension of the filling deadline, saying BPOs that cannot offer WFH, which is capped if they operate out of a PEZA facility, will become uncompetitive in hiring, posing a risk to the industry’s prospects.
The BoI does not restrict the proportion of BPO workers allowed to perform remote work, which makes BoI-registered companies eligible to keep their tax incentives, unlike PEZA-registered ones, which must perform a certain amount of work onsite within economic zones.
Mr. Salceda called for a new deadline of Jan. 31 for the BoI switch.
Dec. 31 was the original deadline for PEZA to endorse transfer applications to the BoI. In turn, PEZA had imposed a Dec. 16 deadline for BPOs to apply for a PEZA endorsement.
“According to the (PEZA), only about 41% of them made it… on time. Some 640 firms have not yet submitted their requirements. That means, they have to stop work-from-home and return fully onsite, or they will lose their tax incentives,” Mr. Salceda said in a statement on Wednesday.
He added that PEZA has only processed 70% of endorsement applications.
Mr. Salceda added that if the deadline extension is not granted, he requested that PEZA submit all endorsements applied for to the BoI by year’s end.
“It is vital that the companies that have completed their applications for transfer start 2023 on a solid footing of tax certainty,” he said.
The Fiscal Incentives Review Board issued Resolution 026-22 allowing BPOs registered for incentives to change their registration to the BoI from PEZA until Dec. 31.
Registered business enterprises must conduct operations within economic zones to receive fiscal incentives under the CREATE act.
Mr. Salceda said that “the work-from-home option is also a significant draw in for companies who may want to recruit from a more diverse talent pool. They can recruit from anywhere in the country. And recruitment in the BPO sector is tough. Retention costs are significant,” he said. — Beatriz Marie D. Cruz
