IBPAP: LOA issued by Peza is legal, fair

The Information Technology and Business Process Association of the Philippines (IBPAP) has reiterated that member firms are allowed to implement work-from-home (WFH) for up to 30 percent until Sept. 12 or the end of the of the declaration of state of calamity.

This is according to the Letter of Authority (LOA) issued to IBPAP member companies in an agreement with the Philippine Economic Zone Authority (Peza).

IBPAP issued this statement following the creation of a task force by the Bureau of Internal Revenue to monitor the compliance of the information technology-business process management firms (IT-BPM) with the return to work order.

“The IBPAP stands by the validity of the LOAs issued by Peza to our member companies, as well as the member companies of our six partner associations,” said Jack Madrid, president and chief executive officer of IBPAP in a statement sent Friday, May 20, 2022.

“The support that the Philippine Economic Zone Authority extended by allowing 30 percent WFH arrangement through a LOA is a legal and fair measure that IT-BPM registered business enterprises (RBEs) are grateful for,” he added.

BIR deputy commissioner Arnel Guballa said the agency has issued mission orders allowing the conduct of ocular inspections of the place of business of RBEs, to determine if they are complying with the conditions for the grant of incentives under the Corporate Recovery and Tax Incentives for Enterprises Act, particularly those relating to on-site work rules.

According to Madrid, “the LOA provides necessary relief to address the cost and competitiveness pressures that the IT-BPM industry has been under since the pandemic began. Moreover, it gives affected organizations more flexibility and runway time to transition and set up their offices for returning employees as they strengthen their immediate-term strategies amid continuing global shifts.”

On April 8, Peza said registered IT-BPM and RBEs that cannot immediately return to office even after April 1 can request an LOA from Peza with the needed requirements.

This 70-30 ratio hybrid work setup is valid until Sept. 12 only or the end of state of (Covid-19) calamity declaration by President Rodrigo Duterte.

Peza Chief Charito Plaza noted that “Peza’s WFH scheme for its registered IT-BPM and RBEs has been conceptualized even before the passage of the Telecommuting Act 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 the Labor Department’s protection, safety and security of tenure of workers engaged in the virtual or WFH schemes to the next administration,” Plaza said.

Peza has currently issued 444 LOAs to registered IT-BPMs and RBEs.

Peza deputy director general for Policy and Planning Tereso Panga also made it clear that the 30 percent work from home is a permissible activity under Peza, Create and Telecommuting laws.

“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.

Madrid said the expiration of the 90 percent WFH arrangement had posed great challenges for many RBEs of the IT-BPM industry. These include the complex process on the logistics of mobilizing employees and equipment to onsite operations while managing employee satisfaction and mitigating widespread attrition.

“In the last two years, the IT-BPM industry successfully navigated the pandemic, recording growth in revenues and jobs through the support of Peza, Fiscal Incentives Review Board, and other government partners. We continue to count on their support to uphold the validity of the LOAs in order to achieve our jobs and revenue targets,” said Madrid.


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