SUSPENSION OF INCOME TAX INCENTIVES GRANTED TO REGISTERED BUSINESS ENTERPRISES (RBEs) FOR VIOLATING THE WORK-FROM-HOME(WFH) THRESHOLD PRESCRIBED BY THE FISCAL INCENTIVES REVIEW BOARD

SUSPENSION OF INCOME TAX INCENTIVES GRANTED TO REGISTERED BUSINESS ENTERPRISES (RBEs)  FOR VIOLATING THE WORK-FROM-HOME(WFH) THRESHOLD PRESCRIBED BY THE FISCAL INCENTIVES REVIEW BOARD (Revenue Memorandum Circular No. 23-2022, March 9, 2022)

• Fiscal Incentives Review Board (FIRB) is a government agency that oversees the administration and grant of tax incentives by Investment Promotion Agencies (IPA) pursuant to CREATE.
• FIRB has issued Resolution Nos. 19-21 and 23-21 which allows RBEs of the Information Technology – Business Process Management (IT-BPM) sector to continue implementing work-from-home arrangements amidst COVID-19 pandemic without adversely affecting their fiscal incentives until March 31, 2022 subject to all of the following conditions:
  1. The number of employees under a WFH arrangement shall not exceed ninety percent (90%) of the total workforce of the RBE; Provided, that beginning January 1, 2022, the ceiling shall be reduced to seventy-five percent (75%) for the remainder of the period; Provided further, that if the State of Calamity due to COVID-19 is extended to any date beyond January 1, 2022, the ceiling shall be maintained at ninety percent (90%) until March 31, 2022;
     • Total workforce includes those who are directly or indirectly engaged in the registeredproject or activity. However, those under third-party contractors are not included.
  2. The number of computer laptops/other equipment of the RBE outside the ecozone should not exceed the number of its employees who are under WFH arrangement;
  3. Bonds shall be posted for all equipment (e.g. computer desktops and laptops) deployed by the RBE to their employees’ homes, to ensure payment of taxes and duties if any such equipment is not returned to the site of the RBE after the WFH arrangement;
  4. Revenues from export as required shall be maintained regardless of the allowed ratio of employees who will work from home. Provided that the current number of employees shall not be reduced regardless if the majority of their employees are working from home; and
  5. The RBE shall comply with the reportorial requirements and site inspection, as may be required by the FIRB or lPA.
• Non-compliance with all conditions shall be meted with the suspension of the income tax incentive on the revenue corresponding to the months of non-compliance
• RBE shall pay the regular income tax of 20% or 25% based on the net taxable income for the corresponding months with violation
  1. For RBEs with no existing transactions subject to regular income tax rate;
  2. BIR Form 1702-MX shall be used for the voluntary payment of the income tax due. RBEs with existing transactions subject to regular income tax rate, payment shall be made through BIR Form 0605 and bank-validated copy shall be attached to AITR;

In the absence of voluntary payment or insufficiency, RBE shall be subjected to an audit pursuant to Letter of Authority (LOA).