BIR inspects call center compliance with return to site work order

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MANILA, Philippines — The Bureau of Internal Revenue (BIR) has formed a task force that has begun verifying compliance with the 100% return-to-work rule among business process outsourcing (BPO) companies that have decided to retain their tax benefits.

Deputy Revenue Commissioner Arnel Guballa recently reported to Finance Secretary Carlos Dominguez III that the BIR had already issued mission orders to carry out eye inspections at the facilities of BPO companies registered with Investment Promotion Agencies (IPAs). ).

The BIR had been tasked with collecting monthly income tax from BPOs whose workforce would not meet the full capacity requirement from April.

The Interagency Tax Incentives Review Board (FIRB), which oversees the granting of tax breaks to qualifying businesses, previously ruled that working from home among BPO businesses operating inside economic zones was only a temporary measure amid the closures imposed over the past two years to contain the spread of COVID-19.

Thus, BPO players can only keep their tax incentives intact if all their employees return to the workplace.

FIRB Secretariat Chief and Deputy Finance Secretary Juvy Danofrata had noted that under Section 309 of the Tax Code, as amended by the Business Recovery and Business Tax Incentives Act ( CREATE), projects and activities registered by the API must be conducted within the geographic boundaries of the ecozone or freeport to be eligible for tax incentives.

Last March, Finance Secretary Carlos Dominguez III, who chairs the FIRB, said it would ultimately be up to BPO companies if they wanted their current work-from-home operations to continue, but not retain their tax incentives.

“No one is banning them or encroaching on their managerial prerogative to continue implementing their work-from-home setups. However, they must give up the tax incentives they currently enjoy because the law is clear on this,” said Dominguez.

Last year, the FIRB allowed the BPO industry to continue its work-from-home operations, without touching its tax incentives, until March 31 this year. But from April 1, BPOs will lose their tax benefits, as required by the Tax Code, if their staff do not return to work on site.

The FIRB had rejected the BPO industry’s call to expand the work-from-home setup while continuing to receive tax exemptions.

For Dominguez, “it’s also unfair to other businesses outside the ecozones that pay regular taxes.”

President Rodrigo Duterte’s economic team had been pushing to place the entire country under the lowest alert level 1, if not the proposed “zero” alert level dismantling all pandemic restrictions, to reopen more sectors. productive and protect the national economy from the indirect effects and fallout of Vladimir Putin’s mission to destroy Ukraine.

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