FIRB Issues Guidelines for the Transfer of Registered IT-BPM Enterprises to BOI

On 16 January 2023, the Fiscal Incentives Review Board (“FIRB”) through Administrative Order No. 001-2023 issued supplemental guidelines to operationalize FIRB Resolution No. 026-22 and FIRB Resolution No. 033-22, which provide for the registration of existing Registered Business Enterprises (“RBEs”) in the Information Technology – Business Process Management (“IT-BPM”) sector with the BOI allowing them to adopt up to 100% work-from-home (“WFH”) arrangements without adversely affecting the enjoyment of their fiscal and non-fiscal incentives.

The FIRB clarified that registration with the BOI shall only be available to the following RBEs in the IT-BPM sector:

1. Those availing of the Transitory Provisions under Section 311 of the National Internal Revenue Code (“NIRC”) of 1997, as amended by the Corporate Recovery and Tax Incentives for Enterprises (“CREATE”) Act; or,
2. Those registered and with approved incentives under the CREATE Act on or before 14 September 2022.

Eligible RBEs in the IT-BPM sector shall have until 31 January 2023 to exercise the option to register with the BOI. The registration with the BOI shall be on a per project or activity basis and not per enterprise. Eligible RBEs that decide not to exercise their option by 31 January 2023, and all RBEs registered with the concerned IPAs starting 15 September 2022 onwards shall not be allowed to register with BOI and shall be covered by Section 309 of the NIRC of 1997, as amended.

The RBEs registered with the BOI (“Covered RBEs”) shall be allowed to adopt up to 100% WFH arrangements without adversely affecting the enjoyment of their fiscal and non-fiscal incentives upon issuance of the BOI Certificate of Registration (“BOI-COR”). The BOI-COR shall be used as basis for the entitlement to the remaining fiscal incentives of the covered RBE as indicated therein while the original COR issued by the concerned Investment Promotion Agency (“IPA”) shall be the basis for the entitlement to non-fiscal incentives as stated therein and its corresponding Terms and Conditions or Registration Agreement and/or Supplemental Agreement.

Following the issuance of the BOI-COR, Covered RBEs must apply for Certificate of Entitlement to Income Tax Incentives (“CETI”) with the concerned IPA in accordance with Rule 8 of the CREATE Act Implementing Rules and Regulations (“IRR”). Once the concerned IPA has verified the covered RBE’s entitlement to tax incentives, it shall issue the CETI in favor of the covered RBE. The CETI shall then be attached to the ITR of the RBE for purposes of filing with the BIR. The CETI issued by the concerned IPA shall be considered valid and sufficient proof of compliance with the terms and conditions indicated in the BOI-COR and the RBE’s entitlement to tax incentives.

The FIRB also indicated that the Certificate of Authority to Import (“CAI”) and Value-Added Tax (“VAT”) Zero-Rating Certification shall still be issued by the concerned IPA (ex. Philippine Economic Zone Authority or “PEZA”). Specifically, existing control procedures, existing process flows, and the documentary requirements of the IPAs and the Bureau of Customs shall be observed as the CAI is yet to be fully implemented. Once the CAI is fully implemented, the covered RBE shall apply for a CAI with the concerned IPA in accordance with Rule 9 of the CREATE Act IRR, as amended. As regards the VAT Zero-Rating Certification, RBEs are to apply for it with the concerned IPA following BIR Revenue Memorandum Circular No. 36-2022.

To this end, all certifications for the availment of incentives provided in the BOI-COR that the concerned IPA will issue shall contain the following annotation:

“This [CETI/CAI/VAT 0% certification] is issued pursuant to FIRB Resolution No. 026-22, as extended under FIRB Resolution No. 033-22, in relation to Board of Investments (BOI) Certificate of Registration No. TR-xxx dated xxx for purposes of allowing this registered project or activity to adopt up to 100% WFH arrangement and [concerned IPA] COR No. dated xxx as part of [concerned IPA] authority to monitor the compliance with the terms and conditions and administer the availment of remaining incentives of the aforementioned RBE.”

Lastly, the FIRB explained that Covered RBEs shall secure a Tax Exemption Indorsement (“TEI”) from the Department of Finance – Revenue Office as proof of entitlement to import VAT and/or customs duties exemption and to facilitate the free movement of capital equipment and other assets within and outside the economic zones and freeport zones. Existing goods will be covered by a blanket TEI per project, covering existing goods that were imported as of 31 January 2023. While for importations starting 1 February 2023, these shall be processed per project per shipment.
The full text of FIRB Administrative Order No. 001-2023 as cited by PEZA Memorandum Circular No. 2023-004 can be found here.