REVENUE MEMORANDUM CIRCULAR NO. 18-2023 issued on February 6, 2023 publishes the full text of Fiscal Incentives Review Board (FIRB) Administrative Order No. 001-2023 prescribing the supplemental guidelines to facilitate and allow a seamless and orderly operationalization of registration of existing Registered Business Enterprises (RBEs) in the Information Technology — Business Process Management (IT-BPM) sector with the Board of Investments (BOI) for purposes of adopting up to 100% work-from-home (WFH) arrangements as prescribed under FIRB Resolution No. 026-22, DTI MC No. 22-19 and FIRB Resolution No. 033-22.
The registration with BOI pursuant to FIRB Resolution Nos. 026-22 and 033-22 shall only be available to the following RBEs in the IT-BPM sector:
a. 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,
b. Those registered and with approved incentives under the CREATE Act on or before
September 14, 2022.
RBEs in the IT-BPM sector shall have until January 31, 2023 to exercise the option to register with the BOI. For this purpose, they shall file their request with the concerned Investment Promotion Agencies (IPAs) using the prescribed Request to Register with BOI Form (Annex A of DTI MC No. 22-19). The registration with BOI shall be on a per project or activity basis and not per enterprise.
IT-BPM RBEs that are eligible to register with BOI under (a) and (b) above but have decided not to exercise their option by January 31, 2023, and all RBEs registered with the concerned IPAs starting September 15, 2022 onwards shall not be allowed to register with BOI under FIRB Resolution Nos. 026-22 and 033-22 and shall be covered by Section 309 of the NIRC of 1997, as amended.
RBEs of the IT-BPM sector, as used herein, refer only to those providing services in line with the transitional Strategic Investment Priority Plan (SIPP). The RBEs registered with the BOI pursuant to FIRB Resolution Nos. 026-22 and 033- 22 and DTI MC No. 22-19 (hereinafter referred to as “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) on the date indicated therein.
The covered RBEs shall be allowed to avail of all their remaining fiscal and non-fiscal
incentives, and the registration with BOI shall not adversely affect their existing fiscal and nonfiscal incentives.
The BOI shall issue a separate COR for each registered project or activity duly endorsed by the concerned IPA upon payment of the applicable fee, provided that the covered RBE may already adopt 100% WFH arrangement from the date indicated in the Official
Receipt representing the payment of the applicable fee in the amount of ₱ 2,250.00, pending the issuance of the BOI-COR. The BOI-COR shall state, among others, the registered project or activity of the covered RBE, the remaining fiscal incentives, and all necessary information as required in Rule 7, Section 2 of the CREATE Act Implementing Rules and Regulations (IRR), as amended. In addition, and for ease of cross-referencing, the BOI-COR shall include an annotation stating, among others, the following:
a. Reference to FIRB Resolution No. 026-22, as extended under FIRB Resolution No.
033-22;
b. Registration number of the COR issued by the concerned IPA and date of its
issuance;
c. The date of registration of the RBE with BOI, which shall be the date indicated in
the Official Receipt of payment of the applicable fee amounting to ₱ 2,250.00; and
d. The unique control number indicated in the original COR issued by the concerned
IPA, if applicable.
The covered RBE must, likewise, submit to the concerned IPA the original COR issued by the said concerned IPA for annotation of the abovementioned information. The covered RBE must comply with the terms and conditions of both CORs to avail of both its fiscal and non-fiscal incentives.
The IPAs, BIR and Bureau of Customs (BOC) shall use and refer to the (1) BOI-COR as the basis for the entitlement to the remaining fiscal incentives of the covered RBE as indicated therein and (2) original COR issued by the concerned IPA as the basis for the entitlement to non-fiscal incentives as stated therein and its corresponding Terms andConditions or Registration Agreement and/or Supplemental Agreement.
Covered RBEs that have been issued a BOI-COR shall apply for a Certificate of Entitlement to Tax Incentives (CETI) before filing their Income Tax Return (ITR) with the concerned IPA in accordance with Rule 8 of the CREATE Act IRR, as amended.
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.
As the Certificate of Authority to Import (CAI) is yet to be fully implemented, existing control procedures, existing process flows, and the documentary requirements of the IPAs and the BOC shall be observed.
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. The concerned IPA may either approve or disapprove the application for a CAI of the RBE. If issued, the concerned IPA shall provide viewing access to the concerned BOC Office with regard to the corresponding CAI. In all cases, any action on the application for a CAI shall be communicated by the concerned IPA to the covered RBE.
The CAI issued by the concerned IPA shall be valid and be considered by the BIR and BOC as proof of entitlement to tax and/or duty-free importation, notwithstanding the BOICOR. The CAI, or the related admission permit or import permit, or any other equivalent document issued by the concerned IPA while the CAI is still being rolled-out, shall be used for
importations.
For existing capital equipment and other assets that are used in the registered project
or activity of the covered RBE, which were imported on or before January 31, 2023, these shall be covered by a Tax Exemption Indorsement (TEI) issued by the Department of Finance’s Revenue Office (DOF-RO). The step-by-step guidance in securing the TEI from the DOF-RO is provided in Annex A of the Order. The Value-Added Tax (VAT) zero-rating certification shall be applied with the concerned IPA following BIR Revenue Memorandum Circular (RMC) No. 36-2022. For counterchecking purposes, the BIR shall rely on the master list and VAT zero rate indorsement of covered RBEs, which the concerned IPA shall submit to BIR.
All general and specific terms and conditions imposed upon the registration of the project and availment of incentives must, nevertheless, be complied with by the covered RBE, with the exception of exclusively conducting or operating the registered project or activity within the geographical boundaries of the economic zone or freeport zone being administered by the concerned IPA.
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. TRxxx 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.”
The monitoring of the covered RBEs’ compliance with the terms and conditions of their registration, reportorial requirements, and other compliance requirements under the CREATE Act and its IRR, as amended, and other applicable laws, rules, and regulations shall remain with the concerned IPA. The concerned IPA shall continue to submit regularly, or when requested, the following reports:
a. Master list of all RBEs;
b. Monitoring of performance commitments for approved project/s with investment
capital of ₱ 1,000,000,000.00 or below;
c. Monitoring of performance commitments for approved project/s with investment
capital of more than ₱ 1,000,000,000.00;
d. Consolidated Annual Tax Incentives Report (ATIR) and Annual Benefits Report
(ABR); and
e. Other reports that may be required by the FIRB Secretariat, pursuant to FIRB
Resolution No. 022-22.
Findings and results gathered by the concerned IPA, if any, in the performance of its monitoring functions shall be endorsed by the concerned IPA to BOI. BOI shall forward the aforementioned reports to the FIRB, BIR, BOC, FIRB Secretariat, and other relevant government agencies, as applicable. For this purpose, the BOI-issued COR number shall be used as a common identifier for all covered RBEs.
Covered RBEs currently availing of the 5% tax on Gross Income Earned (GIE) or the Special Corporate Income Tax (SCIT) incentive, in lieu of all national and local taxes, shall be allowed to avail of the same continuously. Existing rules on the allocation of the 5% SCIT among the National Government, Local Government Units (LGUs), and the IPAs under special laws governing the latter shall be observed.
For covered RBEs governed by special laws, which do not provide an allocation, the 5% GIE or SCIT based on the gross income shall be paid and remitted as follows:
a. Three percent (3%) to the National Government, to be remitted to the BIR using
the electronic system for filing and payment of taxes; and
b. Two percent (2%) to be directly remitted by the covered RBE to the treasurer’s
office of the municipality or city where the covered RBE is located.
No part of the GIE or SCIT shall be remitted to the LGU where an employee under a WFH arrangement is located unless the LGU where an employee under a WFH arrangement is located is the same as that where the covered RBE is located.
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, the covered RBE shall secure a TEI from the DOF-RO. The step-by-step guidance in securing the TEI for new importations is provided in Annex A. Existing goods will be covered by a blanket TEI per project, covering existing goods that were imported as of January 31, 2023. While for importations starting February 1, 2023, these shall be processed per project per shipment. Once the TEI has been secured for existing equipment and other assets, no bond requirement, in whatever form, shall be imposed for the transfer or movement of equipment and other assets, such as laptops, desktops, and other equipment, outside the economic zones or freeport zones. Provided, that the number of equipment of the covered RBE outside the economic zone or freeport zone shall not exceed the number of its employees under a WFH arrangement. Upon approval of the concerned IPA, additional laptops/other equipment may be allowed if reasonably needed to perform the registered project or activity.
For new capital equipment and other assets that will be imported per project starting February 1, 2023, such assets must be covered by a TEI, as issued by the DOF-RO. The stepby step guidance in securing the TEI for new importations is provided in Annex A. Provided, further, that the covered RBE shall, within thirty (30) days from the issuance of BOI-COR, submit a report to the concerned IPA containing the following:
a. List of all equipment and other assets permanently situated inside the economic or
freeport zones, and those assets brought out of the economic or freeport zones,
including the quantity of laptops, desktops, furniture and fixtures, and other assets,
whether local or imported;
b. Acquisition cost, book value, and year of acquisition of the equipment and/or other
assets; and
c.Total number of employees and number of employees under WFH arrangement.
Provided below are the timelines and the supporting documents that will authorize the free movement of goods of covered RBEs within and outside the economic zones and/or freeport zones:
| Date of importation of capital equipment and other assets | Applicability of the TEI | Covered period | Surety bond requirement | Documentary proof of authority to move the goods while TEI is still pending |
|---|---|---|---|---|
| Imported on or before January 31, 2023 (i.e., assets deemed as “existing”) | TEI must be secured for all imported goods that availed of VAT exemption and/or customs duty exemption. The TEI pertaining to existing goods will be secured on a per project basis. | January 1, 2023 to January 31, 2023 | January 1, 2023 to January 31, 2023 | BOI-COR or BOI Official Receipt (only if available) and the provisional goods declaration, together with the notarized undertaking, in lieu of posting any type of bond. |
| February 1, 2023 to March 31, 2023 | BOI-COR or BOI Official Receipt and the provisional goods declaration, together with the notarized undertaking, in lieu of posting any type of bond. | |||
| April 1, 2023 onwards | Surety bond is needed as the transition period has already lapsed | BOI-COR or BOI Official Receipt and duly filed and approved surety bond. The subject goods can be released through a provisional goods declaration, subject to the BOC’s existing rules and regulations. | ||
| Imported as of February 1, 2023 (i.e., assets deemed as “new”) | TEI must be secured for all imported goods that availed of VAT exemption and/or customs duty exemption. The TEI pertaining to new goods will be secured on a per shipment per project basis | February 1, 2023 onwards | No requirement (i.e., goods shall remain with the concerned BOC Office and shall not be released while the TEI is still pending) | No alternative document. The duly processed TEI, Statement of Settlement of Duties and Taxes (SSDT) and consumption entry are all required prior to the release of the goods. |
In essence, all imported goods of the covered RBE that were granted exemptions covering import VAT and/or customs duties will all be covered by a duly processed TEI, statement of settlement of duties and taxes, and duly processed consumption entry. For purposes of determining the bondable amount, the amount of customs duties and/or VAT shall be based on the net book value of imported assets that have availed of the corresponding exemption on customs duties and/or VAT. If the net book value is zero, the valuation methods under Section H will take precedence.
With regard to the movement of locally purchased capital equipment and other assets that were subjected to VAT zero-rating, the IPA-issued VAT zero-rating certificate shouldsuffice as proof of its VAT incentive, in accordance with existing BIR rules and regulations. However, the sale, transfer, donation, and disposal of locally purchased assets shall be governed by Section H of this Administrative Order.
The remaining period of fiscal and non-fiscal incentives of covered RBEs shall be availed from the concerned IPA. After the expiration of the fiscal incentives, the covered RBE shall not be allowed to register anew the same project or activity to avail of fiscal incentives unless there is a new project or activity or a qualified expansion project under the SIPP. Upon completion of registration of projects or activities with the BOI, the BOI shall submit to the BIR, BOC, and FIRB Secretariat a master list of all covered RBEs per IPA. The master list shall include the following information:
a. RBE details
Control number;
Date of filing the request to register with BOI;
Enterprise name;
Office address;
Tax Identification Number (TIN);
BIR RDO code;
Ownership details;
Contact details of an authorized representative to the IPA, including the: name,
position/designation, telephone or mobile number, and email address; and
TIN of the authorized representative.
b. IPA registration details
IPA registration number;
IPA registration date (DD/MM/YYYY);
Registered activity;
Registered capacity;
Type of project (indicate if new or expansion);
Market orientation (export or domestic);
Export requirement, if applicable;
Five (5) digit Philippine Standard Industrial Classification (PSIC) code and
description based on the 2019 PSIC;
Project/plant address, which shall include the: economic zone, building name,
unit no., street no., barangay, city/municipality, province, region;
Project cost (in Philippine Pesos); and
Approved start of commercial operations (DD/MM/YYYY).
c. Remaining fiscal incentives details
The start and end date (DD/MM/YYYY) of the following:
Income tax holiday;
5% tax on gross income earned incentive;
Duty exemption;
VAT exemption;
VAT zero-rating; and
Other remarks.
Employees under WFH arrangements shall not be made liable to pay Local Business Taxes, Mayor’s or Business Permit Fees, and Occupational Permit Fees by the LGU where they render service in a WFH arrangement pursuant to Department of Finance Local Finance Circular No. 001-2022 or the Guidelines on the Imposition of Local Business Tax, Fees, and Charges to Service Contractors.
Sale or transfer of equipment and other assets made to other non-privileged persons or entities shall be subject to the payment of duties and/or taxes based on the following:
a. Net book value; or
b. Depreciated value using the straight-line depreciation method, with depreciation
capped at 10% per year, but in no case shall it exceed 90%. Effectively, this
assumes that the related equipment and other assets have a residual value of 10%,
once fully depreciated.
The value to be used shall be whichever is higher between A and B. Transfer of equipment and other assets by way of donation to non-privileged persons or entities shall be subject to the payment of duties and/or taxes based on the following:
a. Net book value; or
b. Depreciated value using the straight-line depreciation method, with depreciation
cappe at 10% per year, but in no case shall it exceed 90%. Effectively, this
assumes that the related equipment and other assets have a residual value of 10%,
once fully depreciated.
The value to be used shall be whichever is higher between A and B. If the asset shall be destroyed or incinerated, the reference values per BOC Memorandum dated April 7, 2017, numbered 2017-04-012, shall be used for the BOC’s valuation.
In all three cases above, the imposition of customs duties and/or import VAT shall be applied to all imported goods, which have been initially exempted from customs duties and/or VAT, per original importation.
For locally purchased assets, which were initially brought into the economic zone or freeport by availing of VAT zero-rating, the related VAT shall be imposed upon its sale, transfer, donation, or disposal.
The receiving BOC Office shall check the completeness of the documentary requirements. The Office shall only be allowed to process and approve applications with sufficient supporting documents. In case of insufficient supporting documents, import VAT and/or customs duties shall be assessed, as applicable.
Beginning January 1, 2023, only covered RBEs that have successfully registered with the BOI on or before January 31, 2023, as evidenced by the BOI-COR or the BOI Official Receipt representing the applicable fee, shall be allowed to implement 100% WFH from January 1 to 31, 2023. Notably, RBEs who did not register with the BOI shall not be allowed to implement any WFH arrangement starting January 1, 2023.