REVENUE MEMORANDUM CIRCULAR NO. 45-2023 issued on April 19, 2023 publishes the full text of Fiscal Incentives Review Board (FIRB) Advisory No. 004-2023 clarifying the issues covering the transfer of registration with the Board of Investments (BOI) of Registered Business
Enterprises (RBEs) in the Information Technology – Business Process Management (IT-BPM) Sector.
             All registration of new or expansion projects from September 15, 2022 onwards shall be with the BOI if the enterprises wish to avail of the 100% work-from-home (WFH) arrangements. Prior to this period, IT-BPM projects may register with the BOI based on FIRB Resolution Nos. 26-2022 and 33-2022.
                IT-BPM RBEs that implemented WFH arrangements in 2023 but failed to register with
the BOI by January 31, 2023 shall be subject to a penalty on the Regular Corporate Income Tax (RCIT) as specified in FIRB Advisory No. 003-2023, and Bureau of Internal Revenue (BIR) Revenue Memorandum Circular Nos. 23-2022, 39-2022, and 120-2022. This, however, is without prejudice to the suspension or withdrawal of tax incentives or cancellation of the corresponding Certificate of Registration, upon further assessment by the concerned Investment Promotion Agencies (IPAs) or the FIRB.
                The penalty on RCIT, in case of non-compliance with Section 309 of the Tax Code, as amended, shall be computed based on 100% or the entirety of the RCIT for the month/s of noncompliance and not merely on the percentage of non-compliance.
                  The BOI-Certificate of Registration (BOI-COR) cannot be amended after January 31,
2023 to include expansions or new projects in order to allow these new projects or expansions to implement WFH arrangements. New or expansion projects or activities of IT-BPM RBEs should be separately registered with the BOI in order to avail of WFH arrangements. Upon the issuance of the BOI-COR, the IT-BPM RBE must submit the BOI-COR to the original or concerned IPA for the annotation of the original COR issued by the said concerned IPA, For the Philippine Economic Zone Authority (PEZA)-registered IT-BPM RBEs, the BOICOR shall be submitted to the PEZA’s Office of the Board Secretary for proper annotation.
                 The BIR and Bureau of Customs (BOC) shall accept the official receipt as proof that the BOI-COR will be secured by the company. Generally, in lieu of the BOI-COR, the BOI-issued official receipt shall be accepted as an alternative. The date indicated in the official receipt shall be the effective date of registration with the BOI. The effective date of BOI registration marks the beginning of the IT-BPM RBE’s eligibility to implement 100% WFH arrangements.
                  The registration with the BOI will be an additional registration on top of the IT-BPM RBE’s existing registration. The registration with BOI will be the basis for fiscal incentives, while the registration with the concerned or original IPA will be the basis for non-fiscal incentives and the corresponding terms and conditions of registration. As such, IT-BPM RBEs must continue to abide by the regulations set by both IPAs in order to maintain their fiscal and non-fiscal  incentives. In order to easily tag and isolate those under dual registration with the BOI and the concerned IPA, the syntax: “Concerned IPA-BOI” shall be used. To illustrate, if the concerned or original IPA is PEZA, the IPA field in the tax return will be filled-out as “PEZA-BOI”.
                The Certificate of Authority to Import (CAI), Certificate of Entitlement to Tax Incentives
(CETI), and Value-Added Tax (VAT) Zero-rating certificate shall still be processed with the original or concerned IPA, using their existing processes. Nonetheless, coordination shall be made with the concerned IPA for any additional reportorial requirements or for any adjustments in existing process flows.
               An amended VAT zero-rating certificate for 2023 should be requested from PEZA, with
the required annotation as specified in the Administrative Order, to ensure that all stakeholders are guided by the changes in the registration of the subject IT-BPM RBE.
              The existing procedural rules of the original or concerned IPA shall continue even after registration with the BOI unless otherwise declared by the original or concerned IPA. Ultimately, there are minimum control measures that must be implemented to effectively manage and administer economic and freeport zones.
           There is no change in the corresponding share of the existing recipient-Local Government
Unit (LGU), provided that the IT-BPM RBE does not change its registered address or registered location. Further, as provided under Department of Finance (DOF) Local Finance Circular No. 001-2022, the employees under a WFH arrangement shall not be assessed by the LGU.
                The Tax Exemption Indorsement (TEI) is different from the Certificate of Registration and Tax Exemption (CRTE). The TEI is issued by the Department of Finance – Revenue Office (DOF-RO) as proof of VAT and/or customs duty exemption of imported goods. In contrast, the CRTE is issued by the IPA as proof of the registration of the RBE with the IPA and the available fiscal incentives. Under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), the document that serves as proof of entitlement to income tax incentives is now the Certificate of Entitlement to Tax Incentives (CETI).
                 The TEI is applicable to all IT-BPM RBEs that are registered with the BOI, regardless of
the date of registration. IT-BPM RBEs already registered with the BOI as of December 31, 2022, and those registered during the extension, which ended January 31, 2023, shall be required to
secure a TEI.
               The blanket TEI applies to all imported goods, as of January 31, 2023, that availed of import VAT and/or duty exemption and are still in the books of accounts of the registered project/activity. The TEI applies to all imported goods, irrespective of the asset’s current location, and whether the asset is permanently situated in the economic or freeport zone or will be transferred subsequently.
            The TEI no longer applies for imported laptops used for WFH arrangements of employees since the BOC has already assessed these goods, and the IT-BPM RBE has paid the related taxes and duties. The TEI serves as documentary proof of import VAT and/or customs duty exemption. 
                    If there is no exemption availed or granted, the TEI is no longer required. Since the blanket TEI shall be secured per project basis, it follows that each project must secure a blanket TEI. The term “project” means those supported by a separate COR or Supplemental Agreement, as applicable. The TEI does not cover locally purchased goods and is designed to serve as proof of VAT and/or duty exemption of importations. Locally purchased goods enjoying VAT zero-rating are supported by the VAT zero-rating certificate issued by the IPAs. In this regard, locally purchased goods can be freely moved in/out of the economic zone or freeport as long as the related supporting documentary requirements can be presented.
              The tagging of imported assets must follow the tagging per separate books of accounts. The use of one project to consolidate all imports that will be eventually used by other separately registered projects runs counter to the objective of requiring separate books of accounts per project. This means that the related assets must be traced back to the project to which it was booked and where the related depreciation or expense is reported.
              Imported assets that will not be supported by a TEI will be subject to the corresponding
duties and taxes, as determined by the BOC. Securing the TEI from the DOF-RO can be done by
a broker, provided that the company provides an authorization letter granting the broker the authority to apply for a TEI, on behalf of the company. While the registration for the TEI system is done online, the TEI for existing goods and new shipments shall be filed personally at the DOFRO. Nonetheless, IT-BPM RBEs outside Metro Manila may engage brokers to process the TEl, on behalf of the company.
               The 30-day deadline will be counted from the date the BOI-COR was issued and not on
the date indicated on the official receipt. Nonetheless, the covered period of the report shall retroact to the date per official receipt, as this covers the first day of eligibility to avail of 100% WFH arrangements.
               Employees under a hybrid work arrangement shall be included in the WFH count. This
will be the basis for determining the reasonableness of the volume of assets brought out of the economic zone or freeport zone.
               Assets that remain in the registered project or activity’s books of accounts, even with zero net book value, shall be included in the list of existing-equipment provided that these assets are VAT and/or customs duty exempt.
            As business models are constantly changing, the related laptops and other IT peripherals
that operationalize the adjustments may also vary. In this regard, a justification must be provided
for the change in the equipment-to-employee ratio. Such equipment, if imported and availed of
import VAT and/or customs duty exemption, shall be covered by the TEI. Said justification shall
be submitted to the concerned IPA. As existing internal control procedures are maintained, it is
suggested that the justification be included in the IPAs’ forms.
             Asset movements during the bond-free period shall be supported by a provisional goods declaration and a notarized undertaking that the related TEI will be secured, in lieu of posting any type of bond and during the pendency of the TEI. Once the TEI has been secured for existing equipment and other assets, no bond requirement, in whatever form, shall be imposed upon the movement of assets outside the zone.
            A surety bond is not required in order to move locally purchased goods. Locally purchased goods enjoying VAT zero-rating can be freely moved in/out of the economic zone or freeport as long as the supporting VAT zero-rating certificate can be presented, along with the BOI-issued official receipt or BOI-COR, and other supporting documents (e.g., invoices or official receipts), as applicable.
               The valuation rate for assets with zero book value shall be 10% of the original book value, representing the assumed residual value. This valuation method is lifted from Customs AO 5-2011, as adopted, based on Section 608 of the Customs Modernization and Tariff Act, as amended.
               The receiving BOC Office shall only be allowed to process and approve applications with sufficient supporting documents. If the Transit Single Administrative Documents (TSAD) can no longer be found, import VAT and/or customs duties shall be assessed, as applicable. If a TEI
cannot be secured due to lost or missing documents, the related imported assets shall be assessed by the BOC, accordingly.
             There is no limit as to the period of enjoyment of the WFH arrangement once a project is registered with the BOI. Registration with BOI under FIRB Resolution Nos. 26-2022 and 33-2022 is a permanent solution that enables RBEs located in economic zones or freeport zones to conduct 100% WFH arrangements indefinitely.
                The TEI is required to be secured for assets imported as of February 1, 2023. It is recommended that IT-BPM RBEs review their importation timelines to ensure that TEI processing is duly considered in their plans and that adjustments in import lead times are made, as necessary.
                 The filing of the TEI is recommended to be at least ten (10) days before the arrival of the goods, to ensure the smooth processing and release of the imported goods. For new importations, the DOF-RO shall only accept applications filed within one (1) year from the date of importation, based on the date indicated per airway bill or the bill of lading, as applicable. For existing goods, the IT-BPM RBE is required to secure just one blanket TEI per project, whereas for new goods, the requirement is one TEI per shipment per project.