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8box Solutions Inc.

4_20230710_150500_0001

Contact Number: 09369340340
Email: sales@8box.solutions

REVENUE MEMORANDUM CIRCULAR NO. 46-2023 issued on April 19, 2023 publishes the full text of Fiscal Incentives Review Board (FIRB) Advisory No. 006-2023 regarding clarifications on the supplemental guidelines on the registration with the Board of Investments (BOI) of Registered Business Enterprises (RBEs) in the Information Technology-Business Process Management (IT-BPM) Sector.
            Only capital equipment and other assets related to the IT-BPM project or activity registered with the BOI and are to be used to implement work-from-home (WFH) arrangements shall be covered by the Regulations.
                  Based on Section E of FIRB Administrative Order (AO) No. 001-2023, as amended by
FIRB AO 033-22, only assets intended to be moved out of or currently outside the economic zones and/or freeport zones for WFH arrangements shall be required to secure a Tax Exemption Indorsement (TEI) from the Department of Finance – Revenue Office (DOF-RO). The existing goods will be covered by a blanket TEI per project, covering existing goods that were imported as of January 31, 2023. For new importations starting February 1, 2023, the TEI shall be processed per project per shipment.
                TEI will no longer be required for foreign-supplied intangible asset/software that will not pass through the BOC/any port (e.g., purely internet-based) since the TEI only covers goods that are physically imported and processed by the BOC as imports. However, if the intangible asset/software is a component of a tangible/physical asset (e.g., part of equipment or machinery), the TEI must be secured. As the intangible asset/software forms part of the imported asset, the cost of such intangible asset/software will be embedded in the purchase price of the tangible/physical asset that will be processed by the BOC.
                 IT-BPM RBEs can implement WFH arrangements while still processing the blanket TEI. WFH arrangements are already permitted upon registration with the BOI. However, during the pendency of the issuance of the TEI, the movement of goods from the economic zones and/or freeport zones, in order to operationalize the WFH arrangements, shall only be allowed upon successfully securing a provisional goods declaration (PGD) and submitting a notarized undertaking. The requirements and procedures regarding the processing of PGD are specified under Customs Administrative Order No. 02-2021. There is no need to lodge a PGD if the blanket TEI has already been secured.
                 As provided by FIRB Resolution No. 33-2022, and as extended by FIRB Resolution No.
012-23, the bond-free transition period shall run from January 1, 2023 to June 30, 2023. After the bond-free transition period, the goods may still be allowed to be moved outside the economic zone or freeport zone provided that a PGD has been secured and the specific and sufficient surety bond has been posted, as approved by the BOC. However, in no case shall the TEI of existing assets currently outside the economic or freeport zone be secured later than one (1) year from the issuance of FIRB AO No. 003-2023 or the end of the bond-free transitory period, whichever comes later.
               The request for the staging bill of lading (BL) or dummy BL shall be filed by the covered
RBE to the BOC satellite offices, as applicable, for pre-assessment. Thereafter, the BOC satellite
offices shall endorse the application for the approval of the BOC Deputy Collector for Operations and the BOC Deputy Collector for Assessment.
              Aside from the requirements listed in Annex A of FIRB AO No. 001-2023, the application
for the staging BL/dummy BL shall be filed together with a pre-assessment entry, the related import documents, and a memorandum/letter addressed to the BOC Deputy Collector for Operations stating clearly the grounds and basis for the approval of the request. The BOC also requires the inventory list of importations to be covered by the blanket TEI in order to process and issue the staging BL/dummy BL.
            Import licenses issued by Investment Promotion Agencies (IPAs) may serve as acceptable substitutes for the transit-single administrative document (TSAD) in applying for the staging BL/dummy BL. If the TSAD is no longer available, the related admission permit or import permit, or any other equivalent document, can also be used in lieu of the TSAD. The staging BL/dummy BL shall be released within three (3) working days upon submission of complete documents. The staging BL/dummy BL is a requirement to process the TEI for imported existing
goods. It does not need to be secured if the WFH assets to be moved outside the economic or
freeport zone are locally purchased equipment.
               The staging BL/dummy BL is only required to secure the blanket TEI for existing assets.
New importations starting February 1, 2023 shall be covered by an actual signed and dated Import BL/Air Waybill. The distinction between requirements for existing assets and new importations starting February 1, 2023 are listed in Annex A of FIRB AO No. 001-2023.
               New importations of IT-BPM RBEs starting February 1, 2023 shall undergo the existing/status quo clearance procedures and documentary requirements of their concerned IPA in order to release the goods from BOC custody. The additional step of securing a TEI from the DOFRO will only arise when the IT-BPM RBE requests for the movement of goods from the economic zone or freeport zone.
                  As an additional control measure, the related import permit/admission permit, or any other equivalent document to be issued by the concerned IPA for all new importations, must indicate an annotation that a TEI must be secured if the related assets will be moved out of the economic zone or freeport zone, for WFH purposes.
                   New imported assets of IT-BPM RBEs still securing the TEI may still be allowed to be
moved outside the economic or freeport zone provided that a PGD has been processed, the specific and sufficient bond has been paid, and an application for TEI has already been filed with the DOFRO at the time of lodgement.
                  The submission of the Certificate of Non-Local Availability (CNLA), as required in the
FIRB AO No. 001-2023 for the processing of the TEI, shall be deferred pending the issuance of
the joint memorandum circular of the DOF and the Department of Trade and Industry on how to
operationalize the issuance of the CNLA under Rule 2, Section 4(B)(3) of the implementing rules
and regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Act, as amended. Locally purchased goods used for WFH arrangements, which were subject to VAT zerorating, should be supported by the related VAT zero-rating certificate issued by the concerned IPAs. Given the need to balance government control procedures and the ease of doing business, risk-based validation should be applied whenever possible.
                The BOC’s valuation for asset disposal indicated in Section H of the FIRB AO No. 001-
2023 shall also apply to locally purchased assets/equipment enjoying VAT zero-rating. The
valuation method of the BOC for the sale, transfer, donation, or disposal of related assets will only be applied prospectively. The valuation will not cover the existing assets of the IT-BPM RBEs that were already disposed of and paid accordingly or those paid under protest, prior to the IT-BPM RBE’s BOI registration. 
             Cargoes are subject to 100% inspection by the BOC even if the RBE is already registered
with the BOI. The BOC has the right to physically inspect and validate that the goods listed in the
submitted farm-out forms are the same goods to be taken out.
             An extension office (i.e., with activity on the same building but on a different floor) may
be registered for incentives separately if the operations at the additional floor would entail an
increase in production capacity, either through the installation of new IT equipment or the hiring
of additional personnel. A qualified expansion project shall be subject to a separate application
and approval process, as aligned under existing rules and regulations.
            If the extension office is intended only for rearranging the office premises, the concerned
RBE shall secure a Letter of Authority (LOA) from PEZA for the additional area of operations. In
this instance, there will be no additional incentives granted to the RBE, and the incentives for the
extension office shall be co-terminus with the incentives of the existing project.
              Transferee IT-BPM RBEs registered with PEZA and BOI are still required to maintain an
office inside PEZA-registered IT Centers/Buildings based on PEZA Memorandum Circular No. 2022-067. Failure to comply shall result in cancellation of its registration with PEZA as an IT Enterprise and subsequently, its registration with BOI.
              Based on PEZA Memorandum Circular No. 2022-067, PEZA Rules and Regulations shall
still apply to the operations of the transferee RBEs, including the related applications for office
space reduction, among others. While there is no specific area or reduction rate indicated, the
reduced office space must remain compliant with the required occupant density under the National Building Code of the Philippines and other existing rules and regulations of the concerned IPA, as applicable.
              Based on PEZA Memorandum Circular No. 2022-067, PEZA Rules and Regulations shall
still apply to the operations of the transferee, including the transferred operation. The corresponding application for the transfer shall still be processed under PEZA. Once the appropriate letter of authority has been issued and the PEZA Certificate of Registration (COR) of the transferee has been amended to reflect the new location, the IT-BPM RBE shall request for the endorsement of PEZA, for submission to the BOI, covering the changes in the registration.
            IT-BPM transferees are required to update their BIR COR. The IPA to be indicated is the new IPA followed by the old IPA, separated by a forward slash (e.g., BOI/PEZA or BOI/CDC). This is also the IPA that will be indicated in the Income Tax Return (ITR).
              For RBEs with multiple registered activities under multiple IPAs, additional sheets of BIR
Form No. 1905 should be accomplished (as many as necessary). The RBE shall inform the BIR
Revenue Officer of the fact that there are multiple registered activities under multiple IPAs to be
updated. The registration update may also be done using the Online Registration and Update System (ORUS) of the BIR (https://orus.bir.gov.ph/).